Rolling a 403(b) Into an IRA: What You Need to Know

Yes, you can roll a 403(b) into an IRA, but the rules depend on whether you still work for the employer and what type of IRA you choose

A rollover moves money from your 403(b) directly to an IRA without you touching it, which avoids taxes and penalties. You can roll a 403(b) into a traditional IRA or a Roth IRA, but each path has different tax consequences and timing rules. The employer must have separated you from service — meaning you left the job, retired, or in some cases reached age 55 — before you can move the money out.

If you still work for the employer, you may be blocked from rolling out unless the plan document allows it. Some 403(b) plans permit in-service rollovers to IRAs while you are still employed, but this is not automatic. You need to check your plan's rules or ask your plan administrator whether this option exists for you.

Key Takeaways

You must have separated from your employer or reached age 55 to roll out a 403(b), unless your plan allows in-service rollovers while employed.
Rolling into a traditional IRA keeps the money in a pre-tax account with the same tax-deferred growth, while rolling into a Roth IRA converts the money to after-tax status and triggers when ready income tax.
A direct rollover, where the 403(b) custodian sends money straight to the IRA custodian, avoids the 60-day important date and withholding taxes that explore to indirect rollovers.
If you have a Roth 403(b), you can roll it into a Roth IRA without paying taxes, but rolling a Roth 403(b) into a traditional IRA is not permitted.
The IRS does not limit how many times you can roll a 403(b) into an IRA, but you can only do one indirect rollover per 12-month period across all your IRAs.

Traditional 403(b) to Traditional IRA: Tax treatment stays the same

Rolling a traditional 403(b) into a traditional IRA is the most straightforward path because both accounts are pre-tax. The money moves without triggering any income tax, and it continues to grow tax-deferred inside the IRA. You do not owe federal income tax until you withdraw money in retirement.

The contribution limits and withdrawal rules change once the money lands in the IRA. Your 403(b) had a much higher annual contribution limit (up to $69,000 in 2024, depending on your age and plan), but an IRA caps annual contributions at $7,000 (or $8,000 if you are 50 or older). This does not affect money already in the account — the limit applies only to new contributions you make going forward. Withdrawals from a traditional IRA follow the same rules as 403(b) withdrawals: you can take money penalty-free starting at age 59½, and you must begin taking required minimum distributions at age 73.

Traditional 403(b) to Roth IRA: You pay income tax on the conversion

Converting a traditional 403(b) to a Roth IRA means moving pre-tax money into an after-tax account. The IRS treats this as a taxable event: you owe federal income tax on the full amount you roll over in the year you do it. If you roll $100,000, you add $100,000 to your taxable income for that year, which could push you into a higher tax bracket.

The advantage is that once the money is in the Roth IRA, it grows tax-free and you owe no tax on withdrawals in retirement. Roth IRAs also have no required minimum distributions during your lifetime, so you can leave the money untouched as long as you want. You can withdraw contributions (the money you put in) at any time without penalty, but earnings (the growth) must stay until age 59½ unless you meet an exception.

There is no income limit on converting a traditional 403(b) to a Roth IRA, unlike direct Roth IRA contributions, which phase out for higher earners. This makes a Roth conversion a common strategy for people who earn too much to contribute to a Roth IRA directly.

Roth 403(b) to Roth IRA: No tax, same after-tax status

If your 403(b) is a Roth account, rolling it into a Roth IRA is tax-free because both are after-tax. The money has already been taxed when you contributed it, so moving it between Roth accounts does not create a new tax bill. The money continues to grow tax-free and you owe nothing on may have access to withdrawals in retirement.

You cannot roll a Roth 403(b) into a traditional IRA. The IRS does not allow you to move after-tax money into a pre-tax account because it would let you avoid taxes on the earnings. If you need to move a Roth 403(b), a Roth IRA is your only option.

Direct rollover vs. indirect rollover: The 60-day rule and withholding

A direct rollover is the safest method. Your 403(b) custodian sends the money directly to your IRA custodian. You never handle the cash, there is no 60-day important date to meet, and no taxes are withheld. This is the path most people should take because it eliminates the risk of missing a important date or owing unexpected taxes.

An indirect rollover means the 403(b) custodian sends you a check. You then deposit it into an IRA within 60 calendar days. The custodian must withhold 20% of the money for federal income tax, even if you plan to roll the full amount. If you roll $100,000, you receive a check for $80,000 and owe $20,000 in withholding. To avoid taxes on the $20,000, you must deposit it from your own pocket within the 60 days — if you do not, the $20,000 is treated as a distribution and you owe income tax plus a 10% penalty if you are under 59½.

The IRS allows only one indirect rollover per 12-month period across all your IRAs combined. Direct rollovers have no such limit. If you do more than one indirect rollover in 12 months, the second one is treated as a taxable distribution.

Employer plan rules: Check whether your 403(b) allows rollovers

Not all 403(b) plans permit rollovers to IRAs. Some plans restrict withdrawals until you leave the job, reach a certain age, or experience a hardship. Your plan document — which your employer or plan administrator can provide — spells out what you are allowed to do.

If you are still employed, ask your plan administrator whether the plan allows in-service rollovers. Some do, some do not. If it does not, you must wait until you separate from service. Separation includes leaving the job, retiring, or in some cases reaching age 55 while still employed (the "rule of 55" exception, though this varies by plan).

Once you have separated, most plans allow you to roll out. Contact your 403(b) custodian — the financial institution holding your account — and request a rollover form. They will guide you through whether you want a direct or indirect rollover and to which type of IRA.

Timing and taxes: When the rollover counts and what year you report it

The year you complete the rollover is the year taxes are due, if any. For a traditional-to-traditional rollover, there are no taxes. For a traditional-to-Roth conversion, you owe taxes in the year the money lands in the Roth IRA, not the year you initiated the rollover. If you start a rollover in December but the money does not arrive until January, the taxes are due in January's tax year.

If you do an indirect rollover, the 60-day clock starts the day you receive the check. Weekends and holidays count toward the 60 days. If day 60 falls on a weekend or holiday, you have until the next business day. Missing the important date means the money is treated as a taxable distribution, and if you are under 59½, you also owe a 10% early withdrawal penalty.

Frequently Asked Questions

What happens to my employer match if I roll out my 403(b)?

Employer match money is yours to roll out once it is vested — meaning you have worked long enough for the employer to let you keep it. Vesting schedules vary by employer; some vest when ready, others over three to six years. Check your plan documents or ask your employer when your match becomes vested. Once vested, it rolls out with the rest of your balance.

Can I roll a 403(b) into a SEP IRA or Solo 401(k)?

You can roll a 403(b) into a SEP IRA if you are self-employed, but the rules are the same as rolling into a traditional IRA — it is tax-free for pre-tax money. Rolling into a Solo 401(k) is also allowed. Both accounts accept rollovers from 403(b)s, though you should confirm with the custodian that they accept rollovers before you start the process.

Do I have to roll out my entire 403(b) balance?

No, you can do a partial rollover and leave some money in the 403(b). However, if you do an indirect rollover, the 20% withholding applies to the amount you roll, not the full balance. Partial rollovers are less common because most people roll everything out at once to simplify their accounts.

What if I have loans outstanding on my 403(b)?

Outstanding loans must be repaid before you roll out. If you do not repay the loan, it is treated as a taxable distribution. You have 60 days to repay it, or you owe income tax plus a 10% penalty if you are under 59½. Contact your plan administrator to find out the loan balance and repayment terms.

Can I roll a 403(b) into an IRA if I am still working for the employer?

Only if your plan allows in-service rollovers. Some plans permit this, others do not. You must check your plan document or ask your plan administrator. If your plan does not allow in-service rollovers, you must wait until you separate from service or reach age 55 (if your plan offers the rule of 55 exception).

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.