7 Powerful Benefits of a 403(b) Rollover in 2025
by Daniel Snyder, Founder & Principal Advisor
7 Powerful Benefits of a 403(b) Rollover in 2025
If you work for a public school, hospital or non-profit, chances are your nest egg sits in a 403(b). When you change jobs—or simply want more control—a 403(b) rollover lets you move those savings to another tax-advantaged account (most often an IRA) without triggering current-year taxes. Below, we explain why a rollover may supercharge your retirement strategy and how the latest 2025 rules make the move even more attractive.
What Is a 403(b) Rollover?
A 403(b) rollover transfers your balance to an IRA or another employer plan. Done as a direct (trustee-to-trustee) transfer, no money touches your hands and no taxes are withheld. With an indirect rollover you receive the check and must redeposit 100% of it—including the 20% tax withholding—within 60 days to stay tax-deferred. Missing that 60-day window means income tax and, if you're under 59½, a 10% penalty. [Source: annuity.org]
2025 Contribution & Catch-Up Highlights
- Elective-deferral limit rises to $23,500
- Standard age-50 catch-up stays $7,500
- New SECURE 2.0 "mega" catch-up for ages 60-63 jumps to $11,250 in 2025
1. Wider Investment Choice
Many 403(b)s restrict you to annuity sub-accounts and a short mutual-fund menu. Moving to an IRA opens thousands of low-cost ETFs, individual stocks, bonds and model portfolios—letting you dial in risk, ESG preferences or tactical strategies unavailable in most plans.
2. Potentially Lower Fees
Variable-annuity contracts inside 403(b)s can levy mortality & expense (M&E) charges of 1%–1.50% plus fund expenses. IRAs from reputable custodians often cost a fraction of that, boosting net returns over decades.
3. Easier Portfolio Management & RMDs
Consolidating old workplace plans into one IRA means:
- A single statement and login
- One required minimum distribution (RMD) calculation when you turn 73/75 under SECURE 2.0 rules
- Streamlined beneficiary designations and estate planning
4. Roth Conversion Opportunities
Rolling to a traditional IRA first, then converting portions to a Roth IRA, can create future tax-free income. Conversions are taxable in the year executed, so timing them in lower-income years or before Social Security starts can slash lifetime taxes.
5. Post-SECURE 2.0 Flexibility
Collective Investment Trusts (CITs) may enter 403(b)s, but most plans still lag IRA breadth.
Expanded hardship rules and student-loan matching begin in 2024, yet those provisions don't offset the control gained in an IRA.
6. Stronger Estate-Planning Tools
IRAs let you name multiple beneficiaries, enable "stretch" distributions for certain heirs and can be paired with trust language—features many 403(b) contracts don't fully support.
7. Professional Guidance & Protected Income With FortiGuard
FortiGuard Financial specializes in secure-growth strategies:
- FLOW® Fixed-Indexed Annuities for lifetime income without market risk
- Personalized, fee-efficient IRA portfolios
- One-on-one rollover navigation so your transfer is tax-free and penalty-free
Schedule a complimentary Rollover Strategy Session to see how your 403(b) could work harder—on your terms.
When a Rollover May Not Make Sense
| Consideration | Why You Might Keep the 403(b) |
|---|---|
| Loan feature | Some plans let you borrow; IRAs don't. |
| State creditor protection | A few states shield employer plans more broadly than IRAs. |
| Early-retirement rule | You can withdraw penalty-free from a 403(b) if you separate service at age 55; IRA penalty-free age is 59½. |
Step-by-Step: How to Execute a Direct 403(b) Rollover
- Request paperwork from your 403(b) administrator—check the "direct rollover" box.
- Open a receiving IRA (traditional and/or Roth) in your name.
- Provide custodian details to the plan. Funds move directly—no withholding.
- Invest according to your new strategy, matching your risk tolerance.
- Confirm that Form 1099-R shows Code G (direct rollover) at tax time.
Frequently Asked Questions
Does a rollover cost anything?
Most custodians waive IRA opening fees; some 403(b) vendors charge a $50–$125 termination fee.
Will I owe taxes?
A direct rollover of pre-tax dollars is tax-free. Converting to a Roth is taxable the year you convert.
Can I roll over after age 73?
Yes—but your current-year RMD must be distributed before the rollover.
Ready to Move Your 403(b)?
FortiGuard Financial makes rollovers simple, secure and strategic. Book your free call to compare fees, run tax forecasts and create a guaranteed-income plan that outlives the market.
FortiGuard Financial and its advisors do not provide tax or legal advice. Consult a qualified professional for your personal situation.