Dear Olga,
I am unemployed and not sure if I should keep my 403 from my former employer as it is or roll it into an IRA.
Thank you,
Kim
Dear Kim,
Unemployment brings so much uncertainty about the future and the lack of funds can be very stressful.
Earlier this year, I wrote a blog post about dealing with financial setbacks. You can read the advice here.
Before going into my advice, I urge you to think about what you're trying to achieve with this transactions. Your intentions will help you decide what is best for you and your current situation.
When talking to a 401k representative this summer I learned that if you roll over funds to an IRA first you may have more flexibility with receiving partial distributions from the IRA if you're running low on cash and need to keep things afloat. When you take a distribution from a former employer, it will usually need to be the whole amount. I cannot guarantee that 403 accounts have similar options, but if you call the financial institution they are required by law to disclose all of your options and the possible implications of what you choose to do.
I know, everyone talks about how bad of an idea it is to cash out retirement funds, but if you've gone through all your savings and have nowhere else to turn, don't let this advice prevent you from taking care of your basic needs.
My biggest piece of advice, is do your homework before you do anything. If you have a tax accountant, I suggest consulting with them about how this may impact your taxes if and when you decide to move your funds. Depending on the type of IRA account you choose and any distributions, there may be tax implications.
Also, speak to the financial institutions that hold your current account(s) and where you are considering opening an IRA. This information will be the foundation that will guide you through your choices.
If you need more guidance once you've collected all of the information, I'm happy to hop on a quick call with you. Here's a link to my calendar!