403b for teacher
Hi Terry,
My daughter was a teacher at CPS and had a 403b through Valic. She left CPS after 10 years and got a job at a suburban school. The Valic rep at CPS says they can’t handle her account anymore. The suburban rep says he doesn’t recommend transferring the CPS account to a suburban account if she opens one. I’m wondering if she should even bother opening a 403b in the suburbs and instead she should should invest money monthly into a Roth IRA, which she also has. Also, does she have to leave the money in the CPS 403b or can she roll that into a Roth IRA? Thank you for your help.
Terry Says
Let’s take this step-by-step. First, since Valic won’t advise on her CPS plan after she is no longer an employee, she should do a DIRECT ROLLOVER to an IRA. She can contact Fidelity, Vanguard, or T. Rowe Price on their toll=free phone numbers and they will make that happen with no tax consequences. Then the money can continue to grow tax-free.
Then she should definitely sign up for the new suburban 403 (b) plan — and hopefully they will match some of her contributions! Make it an automatic deduction from her paycheck.
And, THEN, if she can handle it, and if she qualifies based on income, she can ALSO contribu8te to a Roth IRA. She won’t get a tax deduction, but all the money will grow tax-free for her retirement. In 2019, she can contribute up to $6,000 to a Roth if her income (single) is below the range is $122,000.
Depending on her employer, she may or may not be accruing quarters toward Social Security. I’m assuming you live in Illinois, and if so, she will want to read this article about Illinois teachers and Social Security.
