Can 403K Funds be used as SDIRA w/same employer?

Question

Can 403K Funds be used as Self Directed IRA if I'm still employed by the same employer that originated and implemented the 403K plan?

Justin Windham · Answer

@Joe White

Check to see if the plan allows for any in-service distributions. Otherwise, you'll generally have to wait until you are no longer working with that employer.

Mark Nolan · Answer

@Joe White

You may not be able to transfer that 403b unless one of the following triggering events are met:

• Reaching retirement age. This is usually defined by the plan, and  typically ranges from age 55 to 65; however, the actual retirement age  may vary among plans. As such, the plan must be consulted to determine  its particular requirements and definitions.
• Termination of employment
• Disability
• Termination of the plan
• Death, in which case the distribution would be taken by the beneficiary

However, some current employers may allow for partial or  full-transfers from 403b and profit sharing plans even if one of the  aforementioned triggering events have not been satisfied. These are  referred to as in-service withdrawals. Key factors should be considered  when making in-service withdrawals. These include the following:

• In-service withdrawals are not permitted from pension plans, such as money purchase and defined benefit pension plans.
• In-service withdrawals that are due to hardship cannot be rolled over to an IRA or any other retirement plan such as solo 401k.  
• In-service withdrawals of salary deferral amounts are usually  permitted only under hardship circumstances, whereas in-service  withdrawals of employer contributions need not be limited to hardship.
• Withdrawals cannot be more than the participant’s vested account  balance, and for participants who have participated in the plan for less  than five years, their in-service withdrawal amounts can be further  limited to amounts that have been in the plan for two-years or less.

Get a copy of the Current Employer SPD

One way of determining if your current employer will allow you access  your retirement funds while still working for them, is to check the  summary plan description (SPD) for the existing 403b plan. The SPD is  required to be written in a language or format that is easily understood  by participants. Larger plans usually make the SPD available on the  company’s benefits website. If the SPD is not available, the plan  administrator or human resources department should be contacted for a  copy of the most updated version

Dmitriy Fomichenko · Answer

@Joe White, 403b funds can never be "self-directed" (meaning you can not buy investment property with it or other alternative investments). 403b however can be rolled over into self-directed IRA. But as Brian mentioned above it is very unlikely in your case.

Brian Eastman · Answer

@Joe White

Likely not.

Most employer plans (401k, 403b, etc) are going to be locked into that plan while still employed.  An exception would be if you are over age 59 1/2 while still employed with the plan sponsor.

Some plans do allow for an "in-service" distribution while still employed, but this is rare. You can contact your plan administrator to see if this is an option and if you are eligible.

Joe White · Answer

@Brian Eastman & @Dmitriy Fomichenko - Thanks for the info. That's disappointing! I was hoping to be able to use our 403b monies to invest.

Can 403K Funds be used as SDIRA w/same employer?

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