Rollover of Retirement Plans from Old Job

[snipes007]

Hello everyone. Long-time lurker here. I just recently became engaged. I am currently in the process of organizing finances and have found out that my fiance has two retirement accounts from a short stint as a teacher in another state. They were all but forgotten until a statement came in earlier this month.

She is 30-years old. Is vested into a pension plan with a balance of about $6,000 and also has a 403b annuity at about $5,000. Again, she no longer works there, and neither account are currently receiving additional contributions. Neither have interfaces (other than calling up) where you can determine balances, change investments, etc. She is looking to start/continue saving for retirement and was planning on starting a ROTH IRA soon.

My question, is it worth rolling over these two retirement plans into an IRA within the same institution she will use for future planning? Consolidation is a plus, but are there benefits of keeping them in their current states?

Lastly, if we do rollover. I am told it can be done tax/fee free if we do a direct rollover into a Traditional IRA. Are there limits on how much can be transferred per year? (like the $5,000/year limit on contributions)

Thanks in advance.

[sweeps]

In recent years, I've really gotten on a simplification kick. There is a lot to be said for consolidating your finances so they're easier to view and manage. In general I would suggest rolling the 403b and pension over into a Rollover IRA at the institution you have your other investments (Schwab, Fidelity, Vanguard, etc.). There is no limit on the amount you can roll over -- this is separate from your maximum annual IRA contribution.

Note that there are exceptions though. For example, if there is a penalty for transferring out before a certain time period, or if your fiancee has an unusually good pension or 403b plan you may want to leave the money there.

[snipes007]

Yes, I'm trying to push her towards simplifying her finances. We've spent the last few months paying off her debt and cleaning up her credit. I really want to enter our marriage in a very good financial footing.

The discovery of the retirement funds was a nice surprise. It was just something she knew was there but never bothered checking. We called and there are no penalties involved as long as its a direct rollover. Unfortunately, they cast some doubt in us with their sales pitches saying their plans are superior since not many people qualify for pensions nor 403bs. However, as far as I can tell, there are no contributions from the employer, so I see no benefit.

[snshijuptr]

Being the only one on your block with a 403(b) does not make you special. 403(b) is the 401(k) equivalent for non-profits. What matters is if the selection of investments is right for you both (mainly her since it is her money). I would recommend finding a company with an online presence. Plus their shady sales pitch would turn me off majorly.

Now as for the pension, can she roll that over? My husbands pension belongs to the state until he retires (he's a teacher).

[creditcardfree]

I would definitely roll over the money!

You have more investment options outside the current plans. The maintenence fees are probably lower. You will have more visability if you move the money to a company where you can log on to see balances.

403b's are for non profits and many people have them. Pensions...maybe not so much, but since she is no longer employed there is not likely to be any additional benefit from it.

[snipes007]

Yes, the sales pitch was a turn-off but it was enough to have me begin researching.

The pension people (Boston, Mass Teachers) said it would be no problem as long as we don't take a withdrawal out on it. No fees or tax penalties as long as it was a direct rollover. We were specific in asking.