What Are Your Thoughts On This Fixed 403(b) Account

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What Are Your Thoughts On This Fixed 403(b) Account

Post by choral54 »

I have a fixed account in my 403(b) that has a low floor rate of 3% at Voya and I have quite a bit of cash invested in it from the time that CD's were not paying much. I also have another account with quite a bit of money in another 403(b) at Voya that has a low floor of 2.5%. Neither of these interest rates have gone up with all of the rate hikes and have remained at the low bottom rate. I am thinking about rolling these accounts into my IRA's and perhaps investing in treasuries. Would I be making a mistake not keeping the guaranteed interest rates in the long run? I realize that know one can predict the future but even a 10 year treasury would be better than what I am receiving now and by then I will need to be taking some RMD's. Just looking for some thoughts before I make a decision. Is it foolish to give up a guaranteed rate? Anything else I should consider or have missed in my thinking?

BTW--I always appreciate all the knowledge shared on this forum! I have received a lot of helpful information with various issues that I struggle with.

Thank you!
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David Jay
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Re: What Are Your Thoughts On This Fixed 403(b) Account

Post by David Jay »

I agree that 2.5% looks a lot less attractive than it did 18 months ago. Are there any other investment options inside the 403b accounts that would pay more now but allow you access to the guaranteed rate in the future? Doing a rollover to an IRA will “end” access to that guaranteed rate.

I was thinking of a bond fund or a TargetDate fund (mostly bonds if it is a 2020 or 2025 date).

Another choice is to “split the difference” - perhaps rollover the 2.5% and keep the 3%.
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Re: What Are Your Thoughts On This Fixed 403(b) Account

Post by lakpr »

Are you retired and/or older than 59.5?

Rollover from a workplace plan to IRAs is not possible while you are still working at the company/government entity that is sponsoring the 401(k)/403(b) plan. UNLESS you are no longer working there, OR you are older than 59.5 (and even then, the plan has the discretion to deny rolling out of the plan; it causes havoc with accounting).

It is not clear from your post, hence asking.
Edit: never mind, you said within 10 years you will be RMD eligible, so that puts you at least 62 years or older.

If you are eligible to roll out of the plan, I strongly suggest that you buy TIPS so that you are guaranteed to keep pace with inflation.
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