Q. You have a client who worked with one school district for 10 years and set up a 403b account. The client left that job at age 55 to work in another district, and established a 403(b) account through that employer as well. The client will retire at age 58.
The plan document and TPA serving the account allow IRA funds to roll into the employee’s 403b. If the employee retires at age 58 and withdraws from the account, would these funds be the 10% pre-age 59½ penalty?
A. The IRA funds would also not be subject to the 10% penalty. Under IRS Revenue Ruling 2004-12, rollover assets take on the characteristics of the accepting plan. The only exception is for 457(b) plans.