You can roll over a 403(b) to a Roth IRA once a qualifying event gives you access to the money, but the IRS treats every pre-tax dollar you move as ordinary income in the year of the conversion. A $100,000 rollover from a traditional 403(b) adds $100,000 to that year’s taxable income. In exchange, the money grows tax-free inside the Roth IRA, comes out tax-free in retirement, and escapes required minimum distributions during your lifetime.
When You Can Actually Move the Money
Federal law ties access to your 403(b) to specific events: leaving the employer that sponsors the plan, reaching age 59½, becoming disabled, or the plan being terminated.1Internal Revenue Service. When Can a Retirement Plan Distribute Benefits? If you’re still working for the same employer and under 59½, you’re generally stuck unless your plan specifically permits in-service distributions. Many don’t. Check your plan document or call your benefits office before you assume the funds are available.
Once you have access, there is no income limit on the conversion itself. Congress removed the income cap on Roth conversions starting in 2010, so high earners can move the full balance. Both traditional pre-tax 403(b) accounts and designated Roth 403(b) accounts are eligible to roll into a Roth IRA under federal rules.2United States Code. 26 USC 402
One boundary worth flagging: if you inherited the 403(b) from someone other than a spouse, the rules are narrower. Non-spouse beneficiaries can generally transfer inherited plan assets into an inherited Roth IRA through a direct rollover, but the funds must stay titled as an inherited IRA and are subject to the 10-year distribution rule for most beneficiaries.3Internal Revenue Service. Retirement Topics – Beneficiary Surviving spouses have broader options, including treating the account as their own.
What the Tax Bill Looks Like
Pre-tax 403(b) money moved into a Roth IRA counts as ordinary income on that year’s return.4Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans Your wages plus the converted amount equal your new taxable income. A single filer earning $90,000 who converts $50,000 reports $140,000. For 2026, the 22% bracket ends at $105,700 for single filers, so $15,700 of that conversion is taxed at 22% and the remaining $34,300 at 24%.5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
The 10% early withdrawal penalty that normally hits distributions taken before 59½ does not apply to the conversion itself. Federal regulations exempt the taxable conversion amount from that penalty as long as the funds actually land in the Roth IRA.6eCFR. 26 CFR 1.408A-4 – Converting Amounts to Roth IRAs
A big conversion can also trigger a secondary tax hit that catches people off guard. The 3.8% Net Investment Income Tax applies when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married filing jointly. The conversion income itself isn’t classified as investment income, but it inflates your MAGI, which can push your dividends, capital gains, or rental income past the threshold and expose that investment income to the 3.8% rate.7Internal Revenue Service. Net Investment Income Tax
Money That Was Already Taxed
If part of your 403(b) sits in a designated Roth account, you already paid income tax on those contributions when they went in. The principal rolls into the Roth IRA tax-free. The earnings also transfer tax-free if the Roth 403(b) met the five-year aging requirement and you’re at least 59½; otherwise the earnings portion may be taxable.8Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
Some plans also accept voluntary after-tax contributions, which are separate from designated Roth contributions. Those dollars were already taxed but their earnings weren’t. Under IRS Notice 2014-54, you can split the distribution so after-tax contributions go directly to a Roth IRA while pre-tax amounts and earnings go to a traditional IRA. This isolates the already-taxed money so you don’t pay tax on it twice.9Internal Revenue Service. Rollovers of After-Tax Contributions in Retirement Plans You can’t cherry-pick only the after-tax dollars on a partial distribution, though; any partial payout must include a proportional share of pre-tax money.
Spreading the Conversion Over Several Years
Nothing requires you to convert the whole balance at once. Splitting the conversion across two, three, or more tax years keeps each year’s added income lower, which can stop you from jumping brackets or triggering the Net Investment Income Tax. Someone with a $300,000 balance might convert $75,000 a year over four years instead of absorbing the full hit in one return.
The strategy works best during a window of lower income, such as the years between early retirement and the start of Social Security or a pension. The goal is to fill up the current bracket without spilling too far into the next one. Each year you convert, the 403(b) plan issues a Form 1099-R for that year’s distribution, and you report the taxable amount on that year’s return.10Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
Two Five-Year Clocks to Watch
Roth IRAs come with two separate five-year rules, and confusing them can cost real money.
The first clock governs tax-free withdrawal of earnings. Your Roth IRA must be open for at least five tax years before earnings come out tax-free, assuming you’re also 59½ or older. The clock starts on January 1 of the year of your first contribution or conversion to any Roth IRA. If you opened one back in 2020, that clock is already running and this rollover inherits it. If this is your first Roth IRA, the clock starts January 1 of the conversion year.
The second clock is conversion-specific. Each conversion has its own five-year holding period. If you withdraw converted principal before those five years are up and you’re under 59½, the IRS charges a 10% penalty on the amount you pull out. This clock runs separately from the account-age clock and applies even if you’ve had a Roth IRA for decades. Once you hit 59½, the penalty goes away regardless of when you converted.6eCFR. 26 CFR 1.408A-4 – Converting Amounts to Roth IRAs
The practical read: if you’re under 59½ and might need the converted money within five years, a Roth conversion can backfire. The plan assumes the money sits and grows.
Direct Rollover vs. Indirect Rollover
A direct rollover, also called a trustee-to-trustee transfer, sends the money straight from the 403(b) plan to the Roth IRA custodian. You never touch it. No taxes are withheld at transfer because the funds don’t pass through your hands.11Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income You still owe income tax on the conversion when you file, but the full balance stays invested while you pay that tax from other funds.
An indirect rollover puts a check in your hands. The 403(b) provider must withhold 20% for federal income tax before writing that check.11Office of the Law Revision Counsel. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income On a $100,000 distribution, you receive $80,000. You then have 60 calendar days to deposit the full $100,000 into a Roth IRA, meaning you need to come up with the missing $20,000 from other savings.12Internal Revenue Service. Retirement Plans FAQs Regarding IRAs If you only deposit the $80,000, the missing $20,000 is treated as a taxable distribution and may draw the 10% early withdrawal penalty if you’re under 59½.13eCFR. 26 CFR 1.402(c)-2 – Eligible Rollover Distributions You eventually get the $20,000 back as a tax credit at filing, but only after months of it sitting with the IRS. Direct is the safer path in almost every case.
How to Complete the Transfer
Open the Roth IRA at the institution where you want the money to land, if you don’t already have one. You’ll need the account number and the custodian’s mailing or wire instructions before the 403(b) provider will process anything.
Then contact your 403(b) plan administrator and request a direct rollover. Most providers have a distribution request form, sometimes labeled a Direct Rollover Request Form, that asks for:
- Your identifying information: name, Social Security number, date of birth, and plan account number.
- Destination details: the Roth IRA account number, the receiving institution’s name and address, and the account type. Confirm the destination is labeled Roth IRA, not traditional IRA.
- The dollar amount or percentage of the balance you want to convert.
Getting the destination account type right matters more than it sounds like it should. If the form says “traditional IRA” instead of “Roth IRA,” the provider applies the wrong tax reporting code, and unwinding that error through compliance departments can drag on for months.
Some receiving institutions want a letter of acceptance or a transfer-in form of their own. Call the Roth IRA custodian and ask whether they need any paperwork before the 403(b) provider releases funds. Once both sides are set, the transfer typically takes one to three weeks. The funds may arrive by electronic wire or as a check made payable to the new custodian for your benefit.
No More Required Minimum Distributions
Money left in a 403(b) is subject to required minimum distributions starting at age 73. The IRS forces you to withdraw a calculated amount each year, whether you need the income or not, and each withdrawal is taxable.14Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs For retirees who don’t need the money to live on, those mandatory withdrawals raise the tax bill and shrink the account faster than necessary.
Roth IRAs have no required minimum distributions during the original owner’s lifetime.14Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs Rolling a 403(b) into a Roth IRA removes those forced withdrawals entirely and lets the full balance keep compounding. For many people, this is the strongest single reason to convert.
One caveat: converting pre-tax 403(b) money into a designated Roth 403(b) inside the same plan is not the same as rolling to a Roth IRA. Roth money held inside a 403(b) is still subject to RMDs. Only the Roth IRA eliminates them.
Reporting the Conversion at Tax Time
The 403(b) plan administrator issues Form 1099-R for the year the distribution occurs, typically mailed by the end of January the following year. The form reports the gross distribution, the taxable amount, and a distribution code telling the IRS the money went to a Roth account.10Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498 You report the taxable portion on Form 1040 as ordinary income.
If the 403(b) held any after-tax contributions or designated Roth contributions, you may also need Form 8606 to separate the taxable and nontaxable portions. Keep records from the 403(b), including proof of after-tax contributions, in case the IRS questions the nontaxable amount. The receiving Roth IRA custodian reports the incoming rollover on Form 5498, which confirms the funds arrived. Hold onto both forms with your tax records for at least seven years.