403(b)/401(k): No Longer Employed

403(b)/401(k): No Longer Employed

What can I do with my account when I leave my employer?

We are pleased to provide instructions to assist you with processing your separation from service distribution from your former employer’s retirement plan. It is important that you understand both your distribution options and your role in initiating the distribution.

Many retirement plan Participants who have separated from service choose to have their account transferred into an Envoy Choice Individual Retirement Account (IRA). Transferring the account out of your former employer’s retirement plan trust or custodial account gives you the greatest control over your retirement savings.

The distribution options that are available to you are driven, in part, by your vested account balance and are outlined below. Before you decide on the distribution option that is right for you, review the Special Tax Notice Regarding Plan Payments. This important notification details the tax consequences associated with the various distribution options that are available to you.

This guide is designed to explain your distribution options and outline the steps associated with initiating a distribution, including your options to keep the money in the Plan, take the money out of the Plan, and the tax implications of both. Some Participants are eligible for special tax treatment, including Housing Allowance Tax Treatment for pastors from a 403(b) plan.

Special forms and processes apply to certain situations, including deceased Participants, Participants who qualify to receive their distribution in installment payments, and Participants who qualify for tax-favored treatment of Housing Allowance. Contact Envoy Participant Services if you have a distribution request that includes one of these special considerations.

Any outstanding loans against the plan will need to be paid off in full by you, the Participant, within 90 days of the date of separation of service. If the loan is not paid off in full by that time, it will go into default and you will receive a 1099-R reflecting the deemed distribution. This is typically a taxable event to you. If you intend to pay off your outstanding loan, contact Envoy Financial for help.

During your exit interview, your employer will provide you with a notice entitled “Separation from Service – Important Information about Your Retirement Account”. This form indicates that you will need to contact Envoy Financial to review the various actions you can elect with regard to your account. It also advises you to keep your email address and phone number current on the Envoy Web Portal.

Outlined below are the distribution options available to both the Plan Sponsor (your former employer) and you, as the Participant. The distribution options available are determined by the Internal Revenue Code and, in part, the value of your account. Click on the link below to view the available distribution options for each scenario.

To view the full Participant Separation From Service Guide, click here.

< $1000  (page 3)

$1000 to $5000 (page 3)

> $5000 (page 3)