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December 19th, 2023
Information & Insights for the 403(b) Community
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Ask the Experts
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What Are the Withholding Rules for Small 403(b) Rollover Balances?
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Q: Our ERISA 403(b) plan automatically cashes out small balances (less than $5,000) of terminated employees, with rollovers to an IRA for balances between $1,000 and $5,000. It is our understanding that these are all eligible rollover distributions subject to 20% withholding if not rolled over; however, our recordkeeper says that is not the case for distributions less than $200. Is our recordkeeper correct?
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