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Accessing your 403(b)

403(b) Distribution Eligibility

If you withdraw assets prior to age 59½, the IRS will impose a 10 percent penalty on the amount to be included in your taxable income, in addition to normal income taxes, unless you meet one of the following exceptions:

  • Separation from service during or after the year you reach age 55
  • Retire before age 55 and arrange a schedule of Substantially Equal Periodic Payments (SEPP)
  • Separate from service and execute a rollover to a tax-deferred account such as another employers plan or a Rollover IRA
  • Disability
  • Divorce
  • Death

What happens to your 403(b) if you leave your employer?

  1. Assets may be transferred to your new employer’s plan if permitted by that plan.
  2. Assets may be moved to a rollover IRA at an institution of your choice.
  3. You may leave the money in your current plan and continue to enjoy tax-deferred growth (subject to plan rules).
  4. You can take a lump sum distribution, but early withdrawal penalties and tax consequences may apply. Please consult your tax adviser for more information.

Taking a Loan from Your 403(b)

Subject to availability and plan rules, IRS limits loans to the lesser of:

  1. $50,000 or
  2. One half of account value