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Accessing a 403(b)

When may I access my 403(b)?

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

  • You separate from service during or after the year you reach age 55. This exception is permitted by §72(t)(2)(A)(v). See irs.gov for more information.
  • Retire before age 55 and arrange a schedule of Substantially Equal Periodic Payments (SEPP). The payments are based on an IRS formula and must continue for 5 years or until the individual reaches age 59½, whichever takes longer. This exception is permitted by §72(t)(2)(A)(iv). See irs.gov for more information.
  • Separate from service and move money to a tax-favored account such as another employers plan or a Rollover IRA
  • Disability
  • Divorce
  • Death
  • Made to an employee for medical care to the extent you have deductible medical expenses (medical expenses that exceed 7½% of your adjusted gross income), whether or not you itemize your deductions for the year.


Subject to availability and any additional conditions applied by individual vendors. IRS limits loans to the lesser of:

  • $50,000
  • One half of account value

Hardship withdrawal

Hardship distributions are permitted by the IRS, but are not required to be made available. Check with your vendor for details.

Resource: IRS Rollover Chart

Required minimum distributions

You must begin to take withdrawals from your 403(b) no later than April 1 of the year following the year in which you turn age 72. If you are still working, you can delay withdrawal from your 403(b) until April 1 following the year in which you retire. See this IRS story on Required Minimum Distributions (RMD).

403(b) account balances that existed on December 31, 1986 are not subject to the age 70-1/2 distribution requirement. However, any earnings on that balance are. Distribution from the 12/31/86 balance needs to start at age 75. This requirement is not found in the Internal Revenue Code, but rather in a letter ruling. Also, any distributions in excess of required distributions are deemed to reduce the 12/31/86 balance. So, if any money has been taken out of the 403(b) account other than those that are required (such as a partial withdrawal or a deemed distribution), the 12/31/86 balance may be less than anticipated. For your specific situation it's recommended that you consult a professional tax advisor.

Job change

  • Assets may be transferred to your new employer's plan if permitted by that plan.
  • Assets may be moved to a rollover IRA at an institution of your choice. This will permit the money to continue to grow tax-deferred.
  • You may leave the money in your current plan and continue to enjoy tax-deferred growth. If plan has less than $5,000 in assets you may be required to transfer assets. Check with your employer for details.
  • You can take a lump sum distribution, but early withdrawal penalties and tax consequences may apply (unless age 59½ or 55+ and retiring) See: How do I access my 403(b) for details.


You may be eligible for a distribution. This option is designated by each vendor and not by the plan. Contact your vendor for more information.


Some or all of the balance in your 403(b) account may be transferred. Distribution to an alternate payee will be permitted if it is made pursuant to a qualified domestic relations order (QDRO). This is a decree, judgment, or order that meets the qualification requirements of the Internal Revenue Code. Those requirements include the following:

  • The order must have been issued under a state's community property or other domestic relations law.
  • It must relate to the provision of alimony, child support, or the property rights of a spouse, former spouse, child, or other dependent (alternate payee).
  • It must assign to the alternate payee the right to receive all or a portion of the participant's plan benefits.
  • It must clearly specify (1) the names and addresses of each alternate payee, (2) the amount or percentage of the participant's benefit to be paid to each alternate payee, (3) the period of time over which the order applies, and (4) each plan to which the order applies.

When discussing property distribution in contemplation of a divorce, you should make certain that your attorney ensures that the distribution of your 403(b) assets and all other retirement plan assets meet the requirements of a QDRO.


Death benefits are paid to a beneficiary or beneficiaries on file with your vendor. How the proceeds are distributed depends upon the age of the participant upon death and beneficiary's relationship to you. You should review your beneficiary designations annually and update them as necessary through your 403(b) vendor.

Related Podcast:

Scott goes deep on how to access a 403(b)... after age 59 1/2, between 55 and 59 1/2, before 55, loans, disability, divorce, and death. Listen Now »