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Your employer's 403(b) plan may have restrictions for withdrawing assets from their 403(b) plan. Check with your employer for details about the withdrawal provisions allowed within their plan. If you meet the requirements for withdrawing from your employer's plan, there are several guidelines to consider before making a final decision.
Q: Will I Be Required To Pay Taxes On My Withdrawal?
A: Since no income tax has been paid on the payments to your account, you would need to report your withdrawals as income on your income
tax return. A 10% federal penalty tax will also be due on the amount withdrawn unless it is:
- Made after age 59½
- Made after age 55 and separation from service
- Made on account of your death, disability, or medical expenses meeting certain conditions
Q: When Will My Contributions Be Available For Withdrawal?
A: Withdrawals are available if you meet one of the following conditions:
- You attain age 59½
- Your death or total disability
- Separation from service
- Severe financial hardship (limited to contributions only)
- Qualified Reservist Distribution
Q: What Qualifies As A Hardship?
A: Hardship distributions are an immediate and heavy financial burden caused by one of the following events:
- Purchase of a primary residence
- Payment of rent or a mortgage to avoid eviction or foreclosure
- Funeral expenses for an immediate family member of employee
- Uninsured and unpaid family medical expenses
- Unpaid family education expenses over the secondary level
- Expenses for the repair of damage to primary residence that are deductible for federal tax purposes
Before requesting a withdrawal, you should familiarize yourself with any possible lost tax advantages or potential penalty taxes. For more information about hardship requirements and qualifications, please contact American Fidelity at 800-662-1106.
| E-SB-17-0409 |
Last Updated: 5/4/2009 |
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