403b Question

[SouthernComfort]

Never asked the OP does your wife want cash or other options. She may be able to do a contract exchange to another approved provider. What she really needs or you need is to get a copy of the plan document. The district may have it listed on its website.

Thanks to all of you. I am going by the Board office tomorrow to get a copy. She was going to use the money to pay off her student loans. You could call it a hardship I lost my backside and had to sell some rental properties at a significant loss when the housing market fell. We are making it and my business is growing but being able to access the funds and payoff the debt would create an additional $780 monthly cashflow for the family.

 

[Norwayguy]

Thanks to all of you. I am going by the Board office tomorrow to get a copy. She was going to use the money to pay off her student loans. You could call it a hardship I lost my backside and had to sell some rental properties at a significant loss when the housing market fell. We are making it and my business is growing but being able to access the funds and payoff the debt would create an additional $780 monthly cashflow for the family.

It will all depend on the plan document as to even if a hardship can be done...I know it sucks I had a district not allow hardships so even on the death of a divorced spouse and the financial burden his only option to access the 403(b) would have been to quit.

 

[Tahoe Ray]

Thanks to all of you. I am going by the Board office tomorrow to get a copy. She was going to use the money to pay off her student loans. You could call it a hardship I lost my backside and had to sell some rental properties at a significant loss when the housing market fell. We are making it and my business is growing but being able to access the funds and payoff the debt would create an additional $780 monthly cashflow for the family.

You can borrow money for a lot of things (car, house, school), but not for retirement...

We don't have anywhere near enough info to make a recommendation but consider tax and potential penalty implications of a large withdrawal vs. a short term lifestyle adjustment.

Or if money is really tight (and you end up having some type of access to the 403(b)), then maybe only take out enough to give you some breathing room.

You could also consider Peter's mention of a potential loan from the plan.

You might want to talk with someone who could guide you here. Have someone draw up all of your options, tax implications and future ramifications...you might be able to get it on the cheap if you contact your local FPA (Financial Planning Association). Some offer pro bono planning services depending on your need.

 

[Tahoe Ray]

I'd need a little more details on this to properly offer my 2 cents.

44 posts in an hour and a half...impressive.

 

[marketing]

The contract has the normal withdrawal definition. Where is shows the decreasing withdrawal penalty and the statement that if she does make a withdrawal prior to age 59.5 then it will be subject to an additional 10% on top of her current tax rate. Not on any signed document does it say she can not withdraw funds until age 59.5.

Some good information, thanks.

 

[Norwayguy]

The contract has the normal withdrawal definition. Where is shows the decreasing withdrawal penalty and the statement that if she does make a withdrawal prior to age 59.5 then it will be subject to an additional 10% on top of her current tax rate. Not on any signed document does it say she can not withdraw funds until age 59.5.

Some good information, thanks.

There will most likely be an addendum for 403(b)...Just look at the statement if it is a 403(b)/TSA contract IRS regulations restrict her access prior to age 59 1/2 while still employed. A 403(b) is an EMPLOYER sponsored plan and as of 2009 all distributions require the approval of an authorized TPA or the plan. Failure to comply by the employer could cause the plan to fail to meet IRS requirements and create a taxable event for all participants.

 

[LGilmore]

Pick up a copy of the plan summary document at your wife's place of employment. It will spell out the options available to you for any withdrawal allowed.

If due to hardship, you may have to present a letter to the retirement plan committee and they will decide if acceptable for loan or withdrawal.

 

[Norwayguy]

Pick up a copy of the plan summary document at your wife's place of employment. It will spell out the options available to you for any withdrawal allowed.

If due to hardship, you may have to present a letter to the retirement plan committee and they will decide if acceptable for loan or withdrawal.

If they even allow for hardship distributions or loans.

 

[LGilmore]

"If they even allow for hardship distributions or loans"

Well, if they do, it will be in there.

 

[ncrantz]

Most times I tell my teacher clients to use a Mutual Fund account for the equities and a Whole Life policy for the fixed portion of the portfolio. More options, flexibility and liquidity. That is just a simple explanation of it. The plan is put together after a thorough fact finder but I will switch a high percentage of teachers I meet with that have an Annuity for their 403b.