How to Cash Out a 403(B)


When you work for a nonprofit organization, you may have access to a retirement account known as a 403(B). This account is similar to a 401(k) in that you can make tax-deferred contributions and your employer can also contribute. If you leave your employer, you may want to cash out the account and use the money for something else. When you do this, you may have to pay an early distribution penalty and taxes on the amount you withdraw.

Get the information about your plan provider from your employer. Your employer will be able to give you the contact information of the person in charge of your 403(B) plan. Contact this person to get the details on the requirements for an early distribution. In some cases, your employer's human resources department will have forms for an early distribution.

Request the forms for an early distribution from your 403(B) plan provider. Most of the time, you will simply need to fill out a form and have it signed by your employer. Send the form into the 403(B) plan provider. You may need to send in the original document to the provider or, in some cases, fax the document or email it.

Contact the 403(B) provider to ensure it received the documents you sent in for an early distribution. Typically, the provider will need time to process the documents and get you a check for the distribution. Ask how long it will take to process the distribution. Then call back about a week before the distribution is scheduled to be made to confirm everything is on track for the payment to be made.

Receive the check from the 403(B) provider and set aside an amount to pay the early distribution penalty, if applicable. If you are not yet 59 1/2, you will pay a 10 percent early distribution penalty on the amount you take out. You will have to pay this penalty when you file your taxes for the year.

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