Are There IRS Rules About These Accounts?

DISTRIBUTION RULES:

403(b) plan may allow employees to take money out of the plan when they:

• reach age 59½;
• have a severance from employment;
• become disabled;
• die; or
• encounter a financial hardship.

Eligible distributions may be paid out in cash, rolled into another retirement plan or IRA.

The employee will have to pay taxes on any amount of the distribution that was not from designated Roth or after-tax contributions and if under 59 1/2 years old, may have to pay an additional 10% early distribution tax unless an exception to this tax applies.

LOANS:

 Yes, a 403(b) plan may allow loans. If permitted, loans are based on 50% of your account balance less any other 403b or 457b loan outstanding.  The maximum aggregate loan amount is $50,000. Subject to your Investment Providers terms and conditions. 

HARDSHIP WITHDRAWALS:

 A retirement plan may allow participants to receive hardship distributions. A distribution from a participant’s elective deferral account can only be made if the distribution is both:

• Due to an immediate and heavy financial need.
• Limited to the amount necessary to satisfy that financial need.

The employer determines a participant has an immediate and heavy financial need based on the plan terms and all relevant facts and circumstances.

• Consumer purchases (such as a boat or television) are generally not considered an immediate and heavy financial need.
• A financial need may be immediate and heavy even if it was reasonably foreseeable or voluntarily incurred by the employee.

A distribution is automatically considered to be necessary to satisfy an immediate and heavy financial need if all of the following requirements are met:

• The distribution isn't greater than the amount of the immediate and heavy financial need, including the amounts necessary to pay any taxes resulting from the distribution.
• The employee has obtained all other currently available distributions (including distribution of ESOP dividends under section 404(k), but not hardship distributions) and nontaxable (at the time of the loan) plan loans, including all other plans maintained by the employer.
• The employee isn't allowed to make elective deferrals to the plan for at least six months after the hardship distribution.

CONTRIBUTION LIMITS:

The IRS sets the maximum contributions limits annually. Check with your Plan Advisor on the current year's limit.

ROLLOVERS & TRANSFERS:

Rollovers and transfers are allowed into and out of the Plan. All are subject to distribution rules.  You may Exchange from one Investment Provider to another within the Plan.