Circumstances can arise where you might need the money in your 403(b) accounts before you retire. Options include borrowing from the plan—if permitted—or in the event of hardship, withdrawing money from the plan.

Loans. The IRS permits you to borrow money from your 403(b) accounts. Your 403(b) will have its own rules, however, so you may or may not be allowed to borrow from your 403(b).

If your plan permits loans, you may be able to borrow from your 403(b) accounts without paying any tax or penalty. Loans must be repaid. And regular principal and interest payments must be made.

Hardship Withdrawal. Money can be withdrawn from 403(b) accounts, without penalty, if the participant retires, reaches 59 1⁄2, becomes disabled or dies. If none of these conditions apply and your plan does not permit loans from your 403(b) accounts, the only way to withdraw money may be through a hardship withdrawal –a special circumstance that has tax consequences. Purchase of a primary residence, college tuition or medical expenses may be considered hardship situations. Plans will allow early withdrawals of your contributions—but not earnings from your contributions. If you qualify for such a hardship exception, you will still pay ordinary income tax and, if you are under age 59 1⁄2, a 10 percent penalty on the withdrawn funds.