Generally, because your 403(b) is designed to help you save for your retirement, you can’t withdraw amounts from your 403(b) program account without a 10% tax penalty until you permanently terminate employment with your current employer or you reach age 59½.
You must begin receiving payments by April 1st of the calendar year immediately following the calendar year you reach age 70½ or, in most cases if you’re still working, then by April 1st of the calendar year after you leave work.
If you go to work for another eligible employer, you may transfer your 403(b) to your new eligible employer and continue to contribute to your 403(b), provided your new employer's 403(b) plan permits and your 403(b) provider is part of your employer's plan or there is an information sharing agreement in place between your new employer and your 403(b) provider.
If you go to work for an employer that isn't eligible, you can't make any more contributions to your 403(b); however, you can keep your retirement savings in your 403(b) and continue to benefit from any tax deferred accumulation within the program.
With an eligible rollover distribution, you may roll over your 403(b) retirement savings to a new 403(b), 401(a), 401(k) or governmental 457(b) plan, or you can roll it over into an IRA. Certain limitations apply so check with your 403(b) provider's representative.
Current 403(b) regulations permit investment exchanges between accounts and contracts (called "exchanges") only if the receiving contract or account includes distribution restrictions at least as stringent as the old contract or account and if:
- the receiving account or contract is part of the employer's plan, or
- your employer has entered into an information sharing agreement with the receiving 403(b) vendor.
If an information sharing agreement is required, the information sharing agreement must specify that the employer will share information sufficient for the institution providing the account or contract to satisfy the applicable requirements, including administering loans and hardship distributions and determining whether an employee has had a severance from employment. The information sharing agreement must be entered into before the exchange takes place.
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