When Can I Take Money Out of My 403(b)?

403(b)s have essentially the same distribution rules as 401(k)s. The advice given for 401(k) accounts still applies here: taking money out of a retirement account before retirement is strongly discouraged.

You may withdraw your money penalty-free at age 59½, and you must begin taking annual withdrawals that satisfy RMD requirements on April 1st of the year you turn 70½. If you withdraw money before age 59½, you will be subject to a 10% penalty in addition to regular income taxes.

To learn about the exceptions to the early withdrawal penalty, see “What are hardship withdrawals from my 401(k)?

Rules for hardship withdrawals are the same for 401(k) accounts and 403(b) accounts 403(b)s at government-funded organizations (public schools and hospitals) and private sector 403(b) plans funded solely by employee elective deferrals are non-ERISA plans, and the plan cannot impose their discretionary standards to define what constitutes a hardship withdrawal.

A third-party company must be contracted by the custodian or vendor to handle those requests as well as loans and other distributions for the plan to keep its non-ERISA status. A plan which is subject to ERISA costs more to maintain due to auditing and reporting requirements.