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403(b) early distributions


Guest Vicki

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Guest Vicki
Posted

I work at a college and am considering leaving the college to start my own small business. I have a 403(B) with funds invested in Fidelity and an SRA with funds invested in TIAA/CREF. I would like to take some of the funds upon my termination to cover my salary for a year, pay my health insurance costs until I am settled in business.

Is there a way I could work this to avoid the penalties associated with early withdrawl? The balance of the funds I would roll over into another retirement vehicle, but I'm not sure which kind would be best. Any suggestions.

Guest Brent Rowell
Posted

I can think of three possible options:

1) Simple withdrawl .... take your lumps

2) Loan (Unlikely.... most plans will not allow loan after termination of employment)

3) Substantially equal payments until age 59 and a half .... I think the amount should be roughly the same as a life annuity would provide .... again not really a great option unless you are close to age 59

Side comment: I'd leave the balance where it is. I see no great advantage in a roll over

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