403(b) In Service 72T distributions

[Guest Peter L]

I've had another agent tell me that you can take 72T SEPP distributions from a 403(b) while the participant is still under age 59 1/2 and still in service. I haven't been able to get a carrier or TPA to verify and I can't see how I can get a TPA to approve the distribution. This other agent is claiming to have a client going through the process right now but I haven't seen any paperwork (We work in different states).

[ETA Consulting LLC]

I would disagree with the Substantially Equal Periodic Payments being received during employment. Had it been an IRA, then there is no employment record associated with the account.

Good Luck!

[QDROphile]

Anything is possible with agents. That is a major why we got new 403(b) regulations and can't have ERISA exempt 403(b) plans any more, despite the embarrassing Department of Labor field assistance bulletin to the contrary. The restrictions on in-service distributions before age 59 1/2 are in section 403(b) and the 403(b) regulations. The applicable exceptions are found in section 403(b) or might be found in other applicable law with reference to 403(b) rules. Section 72 does not provide any exceptions.

[Guest Peter L]

Anything is possible with agents. That is a major why we got new 403(b) regulations and can't have ERISA exempt 403(b) plans any more, despite the embarrassing Department of Labor field assistance bulletin to the contrary. The restrictions on in-service distributions before age 59 1/2 are in section 403(b) and the 403(b) regulations. The applicable exceptions are found in section 403(b) or might be found in other applicable law with reference to 403(b) rules. Section 72 does not provide any exceptions.

I agree I've been under the only way to take a distribution is by meeting a distribution event Attained age 59 1/2, Death, Disability, Financial Hardship or seperation of service. I see you can do this once you have seperation of service...What gets to me is when you read the IRS pubs and documents the statement always starts with "Generally".

[ETA Consulting LLC]

What gets to me is when you read the IRS pubs and documents the statement always starts with "Generally".

There are tax levies and QDROs. So, 'generally' would be appropriate.

Good Luck!