I’ve been trying to find the answers to these questions, and I get a lot of conflicting advice. I would appreciate any guidance available.

My wife will retire this year at age 55 1/2. She has an old 403B balance at AIG that we would like to transfer after retirement to an existing 403B at Vanguard. The school district has switched as of Jan 01, 2009 to Hancock as the sole 403B provider, so the district has no info sharing agreements with AIG or Vanguard. Can the transfer be from 403B to 403B or will it need to be a 403B to an IRA? Does she need to wait until retirement to make the transfer? Does she need to wait until retirement to avoid making the transfer a taxable event? Can AIG transfer the $ directly to Vanguard without need for any approval from the school district or will they need some sort of authorization from the school district?

My understanding is that after retirement, my wife can withdraw $ penalty free from a 403B account because she has retired and is at least 55 years old. Correct? In the event that the 403B can only be transferred to an IRA, does she then have to wait until age 59 1/2 to avoid penalties on withdrawals?

Also, do 403B distributions get taxed at a fixed 22%, or are they considered ordinary income and taxed accordingly?