403(b) Distribution
Client is 57 and will be leaving her job (employed as a nurse at a hospital). She’ll be moving to another state. She’s not retiring in the true sense of the word, because she’ll get another nurse job once she gets settled in after moving. But can she withdraw from the old 403(b), penalty-free, after she leaves the old job? And are there any special timing or circumstances that she should be aware of? Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2019-05-02 19:58
She will qualify for the age 55 separation from service penalty exception. However, this exception is not very helpful if the plan will not allow flexible partial distributions. Client needs to determine if the plan has any distribution restrictions, the worst being that the plan might only allow a lump sum distribution. That would not be subject to penalty, but if she keeps the amount needed for expenses to age 59.5, it might result in a higher marginal rate for the year of the distribution.