Knowing when and how to access your 403(b) savings
Accessing your 403(b) account
This brochure describes the ways you can choose to receive income from your 403(b) account. If your employer is using a third-party administrator (TPA), you may need to complete additional forms and processing may be delayed.
When can I access my 403(b) account?
Generally, a distribution cannot be made from a 403(b) account until you:
• Reach age 59½,*
• Sever employment,**
• Die or become disabled, or
• Encounter financial hardship.**
Financial Hardship: You may request a financial hardship withdrawal, as defined by the IRS, if you have no other available source of money and it is allowed by your school district plan document. Special forms are required to request a hardship withdrawal.
When are penalty-free distributions from my 403(b) account available?
Current IRS regulations allow withdrawals of 403(b) monies, without penalties, when you:
• Reach age 59½,
• Retire or separate from service during the year in which you reach age 55 or later,***
• Take substantially equal periodic payments,
• Die or become disabled, or
• Incur certain medical expenses (affects pre-1989 account balances only).
Most other types of withdrawals are subject to federal and state penalties.
*Please consult with your employer’s plan document for availability.
**These distributions may be subject to penalty.
***If you returned to work as an employee in the same school district, you may not qualify. You will be required to obtain a letter from your employer confirming your separation date.
Is income from my 403(b) taxable?
Distributions from your before-tax 403(b) are considered ordinary income and are subject to federal and state income tax. Taxable distributions may also be subject to early withdrawal penalties. Qualified Roth (after-tax) distributions are tax-free.
We will send you Form 1099R summarizing your distribution activity, which you should use when preparing your income tax returns.
What is a qualified (tax-free) Roth 403(b) distribution?
To qualify for tax-free distributions from your Roth 403(b), you must meet the following requirements:
• Age 59½, death, or disability, and
• Hold account for five years.
Retirement income options available through WEA TSA Trust
You may select up to three of these distribution options each calendar year if you qualify for withdrawal as stipulated by federal and state laws.
You may choose to take your distribution from your before-tax and/or your Roth (after-tax) account.
Please remember that the taxable portion of your distribution is taxed as ordinary income for the year in which you withdraw it. Withdrawals using these options may be subject to 20% federal income tax withholding. You may also elect to withhold for state taxes. The money can be sent to you as a check or electronically deposited in your checking or savings account.
Here are the ways you can receive income from your account:
1. Scheduled Payment Option: You may elect to receive a fixed dollar amount (monthly, quarterly, semiannually, or annually). The length of time these distributions continue (unless you stop or change them) may vary according to the performance of your investment options.
2. Partial Withdrawal: $500 minimum per withdrawal.
3. Total Withdrawal: You may withdraw your entire account balance at once.
4. Declining Balance Withdrawal: You can choose to have your account balance paid to you over a specific period of time.
When must I begin taking distributions from my 403(b)?
Required Minimum Distributions (RMDs): You are legally required to begin taking withdrawals from both your before-tax and Roth (after-tax) 403(b) account by April 1 following the calendar year in which you reach age 70½ or the calendar year in which you retire, whichever comes later
We will contact you annually with a reminder to satisfy this requirement.
Note: A direct rollover from your Roth 403(b) to a Roth IRA will allow you to avoid the RMD. Rolling Roth 403(b) assets into a Roth IRA has no tax consequences.
What happens in the event of my death?
When we are notified of an account holder’s death, we will provide information to the beneficiary(ies) regarding distribution options available to them. The WEA TSA Trust will administer separate accounts for each beneficiary if they desire to keep the account with us. Each beneficiary will be allowed to independently select his or her withdrawal options over his or her life expectancy.
For more information about your retirement income options, please contact us at 1-800-279-4030.
Effective March 2016.
Policies and programs described are subject to change at any time.