403B and IRA distributions
Hello Terry,
I listen to you in WGN, and I hope you can help with this question. My husband retired from a public education job last year at age 56 and is now 57. He is receiving a pension from IL TRS. He also saved a significant amount in a 403B plan. The rules of the 403B for distributions state that you can withdraw without penalty if you have officially retired from your job, which he did.
Making a withdrawal from the 403B took a lot of manual steps to complete. Paperwork and checks sent via USPS. So, we transferred the money out of the 403B into an IRA managed by our investment professional. The distribution process is easier, HOWEVER, since he is not 59 1/2, a penalty tax is automatically applied.
Question – Is it possible to make a withdrawal out of this IRA without penalty?
Thank you!
Terry Says
No. Not really, unless it’s for purchasing a first home, or to pay for higher education. BUT WHY withdraw before age 59-1/2?? You’re doing yourself no favor! You’ll need that money over the next 35 years of your life expectancy!
And, I’m questioning the advisor you have chosen for two reasons:
First, he/she would even allow you to consider this withdrawal.
Second, why there wasn’t a direct rollover of your 403B to a place like Fidelity or Vanguard, which could have been done without taking any checks, and clearly avoiding any taxes!
(Read this: https://www.terrysavage.com/rollover-now/
I think you might benefit from a session with a fee-only FIDUCIARY advisor because it looks like you’re on the wrong track!
Read this: https://www.terrysavage.com/pam-krueger-wealthramp/
