My wife is thinking about leaving her current job. I am a fulltime student and our bills are starting to catch up to us. We are thinking about using her 403 b money to help us get out of debt no matter the penalty. It will probably help in the long run to make life easier until I finish school. Is it possible for her to get all her 403b money if she leaves her job, for she is attempting to gain employment elsewhere.

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Originally Posted by Leroy Brooks

My wife is thinking about leaving her current job. I am a fulltime student and our bills are starting to catch up to us. We are thinking about using her 403 b money to help us get out of debt no matter the penalty. It will probably help in the long run to make life easier until I finish school. Is it possible for her to get all her 403b money if she leaves her job, for she is attempting to gain employment elsewhere.

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When I took mine out it had to be under a hardship, and there was taxes and penalties applied at approx. 10%. I had the choice to have them take and hold that 10% for me and I did not take it... wishing I had because I know owe and don't have it. They for some reason could only allow me to take out like 95%, I think because I was still employed. Later in the year after I had left the job I emptied the rest. MY understanding is that if you are still employed with the company the only way you can get any money is through a proved hardship and they are going to allow 95% of the money out and they don't have to keep the taxes and penalties but if out of the job for 3 or more months you can empty it but they then do have to hold onto taxes and penalties. Talk with the handlers they can explain the whole thing.

You normally CAN access it after you leave the job, but the taxes, combined with the 10% Early Withdrawal Penalty, will probably reduce the distribution by at least one-third and possibly up to half of the distribution.

This being the case, you should exhaust ALL other possibilities before access the 403b.

After she leaves her job she will have the option to take as much of her account as she wants. As already noted she will have to pay ordinary income tax (federal as well as state/local if applicable where you live) plus the 10% early withdrawal penalty. They will most likely withhold 20% for federal taxes, but whether this is enough or too little will ultimately depend on your tax bracket. So be sure to save enough cash to cover taxes and penalty that may be above the amount initially withheld.