I want to take out money from a 403B account from a company I am no longer at. What are the tax effects?
Answers:
If you simply take the money out, you'd have to pay federal and state income taxes. Also, if you are under 59 and 1/2 years old, you would have to pay a penalty of 10% on the amount taken out.
If you transfer the money out of the 403B and into another retirement account, such as an IRA or a 401(k), you should be able to avoid the taxes and penalty. It's best to do this through a "trustee to trustee" transfer where the money doesn't touch your hands. If the money lands in your hands, get it into another retirement account within 60 days in order to avoid the income taxes and penalty. Unless you really need the money for something important now, it's best to leave the money in some kind of retirement account until you retire. That way, it can compound nicely over the years.
You can get more information about retirement accounts at the webpage listed below.
10% penalty of the amount you take out and you report that amount as income for the year you take it out.
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