Voluntary Resignation and 403B Funds

[Karkar50]

What is the name of your state (only U.S. law)? Florida

 

[Karkar50]

403B after voluntary resignation

I voluntarily resigned at a nonprofit earlier thus year. Employees have a 403B that the organization contributed to. I am now facing financial hardship. Can I request funds from this plan? I know penalties will apply but do they have legal rights to deny?
Thank you

 

[FlyingRon]

On your OWN contributions (and the gains on that amount), you may withdraw the money subject to the penalties that you appear to know about.
Whether you can get to the employer contributions, that depends, you need to read the plan document to determine what access you have.

Generally, it's a bad idea to pull from these plans unless you have absolutely NO OTHER OPTION.

Note there may be some exemption to the penalties for certain hardship withdrawals and the plan allows it.

 

[Karkar50]

Thank you for input. I did not contribute to this plan. I am currently unemployed, living in hotel due to eviction of non payment, no auto, only living on food stamps no unemployment. I am pretty much homeless. I need law yet advice.

 

[FlyingRon]

Thank you for input. I did not contribute to this plan. I am currently unemployed, living in hotel due to eviction of non payment, no auto, only living on food stamps no unemployment. I am pretty much homeless. I need law yet advice.

Are you sure. Your contributions include anything taken out (pre-tax) from your pay checks.

Anyhow, any money the employer put in, you might not be able to get to. You need to read the plan documents.

 

[cbg]

There is not a law that grants you access, or denies you access, to these funds across the board. It will depend entirely on what the specific plan documents for your former employer's specific plan says about distribution. If the plan does not allow distribution at this time, or for this reason, then they not only CAN legally deny access, but they MUST deny access. They would be in violation of the law if they allowed you access in disregard of the plan documents. The employer does NOT have the option of making an exception for you - the IRS is very strict that the plan documents be adhered to regardless of how urgent your need.

FYI - it doesn't matter who put the money in; employee AND employer contributions are subject to the plan distribution rules. Employee contributions are always 100% vested - they cannot be lost. But that is not the same thing as always being able to access them at will - they are still subject to distributions limitations.

 

[LdiJ]

There is not a law that grants you access, or denies you access, to these funds across the board. It will depend entirely on what the specific plan documents for your former employer's specific plan says about distribution. If the plan does not allow distribution at this time, or for this reason, then they not only CAN legally deny access, but they MUST deny access. They would be in violation of the law if they allowed you access in disregard of the plan documents. The employer does NOT have the option of making an exception for you - the IRS is very strict that the plan documents be adhered to regardless of how urgent your need.

FYI - it doesn't matter who put the money in; employee AND employer contributions are subject to the plan distribution rules. Employee contributions are always 100% vested - they cannot be lost. But that is not the same thing as always being able to access them at will - they are still subject to distributions limitations.

One possibility is to roll the funds over into an IRA and then withdraw from the IRA. That is a way to get around many restrictions. However that is assuming that the plan allows a roll over. I have never heard of any that didn't, but its always possible.

 

[cbg]

Or, alternately, that they allow a rollover at this specific time. I was once affiliated with a plan that only allowed distributions of any kind within the first month of the plan year. While I agree that that would be unusual and that generally rollovers are allowed at any time, that is a possibility.

 

[FlyingRon]

Or, alternately, that they allow a rollover at this specific time. I was once affiliated with a plan that only allowed distributions of any kind within the first month of the plan year. While I agree that that would be unusual and that generally rollovers are allowed at any time, that is a possibility.

If he left the job more than 60 days ago, the rollover itself would be taxable.

 

[LdiJ]

If he left the job more than 60 days ago, the rollover itself would be taxable.

No, it would not...where are you coming from with this Ron? A trustee to trustee rollover is NEVER taxable and a rollover that passes through the parties hands is the only time that 60 days comes into play.