Ret Acct Question: Early Withdraw v Hardship Withdraw

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narkizopoint
Posts: 200
Joined: Tue Dec 22, 2009 5:33 pm

Ret Acct Question: Early Withdraw v Hardship Withdraw

Postby narkizopoint » Mon Mar 15, 2010 1:41 pm

I am going to be leaving my job before starting law school and will have to close out my 403b one way or the other. If I do a hardship withdraw for educational purposes, then close out the account vs just closing out the account, is the penalty for early withdraw different or worth the effort? I only have about 15k in it so its not a huge pot of gold or anything. If anyone has done one or the other any advice would be appreciated. Thx.

janer
Posts: 72
Joined: Fri Jun 26, 2009 11:51 am

Re: Ret Acct Question: Early Withdraw v Hardship Withdraw

Postby janer » Mon Mar 15, 2010 2:25 pm

narkizopoint wrote:I am going to be leaving my job before starting law school and will have to close out my 403b one way or the other. If I do a hardship withdraw for educational purposes, then close out the account vs just closing out the account, is the penalty for early withdraw different or worth the effort? I only have about 15k in it so its not a huge pot of gold or anything. If anyone has done one or the other any advice would be appreciated. Thx.

You'll have the 10% early withdrawal penalty either way. The only way to avoid it is to roll your 403b to an IRA and take the withdrawal from there. Withdrawals from your IRA for educational purposes are exempt from the early withdrawal penalty; whereas withdrawals from a 403b are not.




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