Does anyone know if I can cash in a 403 B plan before 59 and a half years old?

iVillage Member
Registered: 03-01-2008
Does anyone know if I can cash in a 403 B plan before 59 and a half years old?
Tue, 11-01-2011 - 11:15pm

Before anyone says this, I know its not recommended. I know I will pay a penalty. I know it will be hard to get back to where I am with retirement but Im starting to feel I have no options The stress of the financial stuff is killing me and frankly I am so far behind on my retirement savings

iVillage Member
Registered: 03-15-2005

Please be aware that by the time you are done, you will lose about 40% (yes FORTY) of what you cash out. First you will lose a 10% penalty off the top. Then they will withhold 10% towards the increase in your federal taxes. HOWEVER, keep in mind that ALL of this income is considered taxable income this year. Which means that you likely will end up owing somewhere between 15% and 25% of the total to taxes for FEDERAL (and they only withheld 10%, so you need to save this amount from what you get for tax time). If you live in a state (and/or city) with state (city) taxes, you are going to owe them at tax time too....and nothing was withheld towards this.

In all the years that I was a paid tax person, this was the biggest shock for people. They assumed that the 20% that was withheld (10% for penalty, 10% towards taxes) doesn't cover all their tax burden. Many people ended up owing another 15% towards federal, + 6% for our state, +2% local....and had nothing put back for it.

Trying to be honest here....Personally, after all your posts, I'd seriously consider bankruptcy....and maybe consider adding in the house and getting an apartment.



iVillage Member
Registered: 07-15-2003

Unfortunately I know nothing about 403B plans, I'm 29, new to the working world and very inexperienced/uneducated when it comes to retirement and all that.

I just wanted to say I'm sorry you are feeling so low and having such a hard time. I hope this post gets lot's of support to you and helpful advice.

As a newlywed who paid for her own rehearsal dinner I have to also say, I would have been devastated if one of our parents had paid for that dinner when much more pressing financial issues existed in their lives. We paid for it ourselves because we wanted to pay for as much of our wedding as we could. I'd rather have my mom THERE, just present, than have her write a check. I know every situation and every family is different though. I just feel sad for you and angry at your son and daughter in law to be for coming across as so selfish and unaware of your tough situation. :(

I hope you're able to come up with a good plan to move forward.


Daisypath Anniversary Years Ticker

iVillage Member
Registered: 03-27-2005

There are a few ways to get cash from a 403(b) retirement savings plan.

iVillage Member
Registered: 03-01-2008

Thanks for the info. I knew it was about 40% or so so that doesnt surprise me. I have been reading about this alot today also and found out that some plans do not allow you to cash out at all and that some allow you to take out loans based on the retirement but that they dont all offer this option either.. From what I read this is a smarter thing to do if its available but only if you intend to stay where you are currently employed. AFter 26 years, Im not going anywhere so this isnt an issue.

iVillage Member
Registered: 10-01-2008

Sometimes we do what we have to in life.


"Patience is the best remedy for every trouble"- Plautus

iVillage Member
Registered: 12-31-2010
I know you are stressed and want to help your children, but have you really spoken to them about it? Have you sat them down and said - WE don't have the money, but I am considering taking my retirement funds out to help you? How about letting them play a part in this decision because in 30 years when you run our of retirement funds, they may have to put a roof over your head, so they should be aware of your choices now.
Have you HONESTLY talked to them?

Are you doing all you can on the INCOME side of the fence? I think people too easily say they can't work extra, but they can spend Saturday at the mall - how about working at the mall instead?
Is your daughter making all she can make? My DD is working while a full time student and she is bringing home over $250 a week, saving it for a car and paying her expenses.
Can your daughter look at the local car donation programs who give people cars at low payments based upon income?
I would be sure I have exhausted ALL options before tapping any retirements funds.
Did you know those funds are protected in bankruptcy - so even if you were bankrupt, no creditor could take them - YET you are willing to take them now? IF the government is willing to protect your retirement, we are you not?

Just some things to think about.