Is my 403(b) account owned by me or by the institution?

By Denise Appleby AAA
A:

You are the owner of your 403(b). The financial institution just holds the assets on your behalf and facilitates your transactions.

For the assets they hold on your behalf, financial institutions generally provide certain protection against their own failure. If your account is held at a brokerage firm, your assets are protected under the Securities Investor Protection Corporation (SIPC). If your assets are held at a bank, your assets are protected under the Federal Deposit Insurance Corporation (FDIC). Protection is generally offered up to certain amounts. You should check with your financial institution regarding the amount of protection it provides. Most financial institutions offer brochures on the topic.

You may withdraw the assets from your 403(b) account only when you meet one of a list of requirements:

  • You become disabled.
  • You separate from service or from employment.
  • Your beneficiaries claim the amount upon your death.
  • You reach age 59.5.

Some 403(b) plans also allow you to withdraw amounts without meeting any of the above requirements if you experience certain financial hardships. Your employer or the plan provider should be able to tell you the requirements for receiving a hardship distribution.

Assets that you remove from your 403(b) account that are not rolled over to an eligible retirement plan may no longer benefit from tax-deferred earnings. Also, assets that are no longer in the 403(b) account (that are not rolled over or transferred to another eligible retirement plan) are not offered protection from bankruptcy proceedings, attachment, or other legal process. 403(b) plans are generally offered this protection.

For more on distributing amounts from 403(b) plans, see our 403(b) Plans Tutorial.

This question was answered by Denise Appleby
(
Contact Denise)

RELATED FAQS

  1. How do leverage ratios help to regulate how much banks lend or invest?

    Learn what leverage ratios mean for banks, how regulators restrict leverage, and what impact ratios have on a bank's ability ...
  2. What are the best ways to plan for retirement?

    Learn the basic steps to creating a solid retirement plan that can support you and your family, and find out how to manage ...
  3. How do Pay As You Go pension plans work?

    Learn how pay-as-you-go pension plans are different than fully funded pension plans and why some government plans are running ...
  4. Who is eligible for a Teacher Retirement?

    Learn about the retirement option, the Teacher Retirement System, offered to teachers and other public school employees, ...
RELATED TERMS
  1. Advance Dividend

    An estimate of the present value of an asset being liquidated ...
  2. Asset Specialist

    A professional who is responsible for the management and disposition ...
  3. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
  4. Asset Liquidation Agreement (ALA)

    A contract between the Federal Deposit Insurance Corporation ...
  5. Affordable Market Value (AMV)

    The sale price of a multi-family residential housing unit sold ...
  6. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
Related Articles
  1. The Best Way To Build Your Retirement ...
    Retirement

    The Best Way To Build Your Retirement ...

  2. Want To Know How To Save For Retirement? ...
    Retirement

    Want To Know How To Save For Retirement? ...

  3. Could Being A Landlord Pay For Your ...
    Retirement

    Could Being A Landlord Pay For Your ...

  4. Smart Retirement Strategies Even Without ...
    Retirement

    Smart Retirement Strategies Even Without ...

  5. 8 Essential Tips For Retirement Saving
    Investing Basics

    8 Essential Tips For Retirement Saving

Trading Center