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. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ...
  2. What agencies were created by the Glass-Steagall Act?

    Learn about the Glass-Steagall Act of 1933 that significantly reformed the banking industry, and specifically, what government ...
  3. What is fiduciary liability insurance, and what are its benefits?

    Understand what fiduciary liability insurance is, what companies or individuals can benefit from having it, and when it is ...
  4. What were the objectives of the Glass-Steagall Act?

    Learn about the original objectives of the1933 legislation known as the Glass-Steagall Act and how it affected the banking ...
RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  3. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  4. Advance Dividend

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

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

    The excess of the market value of an asset over its book value. ...

You May Also Like

Related Articles
  1. Professionals

    5 Signs That You Have a Lousy 401(k) ...

  2. Entrepreneurship

    Why Small Business Owners Need Financial ...

  3. Professionals

    How the Robo-Advisors Differ (& How ...

  4. Professionals

    Target Date Funds: More Popular, Cheaper ...

  5. Mutual Funds & ETFs

    This Gold ETF is Fine for Traders, Not ...

Trading Center