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. Can I roll my 403b into another 403b even if I'm not teaching anymore?

  2. Can I combine my 401k with my new 403b?

  3. I work for a university, and I have a 403(b) with TIAA-CREF. But TIAA-CREF says I ...

    It depends. The IRS does permit the transfer of assets between 403(b) providers; however, employers and 403(b) providers ... Read Answer >>
  4. Who is eligible to obtain a 403(b) plan?

    Learn which employers offer 403(b) plans and see how they are custom-designed for nonprofits but similar to 401(k) plans ... Read Answer >>
  5. What is the difference between a 401(k) plan and a 403(b) plan?

    Administered by for-profit, private companies, 401(k) plans are more common than the nonprofit or government-sponsored 4 ... Read Answer >>
  6. I'm a teacher. Which is better for me, a 401(k) or 403(b)? What is the difference? ...

    The first step is to check with your employer regarding any retirement plan(s) it provides for employees, as you can only ... Read Answer >>
Related Articles
  1. Retirement

    Top 9 Benefits Of A 403(b) Plan

    Find out how the 403(b) plan helps employees of nonprofit entities meet their retirement goals.
  2. Retirement

    Top 403(b) Questions Answered

    This plan doesn't get as much attention as its more popular cousin - the 401(k) - but it has a lot of benefits for eligible investors.
  3. Retirement

    How a 403(b) Works After Retirement

    Everything you need to know (don't be afraid to ask) about handling your 403(b) plan when you retire.
  4. Retirement

    Top 9 Benefits Of A 403(b) Plan

    A 403(b) plan is a tax-sheltered retirement plan for employees of many non-profit entities, including public safety and educational organizations.
  5. Retirement

    457 Plans and 403(b) Plans: A Comparison

    There's plenty of advice about 401(k) plans, but what about 457 and 403(b) plans?
  6. Retirement

    Explaining the 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers.
  7. Retirement

    Build A Wall Around Your Assets

    Learn how to protect your money from lawsuits, creditors and other judgment proceedings.
  8. Retirement

    403(b) Plan: Contributions

    By Denise Appleby A 403(b) account may receive the following types of contributions: Elective-deferral contributions, which are deducted from employee paychecks on a pretax basis Employer contributions, ...
  9. Retirement

    Tips For Moving Retirement Plan Assets

    Moving assets is common when changing jobs or retiring, but you have to do this carefully to avoid penalties.
  10. Retirement

    Keeping Track Of Retirement Plan Assets

    Maintain records of your pension benefits or risk losing them.
RELATED TERMS
  1. IRS Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Eligible Rollover Distribution

    A distribution from an IRA, qualified plan, 403(b) plan or 457 ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt ...
  4. Payment Protection Plan

    An optional service that lets a disabled or unemployed consumer ...
  5. Asset Protection

    The concept of and strategies for guarding one's wealth. Asset ...
  6. Distribution

    1. When trading volume is higher than that of the previous day ...
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center