Question about my 403b

[mountanddo]

I have 17 months done of my chapter 13 with 19 more left to go. I am thinking about moving to Texas but can't finance a move and have money to survive without having access to the money in my 403B. Is this going to be allowed? Can I withdraw money from my 403b or do I need trustee permission to do that?

[justbroke]

Technically you would not but you really need to analyze two things. First, whether you can afford the new repayment amount. Second, if you are leaving an employer, you will need to figure out how to pay this back without it becoming a distribution!

[mountanddo]

It would be a distribution. You can't take a loan from a 403b and I can't withdraw the money unless I am no longer working there.

[filingin08]

Also, keep in mind the tax ramifications and the early withdrawal penalty. I took one withdrawal once and had to take another just to cover the taxes come tax time. Looking back, I wish I would have left well enough alone and let the money grow...

[justbroke]

Ouch! As mentioned, a distribution should be avoided. The tax implications can be significant (10% penalty PLUS whatever tax bracket you get stuck in). Just make sure you have taken all of this into consideration. Whenever I *think* about taking a distribution (before age 59.5), I think that the "value" of the distribution is less than 60%. In other words, I chalk 40% of it up as lost due to taxes and penalties.

[mountanddo]

Yep, it's gonna suck but I have to move and I have no other option than to use my 403b. So you don't think I have to get trustee permission to take a distribution? Most likely I won't be moving until a few months after my case is dismissed but wanted to make sure that if I had to use it I wouldn't be doing anything wrong.

[justbroke]

In a confirmed Chapter 13, I don't believe that taking a distribution from an exempt retirement plan would count as 'disposable income', so probably would not be something that the Trustee would care about.

However, if you are represented, you should ask your attorney. If you are pro se, then you should contact the Chapter 13 Standing Trustee's office to determine whether you would need to file a motion seeking permission.