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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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I am still employed by the company that has my 403B. I am

Resolved Question:

I am still employed by the company that has my 403B. I am 57 years old. I want to roll my 403B money into a self directed IRA. Can this be done and will I have to pay income taxes and /or penalties?
Submitted: 7 years ago.
Category: Tax
Expert:  MequonCPA replied 7 years ago.



Most if not all 403(b) plans will not allow a withdrawal while you are currently employed. See page 12 of IRS Publication 571, link below.



If your plan allows for the distributions, you can roll the amounts into an IRA tax free.

Customer: replied 7 years ago.
Customer: replied 7 years ago.
I really wanted to know what taxes &/or penalties I would have to pay if I took the money out anyway and then put it into an IRA.
Expert:  MequonCPA replied 7 years ago.



As I stated in my original post, if it is rolled into an IRA there will be no tax.


To avoid any potential problems you should use a direct transfer from the 403(b) plan to the new IRA. If you choose to take the withdrawal personally and then deposit it into a new IRA, the transaction must be completed within 60 days of the distribution.


You should also elect to not have any tax withheld or you will not roll over the full amount. The tax withheld will be classified as a premature distribution. This portion will be taxable at your incremental tax rate and will also be subject to a 10% penalty tax for early withdrawal.


Much of this is also covered in Publication 571.

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