403(b) Learning Lab

A 403(b) is a retirement savings account designed for employees of public schools & non-profit organizations exempt under Section 501(c)(3) of the Internal Revenue Code.  In addition to pubic schools, other non-profit organizations such as universities, hospitals, churches & libraries potentially offer their employees eligibility to participate in a 403(b) plan.

Most school districts in the state of Texas will allow their employees to Rollover, Transfer or Exchange their retirement account funds from another company's custody, or from a previous employer's retirement plan(s). The term "Rollover" is often used as an umbrella term for all rollovers, transfers or exchanges, & is characterized by the transfer of assets or holdings of one retirement plan or account to another without creating a taxable event. Rolling over a 401(k), 403(b), or IRA might make sense when you change to a new job & want to move your previous employer's retirement account to your new employer's plan, want to move your account with a diffrent custodian within your current employer's plan, or if you decide you want to consolidate multiple accounts into one single plan.

When you consolidate your retirement accounts with McCaffrey Wealth Management, not only can we help you avoid overlaps & gaps in your overall investment strategy, but it can also make tracking your progress toward your retirement goals easier & more apparent. In addition to being able to offer a wide array of investment choices & strategies, MWM can make consolidation under a single financial advisor simple as well as provide guidance & clarity heading into retirement.

403(b) plan participants are able to take cash distributions from their account, however they'll have to pay taxes on any amount that was not from designated "Roth" or after-tax contributions & if younger than age 59½ may have to pay an additional 10% early distribution tax unless an exception to this applies. Depending on the employer's plan rules, these exceptions can include: If you have separated from service after turning 55 or older; If you are permanently disabled; If you die & the funds are distributed to your beneficiary; If you are required by a court order to hand over money from the account to an ex-spouse or dependent; or If you have a qualifying financial hardship (including: Qualified unreimbursed medical expenses for you or your immediate family; Qualified higher education expenses for you or your immediate family; The purchase of a primary residence; Payments necessary to prevent eviction from or foreclosure of your primary residence; Qualified repairs of damage to your primary residence; Funeral expenses).

Some employer's 403(b) plans allow tax-free loans that enable participants to access a portion of their account if repaid within a specified time frame. Defaulted loan amounts not paid back on time will be taxed as ordinary income & may be subject to the 10% early withdrawal tax penalty if under the age of 59½.