403b Withdrawal Calculator

Calculate potential taxes and penalties on early 403(b) withdrawals.

Understanding 403(b) Withdrawals and Taxes

A 403(b) plan is a retirement savings plan for employees of public schools and certain tax-exempt organizations. Similar to a 401(k), contributions grow tax-deferred until retirement. However, accessing these funds before retirement age (typically 59½) can incur significant costs in the form of income taxes and early withdrawal penalties.

When Can You Withdraw from a 403(b) Without Penalties?

Generally, if you withdraw funds from your 403(b) before age 59½, you may be subject to a 10% early withdrawal penalty on top of regular income taxes. However, there are several exceptions that can waive this 10% penalty:

• Separation from Service: If you separate from service in the year you reach age 55 or later.
• Substantially All Withdrawals: If you withdraw all funds from all of your 403(b) accounts (and all other similar retirement plans you have) during or after the year you separate from service and are age 55 or older.
• Disability: If you become totally disabled.
• Unreimbursed Medical Expenses: If you pay for unreimbursed medical expenses exceeding a certain percentage of your Adjusted Gross Income (AGI) (this exception applies to the 10% penalty but not income tax).
• Death: To beneficiaries after your death.
• Periodic Payments: If you elect to receive substantially equal periodic payments (SEPPs), also known as an 83(b) election, for life (this requires careful planning and adherence to IRS rules).

How Taxes and Penalties Are Calculated

When you make an early withdrawal from a traditional (pre-tax) 403(b), the amount withdrawn is typically:

1. Taxable as Ordinary Income: You will owe federal and state income taxes on the withdrawn amount based on your current tax bracket.
2. Subject to a 10% Early Withdrawal Penalty: Unless an exception applies, a 10% penalty is assessed on the taxable amount.

Roth 403(b) Withdrawals:

Withdrawals from a Roth 403(b) are generally tax-free and penalty-free if the account has been open for at least five years (the "five-year rule") and you are at least age 59½, disabled, or meet other specific criteria. If these conditions are not met, earnings may be subject to taxes and penalties. Contributions (not earnings) can typically be withdrawn tax and penalty-free at any time.

Calculator Explanation:

This calculator provides an estimate of the potential taxes and penalties associated with an early 403(b) withdrawal. It considers:

• Your Current Age: To determine if the 10% early withdrawal penalty might apply. The penalty generally applies if you are under 59½, unless an exception is met.
• Withdrawal Amount: The principal amount you wish to take out.
• Your Estimated Tax Bracket: The rate at which the withdrawn amount will be taxed as ordinary income.
• Substantially All Withdrawal: Indicates if you are emptying all your retirement accounts upon separation from service after age 55.
• Disability: Whether you meet the criteria for a disability exception to the 10% penalty.
• Roth 403(b): Whether the withdrawal is from a Roth account, which has different tax implications.

Disclaimer: This calculator is for informational purposes only and does not constitute financial or tax advice. Tax laws are complex and can change. Consult with a qualified financial advisor or tax professional for personalized guidance regarding your specific situation.

Estimated Costs:

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