Certain non-profit organizations are able to offer 403b plans to their employees to help them save for retirement. These plans are tax-deferred, which means you do not pay income taxes on the money you contribute, but do have to pay income tax on the distributions. You can take qualified distributions from your 403b plan starting at age 59 1/2, or if you leave employment after turning 55. Early distributions are only allowed in the event of a serious financial hardship, such as to make payments to avoid eviction. However, early distributions are subject to an additional 10 percent penalty on top of income taxes.
Step 1
Contact your 403b plan administrator to obtain the forms that you need to request a withdrawal.
Step 2
Complete the withdrawal forms. The forms may differ slightly between different 403b plans, but you will always need to submit your Social Security number and how you want to be paid, such as by a check or having the money directly deposited into your account. If you are taking a hardship distribution, you will need to submit documentation that supports your claim.
Step 3
Receive a form 1099-R that shows the distribution from your 403b account. The form will be mailed to you by your 403b plan at the end of the year.
Step 4
Report the taxable portion of the distribution, found in box 2a of your form 1099-R, as a pension and annuity taxable distribution. If you are taking a qualified distribution, you can use form 1040 or form 1040A. If you are taking a hardship distribution, you must use from 1040 and complete step 5.
Step 5
Multiply the taxable portion of your hardship withdrawal by 0.1 to calculate the 10 percent early withdrawal penalty. Report this amount on line 58 of your form 1040 tax return.
Things You'll Need
Form 1040 or form 1040A
Calculator
Form 1099-R