Withdraw money from 403 (b) with penalty?
My current and past employers have 403 (b) retirement plans. I have put a certain percentage of my salary into the plan and they add 128%. The employer contributions became mine permanently after I worked at the jobs for a year. There are several options within the plans, such as mutual funds and money market. I will be old enough to begin withdrawing these funds without penalty in about 8 years.
Recently I've wondering if I should withdraw this money, pay the penalty and income tax, and use it as part of my real estate investment capitol. I don't need the money, I just think it likely I could get I higher return than if I leave it in the 403 (b) account. What do you think and why?
Most Popular Reply
@Eric James There are people that would advocate your withdrawing the money and paying the penalty. I'm always reluctant to voluntarily pay extra taxes but obviously the best course of action depends on the details of your own situation. One other option you might consider is rolling over the previous employers' 403(b) funds into a self-directed IRA. Then you could preserve the tax deferral but still direct capital to the higher-return investments you think you've identified.