I am not the smartest guy in the World when it comes to money. I found this forum and I hope someone can explain something that is happening to me. I live in Georgia,United States, and work for a not-for profit hospital. I have participated in a 403(B) for the past year. My wife has been out of work due to medical reasons and I also had a child. I attempted surrender my contribution out of my 403(B). I was told that I can not get the money that I contributed to the account. I was told that I had to (1) get finicial counseling (2) get two denial letters from banks for loans. Does this sound right? Will I ever be able to get that money that I put in that 403(B) account. Like I said, I do not know alot about these things so would someone help.

thank you

Request a copy of the summary plan description (spd)
from your employer. The spd will outline all available
distribution options and rules.

You seem to be referring to a "hardship withdraw."
Plan sponsors of a 401(k) plan can allow participants
to take a withdraw when they show immediate and
heavy financial need. (For example, if the person is attempting to come up with the money to buy first home.)
In order to allow a withdraw, the plan administrator needs
to document the financial need...for the benefit of the IRS.

I am unsure whether 403(B) plans can permit such
withdraws.

Good luck.

Many 403(B) plans also permit loans, though after just a year of contributing your balance many be too small to make this a viable option. Hardship withdrawals are less advantageous than loans because they are taxable (loans are taxable too, but only if you fail to repay them) and they are permitted only after the employee has exhausted all other options (hence the requirement that you get turned down by two banks). But in desperate circumstances a hardship withdrawal might be a good option for you. Talk to your staff benefits office to find out exactly what your plan allows.

I was not aware that 403(B) plans have a hardship withdrawal provision. Can anyone give an IRC or Treas Reg cite?

I also thought that 403(B) employee contributions were 100% vested and available to the employee for "policy loans" if available, withdrawals (possibly subject to surrender charges) or even full surrender (possibly with charges and/or penalties).

The loans, withdrawals or surrender were subject to the terms of the particular investment or annuity policy. Therefore getting loans or declines from a bank do not seem to have a place in this issue since the employee would be going to the issuer not an outside lender.

Restrictions were only placed on employer contributions.

see IRC 403(B)(11)(B)

In addition, see s. 403(B)(7). These two cites specifically address withdrawals from contributions to an custodial account or an annuity, respectively, made by salary reduction agreement, not employer contributions.

The 1999 IRS Guidelines for Examination of 403(B) plans, part VIII.B.2, refers the examiner to the 401(k) rules on hardship withdrawals to determine whether a 403(B) plan participant is eligible for a hardship withdrawal. The 401(k) rules (1.401(k)-1(d)(2)(iii)(B)(4)) provide that a participant must exhaust loan possibilities before taking a hardship withdrawal. I was guessing that that was the reason why the plan required proof that the participant had been turned down by the bank.

Loans from 403(B) accounts are subject to dollar limits (e.g., the lesser of 1/2 of the account value or $50,000).