TSA FAQ: Contributions

How do I withdraw money from my 403(b) tax-sheltered annuity (TSA) account when I retire?

There are a number of ways you can withdraw money from your 403(b) account when you retire. You may choose from monthly, quarterly, semi-annually, annually, declining balance, and lump-sum withdrawals. 

Lump sum withdrawals are limited to three per year. The declining balance withdrawal option allows a participant to select how long they want their money to last and the frequency of payments. These are just some of the options available to you. For a complete description of your withdrawal options when you retire, download our TSA Withdrawal Options brochure, or request a copy by calling 1-800-279-4030, or send an e-mail to .

When choosing your withdrawal options, remember that the withdrawals you receive from your before-tax 403(b) account are considered ordinary income and are subject to federal and state income tax (other rules apply for transfers, rollovers, and annuities). Qualified* Roth withdrawals are tax-free. 

Other laws may also affect your account. Please call a consultant if you have any questions about your withdrawal options and the legal restrictions that may apply.

You are not locked into withdrawal options. You can stop, start again, or change options.

*For qualified withdrawals from a Roth 403(b), the participant must be age 591/2 or older and have had the Roth 403(b) account for at least five years.

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What if I die before I withdraw my money from my 403(b) account?

Your account value will be paid to your beneficiary according to the most recent instructions that we have on file from your application or subsequent designations.  If no designation is on file or no beneficiaries are living at the time of your death, we will process according to your school's plan documents.

You can confirm the beneficiaries you have on file by using your Money or by calling 1-800-279-4030.

To change your beneficiary information on file, you can download the Beneficiary Information Change form.

If you are married at the time of your death, Wisconsin's marital law may affect your beneficiary designations.  If you have any questions, we suggest you consult an attorney.

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When can I withdraw money from my 403(b) account without early distribution penalties?

You may take withdrawals from your before-tax 403(b) account without early withdrawal penalties if you:

  • Are age 591/2. If allowed in school plan.
  • Separated from service during, or after, the year in which you turn age 55. (If you returned to work as an employee in the same school district, you may not qualify.)
  • Separated from service before age 55 and take substantially equal payments for a minimum of five years or age 591/2, whichever is later. Also known as a 72T withdrawal.
  • Are totally and permanently disabled.
  • Are the beneficiaries of the account.

All distributions from your before-tax 403(b) account are taxed as regular income.

You may take tax-free withdrawals from your Roth 403(b) account without early withdrawal penalties if you have held the account for five years AND one of the following:

  • Reached age 591/2. If allowed in school plan.
  • Are totally and permanently disabled.
  • Are the beneficiaries of the account.

Other distributions are allowed under IRS regulations, but may or may not be allowed under your employer's plan document.  These distributions are subject to early withdrawal penalties* and are limited to the following reasons:

  • Pre-1989 contributions and/or earnings.
  • Nonelective contributions invested in an annuity contract (i.e., our guaranteed fund). If allowed in school plan.
  • All funds if you separate from service before the year in which you turn age 55.
  • A financial hardship distribution of contributions (not earnings) if you qualify and if allowed in school plan. Under IRS rules, hardship distributions are allowed in certain circumstances. The hardship distribution must not exceed the amount required to relieve the heavy financial need, which cannot be satisfied from other reasonably available resources (including a loan). Typical reasons for hardship distributions are:
    • Medical care expenses that would be deductible regardless of whether the expenses exceed 7.5% of adjusted gross income.
    • Costs directly related to the purchase of a principal residence (excluding mortgage payments).
    • Payment of tuition, related educational fees, and room and board expenses for up to the next 12 months of post-secondary education for the employee or dependents.
    • Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence.
    • Payments for burial or funeral expenses for the employee's deceased parent, spouse, children, or dependents.
    • Expenses for the repair of damage to the employee's principal residence that would qualify for the casualty deduction under section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

You should maintain documentation that proves the money was needed for a hardship situation.

*Early withdrawals may include federal (10%) and state (3.3% for residents of Wisconsin) penalties.

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When do I have to start withdrawing money from my account?

Generally, you must start taking required minimum distributions (RMDs) from your 403(b) account in the year you turn age 701/2. Specifically, distributions must begin no later than April 1 following the year you become age 701/2 or retire. These distributions include Roth monies. 

For example, if you turned 701/2 in May 2016, you would have been required to make a withdrawal from your account no later than April 1, 2017. You still would have needed to take your 2017 RMD in 2017.

There are two exceptions:

  • If you are still working for the employer through which you last contributed to your WEA TSA Trust account when you turn 701/2, you can delay your withdrawals until April 1 following the year you retire.
  • Any account balance accrued before January 1, 1987, is not subject to RMD until the later of age 75 or retirement.

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