So you receive $8,000. At tax filing time you’ll pay a hefty early withdrawal penalty of 10% In this case $1,000. Additionally the total withdrawal amount will be taxed at your ordinary tax rate. If you tax rate is 12%. That will be another $1,200. So from your hard earned and saved $10,000, you would have received a net of $5,800. Think twice before raiding your retirement fund.
IRS Contribution Limits 403(b) voluntary plan include:
- The elective deferral (contribution) limit for employees, who participate in 403(b) and most 457 plans, increases to $17,500 from $17,000
- The catch-up contribution limit for those age 50 and older remains unchanged at $5,500. The catch-up contribution may be made beginning Jan. 1, 2013, by participants who will reach age 50 at any time during the year.
- The overall limit for defined contribution plan deferrals from all sources (employer and employee combined) increases to $51,000 per participant from $50,000.
- The amount of employee compensation limit that can be considered in calculating contributions to defined contribution plans increases to $255,000 from $250,000.