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Revised 403b retirement plan regarding hardship withdrawal

Jul 27, 2017

To help employees who may experience a serious financial hardship, Human Resources and the Staff Advisory Council (SAC) have worked together to revise the university's mandatory 403b retirement plan to include a new provision that allows for hardship withdrawals due to unexpected medical or other expenses. This change, effective July 1, 2017, was made in response to a request by the SAC on behalf of Pacific employees.

Hardship withdrawals from 403b plans are allowed by the IRS under the following conditions:

  1. Expenses directly related to the purchase of a principal residence
  2. Funds needed to prevent eviction from a principal residence or foreclosure of mortgage on a principal residence
  3. Expenses related to repair of damage to a principle residence incurred as a result of certain casualty damage (floods, hurricanes, etc.)
  4. Medical expenses that would be deductible under the IRS code for self, spouse and/or dependent
  5. Tuition, related educational fees, and room and board expenses, for up to the next 12 months of post-secondary education for self, spouse, and/or dependent
  6. Burial or funeral expenses that would be deductible under the IRS code for a parent, spouse or dependent

Employees should take note of two important factors before making a hardship withdrawal from their 403b plan: 

  • While hardship withdrawals are not penalized by the IRS, the withdrawal is considered taxable income by federal and state governments.
  • Individuals making a hardship withdrawal will be unable, by IRS regulations, to contribute to their retirement accounts for six months. As a result, University of the Pacific will not make employer contributions during that same time period.

Review additional information from TIAA on the checklist Things you should know.

The new plan documents can be viewed on the Human Resources website under Benefit Plan Documents.

Requests may be submitted directly to TIAA using the 403b plan Request for Hardship Withdrawal. (See submission instructions on page 10 of the Request for Hardship Withdrawal.)

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