QUESTION
If we take out most of the money from our 403-B to pay off the mortgage will we have to pay taxes on it? How?
Asked on Sep 14th, 2015 on Taxation - Michigan
More details to this question:
Both my husband and I are unemployed and have exhausted our unemployment benefits. He is also a minister and receives a housing allowance but no salary. We have 2 more years left on our mortgage. If we take out most of the money from our 403-B to pay off the mortgage will we have to pay taxes on it? If so, how much would the taxes be on $18,000? We are struggling to keep our bills paid and think that getting rid of the mortgage payment would help us greatly. But my concern is, if we will be required to pay taxes on it. Thank you. I look forward to hearing from you soon.
3 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Yes, there are taxes on a 403(b) withdrawal. The amount of taxes depends on your other income and the type of 403(b).
Answered on Sep 15th, 2015 at 10:42 AM
If you take a distribution, you will pay income tax on the amount you receive. Additionally, if you are under 59 you will incur a 10% penalty in addition to the tax.
Answered on Sep 14th, 2015 at 3:04 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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It will lead to a tax liability for income taxes in the year withdrawn, and depending on the age of the 403-B account, a potential early withdrawal penalty as well. See an attorney or accountant before you compound you present problems.
Answered on Sep 14th, 2015 at 1:59 PM