Will money in 403b affect eligibility for disability?

Question

My mom is 55 and hasn't worked in about 3 years. She is getting ready to apply for disability, and has around 38,000 in a 403b account. Will this affect her eligibility for disability? Should she just pay the penalty pull it all out and put in a safe?

Answer 1

Nope.  But you want to set up disability before starting 403b distribution.  

Not a good idea to take out the entire 403b and put it in a safe.  Even with a low interest rate is still better than 0% earnings.  With 10% penalty it is really not worth it.  But make sure that MetLife isn't doing anything crazy with her investment.

For some reason Yahoo is having a system problem every time I tried to answer your other question about 72t.  So here it is:

Given that MetLife sells IRA products, they should have the capability of setting up a 72t distribution. There should be no extra cost for setting up.

Keep in mind, MetLife makes money from keeping your mom's money so they may not be so quick to part with her 403b. You may have to tell them that you might rollver the 403b to an IRA at another institution to make them swing into action.

Further, although she can avoid the 10% early withdraw penalty she still need to pay federal income tax on the distribution at her marginal tax rate.

Best wishes.