Had to take money out of my 403b. Question

Bedo the "medical" reason is something you have to claim on your taxes. The withholding is automatic so if you're eligible it is only after the fact thhat you can claim it on your return. Note that the medical clause for not being subject to the penalty is complicated so you should discuss it with your tax advisor. It will be taxable as ordinary inclome no matter what - only the early withdrawal penalty is what is in question.

Google "403b hardship withdrawal". Lots of info Here is a piece I found:





 

Under what circumstances may a hardship withdrawal be made?

This provision allows withdrawal of funds from a 403(b) if under severe financial distress. The participant must have no other resources available. A hardship withdrawal may be made for:



Un-reimbursed medical expenses of the participant or his/her spouse and dependents.



Down payment on primary residence.



Tuition and fees for higher education needs, and only for the next 12 months.



Eviction or foreclosure on your primary residence

 

  Hardship withdrawals are not exempt from an IRS 10% penalty. Furthermore, withdrawals are subject to ordinary income taxation in the year withdrawn. To qualify you must certify that you have no other recourse, including the possibility of taking a loan. You also are prohibited from contributing to a 403(b) for the next six months. The IRS makes it tough to access money this way for a reason: they don't want you to use the 403(b) as a form of short term savings. For exact details on your situation it is recommended that you contact both your vendor and a tax professional before proceeding.

 

Also, while the IRS permits withdrawals, it is allowable for a plan sponsors (the employer) to not permit them. The employer has some responsibility in making hardship withdrawals. The employer has to "OK" the hardship, based on written information provided by the employee as to the nature of the hardship. The employer has to determine, based on the facts, whether the employee has an "immediate and heavy financial need."

 

Consulting a tax professional before making a hardship withdrawal is highly recommended.