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Treas. Reg. § 1.403(b)-6

Timing of distributions and benefits.
CFR 2009 annual edition (revised as of 2009-04-01) · superseded Apr 1, 2010 · last amended by 72 FR 54352, Sept. 25, 2007
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(a) Distributions generally. This section provides special rules regarding the timing of distributions from, and the benefits that may be provided under, a section 403(b) contract, including limitations on when early distributions can be made (in paragraphs (b) through (d) of this section), required minimum distributions (in paragraph (e) of this section), and special rules relating to loans (in paragraph (f) of this section) and incidental benefits (in paragraph (g) of this section).
(b) Distributions from contracts other than custodial accounts or amounts attributable to section 403(b) elective deferrals. Except as provided in paragraph (c) of this section relating to distributions from custodial accounts, paragraph (d) of this section relating to distributions attributable to section 403(b) elective deferrals, § 1.403(b)-4(f) (relating to correction of excess deferrals), or § 1.403(b)-10(a) (relating to plan termination), a section 403(b) contract is permitted to distribute retirement benefits to the participant no earlier than upon the earlier of the participant's severance from employment or upon the prior occurrence of some event, such as after a fixed number of years, the attainment of a stated age, or disability. See § 1.401-1(b)(1)(ii) for additional guidance. This paragraph (b) does not apply to after-tax employee contributions or earnings thereon.
(c) Distributions from custodial accounts that are not attributable to section 403(b) elective deferrals. Except as provided in § 1.403(b)-4(f) (relating to correction of excess deferrals) or § 1.403(b)-10(a) (relating to plan termination), distributions from a custodial account, as defined in § 1.403(b)-8(d)(2), may not be paid to a participant before the participant has a severance from employment, dies, becomes disabled (within the meaning of section 72(m)(7)), or attains age 591/2. Any amounts transferred out of a custodial account to an annuity contract or retirement income account, including earnings thereon, continue to be subject to this paragraph (c). This paragraph (c) does not apply to distributions that are attributable to section 403(b) elective deferrals.
(d) Distribution of section 403(b) elective deferrals
(1) Limitation on distributions
(i) General rule. Except as provided in § 1.403(b)-4(f) (relating to correction of excess deferrals) or § 1.403(b)-10(a) (relating to plan termination), distributions of amounts attributable to section 403(b) elective deferrals may not be paid to a participant earlier than the earliest of the date on which the participant has a severance from employment, dies, has a hardship, becomes disabled (within the meaning of section 72(m)(7)), or attains age 591/2.
(ii) Special rule for pre-1989 section 403(b) elective deferrals. For special rules relating to amounts held as of the close of the taxable year beginning before January 1, 1989 (which does not apply to earnings thereon), see section 1123(e)(3) of the Tax Reform Act of 1986 (100 Stat. 2085, 2475) Public Law 99-514, and section 1011A(c)(11) of the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3342, 3476) Public Law 100-647.
(2) Hardship rules. A hardship distribution under this paragraph (d) has the same meaning as a distribution on account of hardship under § 1.401(k)-1(d)(3) and is subject to the rules and restrictions set forth in § 1.401(k)-1(d)(3) (including limiting the amount of a distribution in the case of hardship to the amount necessary to satisfy the hardship). In addition, a hardship distribution is limited to the aggregate dollar amount of the participant's section 403(b) elective deferrals under the contract (and may not include any income thereon), reduced by the aggregate dollar amount of the distributions previously made to the participant from the contract.
(3) Failure to keep separate accounts. If a section 403(b) contract includes both section 403(b) elective deferrals and other contributions and the section 403(b) elective deferrals are not maintained in a separate account, then distributions may not be made earlier than the later of—
(i) Any date permitted under paragraph (d)(1) of this section; and
(ii) Any date permitted under paragraph (b) or (c) of this section with respect to contributions that are not section 403(b) elective deferrals (whichever applies to the contributions that are not section 403(b) elective deferrals).
(e) Minimum required distributions for eligible plans
(1) In general. Under section 403(b)(10), a section 403(b) contract must meet the minimum distribution requirements of section 401(a)(9) (in both form and operation). See section 401(a)(9) for these requirements.
(2) Treatment as IRAs. For purposes of applying the distribution rules of section 401(a)(9) to section 403(b) contracts, the minimum distribution rules applicable to individual retirement annuities described in section 408(b) and individual retirement accounts described in section 408(a) apply to section 403(b) contracts. Consequently, except as otherwise provided in paragraphs (e)(3) through (e)(5) of this section, the distribution rules in section 401(a)(9) are applied to section 403(b) contracts in accordance with the provisions in § 1.408-8 for purposes of determining required minimum distributions.
(3) Required beginning date. The required beginning date for purposes of section 403(b)(10) is April 1 of the calendar year following the later of the calendar year in which the employee attains age 701/2 or the calendar year in which the employee retires from employment with the employer maintaining the plan. However, for any section 403(b) contract that is not part of a governmental plan or church plan, the required beginning date for a 5-percent owner is April 1 of the calendar year following the calendar year in which the employee attains age 701/2.
(4) Surviving spouse rule does not apply. The special rule in § 1.408-8, A-5 (relating to spousal beneficiaries), does not apply to a section 403(b) contract. Thus, the surviving spouse of a participant is not permitted to treat a section 403(b) contract as the spouse's own section 403(b) contract, even if the spouse is the sole beneficiary.
(5) Retirement income accounts. For purposes of § 1.401(a)(9)-6, A-4 (relating to annuity contracts), annuity payments provided with respect to retirement income accounts do not fail to satisfy the requirements of section 401(a)(9) merely because the payments are not made under an annuity contract purchased from an insurance company, provided that the relationship between the annuity payments and the retirement income accounts is not inconsistent with any rules prescribed by the Commissioner in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter). See also § 1.403(b)-9(a)(5) for additional rules relating to annuities payable from a retirement income account).
(6) Special rules for benefits accruing before December 31, 1986. (i) The distribution rules provided in section 401(a)(9) do not apply to the undistributed portion of the account balance under the section 403(b) contract valued as of December 31, 1986, exclusive of subsequent earnings (pre-'87 account balance). The distribution rules provided in section 401(a)(9) apply to all benefits under section 403(b) contracts accruing after December 31, 1986 (post-'86 account balance), including earnings after December 31, 1986. Consequently, the post-'86 account balance includes earnings after December 31, 1986, on contributions made before January 1, 1987, in addition to the contributions made after December 31, 1986, and earnings thereon.
(ii) The issuer or custodian of the section 403(b) contract must keep records that enable it to identify the pre-'87 account balance and subsequent changes as set forth in paragraph (d)(6)(iii) of this section and provide such information upon request to the relevant employee or beneficiaries with respect to the contract. If the issuer or custodian does not keep such records, the entire account balance is treated as subject to section 401(a)(9).
(iii) In applying the distribution rules in section 401(a)(9), only the post-'86 account balance is used to calculate the required minimum distribution for a calendar year. The amount of any distribution from a contract is treated as being paid from the post-'86 account balance to the extent the distribution is required to satisfy the minimum distribution requirement with respect to that contract for a calendar year. Any amount distributed in a calendar year from a contract in excess of the required minimum distribution for a calendar year with respect to that contract is treated as paid from the pre-'87 account balance, if any, of that contract.
(iv) If an amount is distributed from the pre-'87 account balance and rolled over to another section 403(b) contract, the amount is treated as part of the post-'86 account balance in that second contract. However, if the pre-'87 account balance under a section 403(b) contract is directly transferred to another section 403(b) contract (as permitted under § 1.403(b)-10(b)), the amount transferred retains its character as a pre-'87 account balance, provided the issuer of the transferee contract satisfies the recordkeeping requirements of paragraph (e)(6)(ii) of this section.
(v) The distinction between the pre-'87 account balance and the post-'86 account balance provided for under this paragraph (e)(6) of this section has no relevance for purposes of determining the portion of a distribution that is includible in income under section 72.
(vi) The pre-'87 account balance must be distributed in accordance with the incidental benefit requirement of § 1.401-1(b)(1)(i). Distributions attributable to the pre-'87 account balance are treated as satisfying this requirement if all distributions from the section 403(b) contract (including distributions attributable to the post-'86 account balance) satisfy the requirements of § 1.401-1(b)(1)(i) without regard to this section, and distributions attributable to the post-'86 account balance satisfy the rules of this paragraph (e) (without regard to this paragraph (e)(6)). Distributions attributable to the pre-'87 account balance are treated as satisfying the incidental benefit requirement if all distributions from the section 403(b) contract (including distributions attributable to both the pre-'87 account balance and the post-'86 account balance) satisfy the rules of this paragraph (e) (without regard to this paragraph (e)(6)).
(7) Application to multiple contracts for an employee. The required minimum distribution must be separately determined for each section 403(b) contract of an employee. However, because, as provided in paragraph (e)(2) of this section, the distribution rules in section 401(a)(9) apply to section 403(b) contracts in accordance with the provisions in § 1.408-8, the required minimum distribution from one section 403(b) contract of an employee is permitted to be distributed from another section 403(b) contract in order to satisfy section 401(a)(9). Thus, as provided in § 1.408-8, A-9, with respect to IRAs, the required minimum distribution amount from each contract is then totaled and the total minimum distribution taken from any one or more of the individual section 403(b) contracts. However, consistent with the rules in § 1.408-8, A-9, only amounts in section 403(b) contracts that an individual holds as an employee may be aggregated. Amounts in section 403(b) contracts that an individual holds as a beneficiary of the same decedent may be aggregated, but such amounts may not be aggregated with amounts held in section 403(b) contracts that the individual holds as the employee or as the beneficiary of another decedent. Distributions from section 403(b) contracts do not satisfy the minimum distribution requirements for IRAs, nor do distributions from IRAs satisfy the minimum distribution requirements for section 403(b) contracts.
(f) Loans. The determination of whether the availability of a loan, the making of a loan, or a failure to repay a loan made from an issuer of a section 403(b) contract to a participant or beneficiary is treated as a distribution (directly or indirectly) for purposes of this section, and the determination of whether the availability of the loan, the making of the loan, or a failure to repay the loan is in any other respect a violation of the requirements of section 403(b) and §§ 1.403(b)-1 through 1.403(b)-5, this section, and §§ 1.403(b)-7 through 1.403(b)-11, depends on the facts and circumstances. Among the facts and circumstances are whether the loan has a fixed repayment schedule and bears a reasonable rate of interest, and whether there are repayment safeguards to which a prudent lender would adhere. Thus, for example, a loan must bear a reasonable rate of interest in order to be treated as not being a distribution. However, a plan loan offset is a distribution for purposes of this section. See § 1.72(p)-1, Q&A-13. See also § 1.403(b)-7(d) relating to the application of section 72(p) with respect to the taxation of a loan made under a section 403(b) contract. (Further, see section 408(b)(1) of Title I of ERISA and 29 CFR 2550.408b-1 of the Department of Labor regulations concerning additional requirements applicable with respect to plans that are subject to Title I of ERISA.)
(g) Death benefits and other incidental benefits. An annuity is not a section 403(b) contract if it fails to satisfy the incidental benefit requirement of § 1.401-1(b)(1)(ii) (in form or in operation). For purposes of this paragraph (g), to the extent the incidental benefit requirement of § 1.401-1(b)(1)(ii) requires a distribution of the participant's or beneficiary's accumulated benefit, that requirement is deemed to be satisfied if distributions satisfy the minimum distribution requirements of section 401(a)(9). In addition, if a contract issued by an insurance company qualified to issue annuities in a State includes provisions under which, in the event a participant becomes disabled, benefits will be provided by the insurance carrier as if employer contributions were continued until benefit distribution commences, then that benefit is treated as an incidental benefit (as insurance for a deferred annuity benefit in the event of disability) that must satisfy the incidental benefit requirement of § 1.401-1(b)(1)(ii) (taking into account any other incidental benefits provided under the plan).
(h) Special rule regarding severance from employment. For purposes of this section, severance from employment occurs on any date on which an employee ceases to be an employee of an eligible employer, even though the employee may continue to be employed either by another entity that is treated as the same employer where either that other entity is not an entity that can be an eligible employer (such as transferring from a section 501(c)(3) organization to a for-profit subsidiary of the section 501(c)(3) organization) or in a capacity that is not employment with an eligible employer (for example, ceasing to be an employee performing services for a public school but continuing to work for the same State employer). Thus, this paragraph (h) does not apply if an employee transfers from one section 501(c)(3) organization to another section 501(c)(3) organization that is treated as the same employer or if an employee transfers from one public school to another public school of the same State employer.
(i) Certain limitations do not apply to rollover contributions. The limitations on distributions in paragraphs (b) through (d) of this section do not apply to amounts held in a separate account for eligible rollover distributions as described in § 1.403(b)-10(d).
Source credit, amendments & notes

[T.D. 9340, 72 FR 41144, July 26, 2007; 72 FR 54352, Sept. 25, 2007]

Treas. Reg. § 1.403(b)-6 — Timing of distributions and benefits. · CFR 2009 annual edition (revised as of 2009-04-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr26-1.403%28b%29-6&asof=2001-05-14 · printed Oct 16, 2026
On this page
  • (a) Distributions generally.
  • (b) Distributions from contracts other than custodial accounts …
  • (c) Distributions from custodial accounts that are not attribut…
  • (d) Distribution of section 403(b) elective deferrals
  • (e) Minimum required distributions for eligible plans
  • (f) (f) Loans. The determination of whether the availability of…
  • (g) Death benefits and other incidental benefits.
  • (h) Special rule regarding severance from employment.
  • (i) Certain limitations do not apply to rollover contributions.
Implements
I.R.C. § 403 Taxation of employee annuities
Cited by (code & regs)
Glossary
required beginning date
Date by which RMDs must begin (generally April 1 after the applicable age or retirement).
Guidance addressing this section

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Also cited in 17 other documents
IRS / Treasury
Treasury Decisions
  • T.D. 10001 Aug 12, 2024 — These regulations provide guidance related to section 401 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), enacted on Dec…
Final Rules
  • 89 FR 58886 Jul 19, 2024 — Required Minimum Distributions (e)
  • 84 FR 49651 Sep 23, 2019 — Hardship Distributions of Elective Contributions, Qualified Matching Contributions, Qualified Nonelective Contributions, and Earnings (b)(c)(d)(d)(2)
  • 79 FR 37633 Jul 2, 2014 — Longevity Annuity Contracts (e)(2)(e)(9)
  • 79 FR 26838 May 12, 2014 — Tax Treatment of Qualified Retirement Plan Payment of Accident or Health Insurance Premiums
  • 75 FR 65566 Oct 26, 2010 — Revised Regulations Concerning Section 403(b) Tax-Sheltered Annuity Contracts; Correction
Revenue Procedures
  • Rev. Proc. 2023-37 Dec 18, 2023 — This revenue procedure sets forth the rules regarding qualified pre-approved plans and section 403(b) pre-approved plans, and combines, conforms, clarifies, an…
  • Rev. Proc. 2021-37Superseded Sep 20, 2021 — This revenue procedure sets forth the procedures of the IRS for issuing opinion letters regarding the satisfaction in form of § 403(b) pre-approved plans with …
    Superseded by Rev. Proc. 2023-37
  • Rev. Proc. 2013-22Superseded Apr 29, 2013 — This revenue procedure sets forth the procedures of the Internal Revenue Service for issuing opinion and advisory letters for § 403(b) pre-approved plans (that… (c)
    Superseded by Rev. Proc. 2021-37
  • Rev. Proc. 2007-71 Dec 17, 2007 — Tax-sheltered annuities; written program; public schools; model amendments. This procedure sets forth model amendments that may be adopted in order to satisfy … (e)
Proposed Rules
  • 87 FR 10504Proposed Feb 24, 2022 — Required Minimum Distributions Comments due May 25, 2022 (e)(e)(5)(e)(7)
  • 83 FR 56763Proposed Nov 14, 2018 — Hardship Distributions of Elective Contributions, Qualified Matching Contributions, Qualified Nonelective Contributions, and Earnings (b)(c)(d)(d)(2)
  • 77 FR 5443Proposed Feb 3, 2012 — Longevity Annuity Contracts Comments due May 3, 2012 (e)(1)(e)(2)
  • REG-142040-07Proposed Aug 25, 2008 — Proposed regulations under sections 401(a)(9) and 403(b) of the Code permit a governmental plan to comply with the required minimum distribution rules by using… (e)(1)(e)(2)
  • REG-148393-06Proposed Sep 24, 2007 — Proposed regulations under section 402 of the Code clarify that a payment from a qualified plan for an accident or health insurance premium generally constitut…
  • REG-146459-05Proposed Feb 21, 2006 — Proposed regulations under sections 402A, 408A, and 402(g) of the Code set forth the tax treatment of designated Roth contributions (and related earnings) that… (d)(e)
Announcements
  • Ann. 2009-34 May 4, 2009 — Request for comments on revenue procedure for section 403(b) prototype plans. The Service intends to establish a program for the pre-approval of prototype plan…

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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Apr 1, 2008Mar 31, 2010CFR 2009 annual edition (revised as of 2009-04-01) run 12772 FR 54352, Sept. 25, 2007View
Apr 1, 2010Mar 31, 2015CFR 2014 annual edition (revised as of 2014-04-01) run 12775 FR 65566, Oct. 26, 2010View · Redline (sign in)
Apr 1, 2015Jul 18, 2024eCFR editorial change effective 2016-05-18 run 26T.D. 9673, 79 FR 37642, July 2, 2014View · Redline (sign in)
Jul 19, 2024Sep 16, 2024eCFR amendment effective 2024-07-19 run 26T.D. 9673, 79 FR 37642, July 2, 2014View · Redline (sign in)
Sep 17, 2024currenteCFR amendment effective 2024-09-17 run 2T.D. 10001, 89 FR 58946, July 19, 2024View · Redline (sign in)
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