The typical penalty for early withdrawal of funds from a 403(b) plan is a 10 percent federal penalty fee, with some states having additional penalties of their own, according to ExpertPlan. As of 2015, individuals can only receive these funds early in the event of financial hardship, becoming disabled or turning 59 1/2 years old.
Qualifications for hardship withdrawals depend on the 403(b) program, but they typically include buying a home, paying overdue rent or mortgage, or paying for college tuition or medical expenses for the individual or his dependents. In these cases, the amount withdrawn is limited to the cost of the hardship itself plus any taxes that may apply, notes ExpertPlan.
As of 2015, certain plans allow withdrawals without the 10 percent penalty for circumstances such as retiring at the age of 55. Other circumstances include death or becoming completely disabled, in which the beneficiary receives the money, explains ExpertPlan. If an individual's medical bills exceed 7.5 percent, or if he is forced by a court to pay money to a former spouse or dependent, he may also be able to withdraw without penalty. In many cases, the individual must report the withdrawal as income and should seek IRS confirmation of any exceptions he may qualify for to alleviate the 10 percent penalty.