403b Cashout Question in 403(b) Forum Posted May 6, 2006 · Report reply Hi dlazic, Steve is right, I think, when he talks about raiding your 403(b) as a last resort only. The penalties are too high, and the opportunity cost is extensive. A "middle ground" might be to borrow some of the funds that are in your account, as opposed to taking out a loan. Many providers offer loans, often up to 50% of the balance, and in many cases the interest you pay is paid back directly into your account, so you wind up effectively paying yourself the interest. Whether or not this is a workable idea depends entirely on who your provider is, and whether they even allow loans against your account in the first place. You should call your agent if you have one (and call the company directly if you don't), and find out the details: how much of a loan is permissible, what the interest rate would be, how the payback would work, etc. A loan would DEFINITELY be preferable to a withdrawal, though from a retirement planning point of view, of course, it would still be preferable to find the money elsewhere if at all possible. Hope this helps.