403-B account closing question (IRA, taxable, tax, money)

[Nativechief]

I have had a 403b with AKA for years, Now that I am 59 1/2 I was told I could close the account and get my money after a small processing fee and pay no early withdrawal penalty. Now I am told I MUST pay all of the tax on this money NOW. If the funds are now deemed as taxable income for 2011 why cant I wait untill I file my next years (2011) return and add the amount to my taxable income then?Just where is this tax money going to be for the next 16 months? I am confused and dont trust AKA to give me all of the facts. thanks

[hilgi]

Originally Posted by Nativechief

I have had a 403b with AKA for years, Now that I am 59 1/2 I was told I could close the account and get my money after a small processing fee and pay no early withdrawal penalty. Now I am told I MUST pay all of the tax on this money NOW. If the funds are now deemed as taxable income for 2011 why cant I wait untill I file my next years (2011) return and add the amount to my taxable income then?Just where is this tax money going to be for the next 16 months? I am confused and dont trust AKA to give me all of the facts. thanks

If you are no longer making contributions to a 403b you can roll it over into an IRA and defer any distributions until you are 70.5.