Employer ended company pension plan. Employees given two options:1

So, what's your question?

Note that a 403(b) is an employer-sponsored retirement plan like a 401(k), but for non-profits and certain other businesses.  You will be able to invest in stocks or mutual funds selected by your company.   The funds grow tax-free.  You pay regular income tax on withdrawals, and if you are under age 59-1/2, you also pay a 10% penalty. 

https://www.irs.gov/retirement-plans/irc-403b-tax-sheltered-annuity-plans

If you take out the cash value of your pension plan, you would have 60 days to deposit it into an IRA.  This is called a rollover.  You can establish an IRA in your own name at almost any bank or broker.  If you do a rollover, you are re-investing the money in a tax-sheltered retirement account.   The funds grow tax-free.  You pay regular income tax on withdrawals, and if you are under age 59-1/2, you also pay a 10% penalty. 

If you do a rollover to an IRA, you want to do a direct rollover from the pension to the IRA custodian.  This is a direct electronic transfer of funds from one plan to the other.   If the funds pass through your hands, your pension plan must withhold 20%, but if you want to do a rollover, you must deposit the entire amount or pay taxes.

For example, if your vested pension balance is $50,000 and you take a withdrawal, the plan must withhold $10,000 for taxes.  If you want to do a rollover to an IRA, you must deposit $50,000, meaning you have to come up with an extra $10,000 from some place.  The rollover will be tax free, and you will get the $10,000 withholding back as a tax refund when you file your taxes.  If you only deposited $40,000 in the new IRA, then $10,000 counts as a taxable withdrawal.  But the tax will actually be almost half that, so you will only get $5000 back.  (The 20% is the mandatory minimum, the actual tax you will owe on the withdrawal will be closer to 50% once you consider the tax, penalty and state income tax.)

There are some important differences between an IRA and a 403(b), even though they have the same general purpose.  For one thing, you can often borrow from a 403(b), with repayment automatically deducted from your paycheck.  But you can't actually withdraw any funds as long as you are still employed with the plan sponsor.  You can withdraw from your own private IRA at any time, but you can't take loans.

To learn more about retirement investing, you might want to read some articles or check out a book on finance from the library.