Basic Retirement Plan: Distributions from Vested Contracts

Purpose

This document describes rollover distributions and payment options under the Basic Retirement Plan.

Definitions

The following table provides definitions for terms related to this procedure:

Term

Definition

Annuity

A contract that provides an income for a lifetime or for a specified number of years.

Annuitant

A person receiving annuity payments.

Annuitize

Conversion of retirement plan accumulations to regular income payments.

Vested Participant

An eligible employee who has met the service requirements and has full ownership rights to retirement contributions.

Mutual Fund

An investment company that pools funds from individuals to buy securities selected to meet specific criteria and goals.

When Distributions Must Begin

Federal tax law requires that retirement income begin by April 1 of the calendar year following the later of the calendar year in which a participant reaches age 70 1/2 or terminates employment.

If the required minimum amount is not distributed, the employee will receive a tax penalty equal to 50 percent of the difference between the amount that should have been distributed and the amount actually distributed.

Note: The required IRS minimum can be collected using TIAA-CREF's Minimum Distribution Option (MDO).

TIAA-CREF Contract Settlements: Lifetime Annuity Income

TIAA-CREF will provide participants with assistance in selecting an annuity option(s) in settlement of annuity contracts. A participant may collect monthly lifetime annuity income at any age from TIAA-CREF contracts, provided he or she has ceased employment with the Research Foundation (RF). Income may begin on multiple dates, using any combination of payment options, and the former employee may annuitize any portion of each TIAA and CREF contract. At least $10,000 of accumulation must be specified for each starting date and option chosen.

Descriptions of available annuity options are provided below. Note: Once annuity payments have begun, changes may not be made.

Single-Life Annuity

A Single-Life Annuity pays an income for as long as the annuitant lives. All payments stop at his or her death. Payments will not be made to a beneficiary unless a guaranteed period has been selected. With a guaranteed period feature, if death occurs before the end of the guaranteed period selected by the annuitant (10, 15, or 20 years), payments will continue to the designated beneficiary for the remainder of the guaranteed period. The guaranteed period may not exceed the annuitant’s life expectancy. Refer to "Spousal Rights to Vested Retirement Accumulations."

Two-Life Annuity

A Two-Life Annuity pays the annuitant and his or her annuity partner income for as long as either lives. Payments may be continued to a beneficiary by electing a guaranteed period feature. With a guaranteed period feature, if the annuitant and annuity partner die before the end of the guaranteed period selected (10, 15, or 20 years), payments will continue to the designated beneficiary for the remainder of the guaranteed period. The guaranteed period may not exceed the joint life expectancy.

The payment amount continuing after the annuitant’s death or the death of the annuity partner depends on which of the following benefit payment options is chosen:

TIAA-CREF Contract Settlements: Other Payment Options

TIAA-CREF will provide the participant with assistance in selecting other payment option(s) in settlement of annuity contracts.

Retirement funds can be collected monthly, periodically, or in lump-sum payments provided the participant ceases employment with the RF and meets the criteria shown in the following payment options. Income from each TIAA and CREF contract may begin on multiple dates using any combination of payment options, provided at least $10,000 of accumulation is specified for each starting date and option chosen. The time period selected for a fixed-period option cannot exceed the annuitant’s life expectancy based on TIAA-CREF tables.

TIAA-CREF Description of Payment Options

A complete description of payment options is provided in TIAA-CREF's publication Choosing Income Options. To obtain a copy, contact TIAA-CREF by:

Making a Full Cash Withdrawal

Withdrawals from a TIAA Traditional Annuity

When a participant terminates RF employment, Basic Retirement Plan vested TIAA-CREF contracts may be surrendered for the cash value, subject to IRS regulations, if:

Withdrawals from other Funding Vehicles

When a participant terminates RF employment, Basic Retirement Plan vested accumulations from other vehicles are fully available to the plan participant, subject to the limitations or restrictions of each underlying investment offered under the plan.

Note: Authorization by employer is required.

Withdrawals and Total Disability

In accordance with IRS guidelines, withdrawals are allowed after a total disability only under the following circumstances:

What to obtain from Employees

Operating locations should obtain a completed application for TIAA Long-Term Disability benefits from eligible employees who choose to make withdrawals as the result of a total disability. See "Eligibility," in Overview of Long-Term Disability Insurance and "Initiating a Claim for Long-Term Disability Benefits," in Claims Process for Long-Term Disability Benefits.

If the employee is not eligible for disability benefits, he or she will be asked to complete a disability questionnaire form and to provide a physician's certification of disability.

Withdrawal Authorization

Employees who have ceased employment with the Research Foundation may annuitize their contracts with TIAA-CREF at any age without employer authorization.

For cash withdrawals, including a full cash withdrawal, systematic withdrawals or transfer payout annuity for cash payments, participants must have ceased employment with the Research Foundation. Authorization by employer is required.

The following table describes the steps taken when withdrawal authorization is required:

Step

Who is Responsible

Action Required

1

TIAA-CREF

Upon request, provide the participant with the appropriate authorization form for the requested withdrawal.

2

Participant

Complete the form and send it to the operating location where he or she was most recently employed.

3

 

Operating location (authorized representative)

 

Verify [on the first screen of the retirement system (RETR)] that the participant:

  • was a former employee of the RF, and
  • is now terminated from employment.

     

If...

then...

the information is verified

complete the Employer Authorization section of the form and send it to TIAA-CREF for approval.

the record of employment is not verified because the participant ceased employment many years ago

contact TIAA-CREF to:

  • verify that the person has a RF contract, and
  • request the last premium date (last date a contribution was made by the RF to the participant's vested contract).

     

    Go to Step 4.

4

Operating location (authorized representative)

When TIAA-CREF verifies that the last premium date indicates the participant is now terminated:

  1. complete the Employer Authorization section of the form,
  2. use the last premium date for the participant's termination date, and
  3. send the form to TIAA-CREF for approval.

    Note: TIAA-CREF will accept a fax or telephone approval for payments under $50,000.

Rollover Distributions and Transfers

If a participant ceases employment with the Research Foundation, the participant may elect a rollover distribution from this plan to another eligible retirement plan. A rollover is a tax-free transfer of assets from one eligible retirement plan to another. An eligible retirement plan includes another employer's qualified plan (like a 401(k)), another employer's non-qualified plan (like a 403(b)),or an individual retirement account (IRA).

Indirect Rollover

An indirect rollover is a payment by the plan made directly to the participant. He or she has until the 60th day following the day on which the distribution is received to place the funds in another eligible retirement plan. A mandatory 20 percent federal withholding tax applies, which will be included in tax withheld when the employee files his or her federal tax return.

Direct Rollover

A direct rollover is a payment by the plan to another eligible retirement plan. The distribution is not received by the participant. Therefore, taxes are not withheld.

Taxation of Distributions

TIAA-CREF will provide tax information when a distribution is made.

Distributions at Death

Death benefits to beneficiaries are determined based on whether or not funds have been annuitized or otherwise distributed when the participant dies. There are no death benefits for nonvested participants.

Death Occurs Before Funds Are Annuitized

If a participant's death occurs before all funds are annuitized or otherwise distributed, any unsettled balance is available to the designated beneficiary(s) in a lump sum, unless another payment option was chosen, as described in the participant's contract. Beneficiaries may also contact TIAA-CREF for additional options.

Normally, the entire balance must be distributed to a participant's designated beneficiary by December 31 of the fifth calendar year after the participant's death. If elected, death benefits may be payable over the life or life expectancy of a designated beneficiary, if the distribution of benefits begins no later than December 31 of the calendar year immediately following the calendar year of the participant’s death. If the designated beneficiary is the employee’s spouse, the commencement of benefits may be deferred until December 31 of the calendar year when the participant would have attained age 70 1/2.

Death Occurs After Funds Were Annuitized

If death occurs after all funds have been annuitized or otherwise distributed, any additional payments will be determined by the settlement option elected by the employee at retirement.

Change History

 

 

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