Federal law requires that most retirement and/or Tax-Deferred Annuity plan participants start taking minimum distributions by April 1 following the year they retire — or the year they reach age 70½, whichever comes later.
Any plan participant's actual required minimum distribution depends on his/her actual accumulation and life expectancy factor from the Uniform Table in the Internal Revenue Code. Alternatively, it can be calculated on the life expectancy of the employee and a beneficiary. If the employee selects the dual life expectancy, the minimum payment required will be smaller and more of the accumulation will remain in the plan where it will continue to be tax deferred.
Under annuities issued to employees participating in a 403(b) retirement plan, only contributions and earnings credited after 1986 are subject to minimum distribution rules. Any contributions and earnings credited before 1987 are excluded. Pre-1987 accumulations are called grandfathered amounts. Ordinarily employees don't have to begin receiving payments from the pre-1987 accumulation until the year they reach age 75. Any amounts accumulated under qualified plans, such as 401(a), 403(a), and 401(k) plans, are not grandfathered regardless of the year when originally contributed.
Automatically pays out the smallest amount that will satisfy the employee's annual minimum distribution requirement.
Guarantees income for life to either one or two people. In most cases any annuity paid out over the owner's or owners' actuarially calculated lifetime(s) will satisfy the minimum distribution requirement.
Available on a single-sum or systematic basis if your institution permits. Cash withdrawals are not available under all plans and certain restrictions may apply. Employees who want to use systematic or single-sum cash withdrawals may need an annual recalculation to be certain that they take enough out each year to satisfy the minimum distribution requirement.
© 2009 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
