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Your client's basic retirement plan is subject to the rules determined by his/her employer, and there
may be limits on if and/or when he/she can begin to make withdrawals. TIAA-CREF Retirement Annuities are
designed to provide a lifetime annuity income; however, employers have the option of allowing full or
partial cash withdrawals from the variable TIAA and CREF accounts as well. TIAA-CREF Group Retirement
Annuities include a cash provision for the variable accounts and TIAA Traditional (subject to certain
conditions). SRAs are fully cashable for all accounts if your client leaves his/her job or experiences
certain other "triggering events" (e.g., disability, severe financial hardship, etc.), but withdrawals
taken before age 59½ will generally entail a 10 percent federal early withdrawal tax, in addition
to current taxes due.
All TIAA-CREF retirement and TDA plans offer the choice of lifetime annuity income, where regular
payments are based on how much money your client has accumulated, his or her age, the income option
and payment method selected, and the interest and/or investment returns earned both before and after
retirement. "Lifetime annuity income" means exactly that -- regardless of how long your client lives,
income payments will continue. If your client has chosen a two-life annuity, income will continue as
long as either person lives -- either in the original amount, or reduced by one-third or one-half, as
determined at the time the original pay-out contract was established. Of course, the basic amount of
each lifetime annuity payment will be affected by the choices your client makes -- single versus joint
annuity; full, two-thirds, or half-benefit to survivor -- and several others. Annuity income is
available from the TIAA Traditional Annuity and TIAA and CREF variable accounts. Payment amounts from
the variable accounts will fluctuate with underlying market behavior. First-year payments assume a
conservative 4 percent return, and payments in subsequent years are adjusted up or down based on the
market's actual performance.
TIAA Traditional Annuity Payment Methods
The TIAA Traditional Annuity has two payment methods. Both provide a guaranteed minimum payment, but
they differ in the way they treat the dividends declared each quarter by the TIAA board of trustees.
In the standard method, total annuity earnings -- guaranteed interest plus the full dividend -- are
reflected in the amount the annuitant receives. If the dividend rate remains the same from year to
year, so does the income amount. With the graded method, in contrast, initial payments are made because
part of the annual dividend is "reinvested" to buy more guaranteed annuity income for the future,
instead of being paid out as income. In general, the standard method is probably best for clients who
want to maximize their retirement income at the outset, while the graded method should over longer
periods do a better job of protecting the real purchasing power of the client's retirement income
stream.
Your clients can receive payments monthly, quarterly, semiannually, or annually; however, each payment
must be at least $25.
Other Income Options
In addition to lifetime annuities, our retirement and TDA plans offer:
Single-sum withdrawals
Both Retirement Annuities and Group Retirement Annuities may allow your client to withdraw some or all
of their variable accounts' accumulation in cash upon termination of employment or retirement (subject
to employer plan rules). Some employers also permit individuals to make cash withdrawals while they are
still employed.
Systematic withdrawals
Your clients can receive periodic (monthly, quarterly, semiannual or annual) payments for any amount,
although there is a $100 minimum payment per account (from cashable accumulations only).
Interest-only payments
Our Interest Payment Retirement Option (IPRO) lets your clients take only the interest income from
their TIAA Traditional Annuity holdings, so that they won't have to reduce their principal accumulation
or make a lifetime annuity decision as soon as they need retirement income.
Minimum Distributions
TIAA-CREF will calculate and pay your clients the minimum amount required annually by law. (See Minimum
Distributions for more information.)
Retirement Transition Benefit
When clients begin their TIAA-CREF retirement income, they can also select the Retirement Transition
Benefit. The RTB enables them to take in cash up to 10 percent of the TIAA and CREF accumulation they
are "converting" to lifetime annuity payments.
Postretirement Flexibilities
Once a client starts annuity income, he/she can't switch to a different income option -- for example,
from lifetime income to systematic cash withdrawals. But he/she can change the source account of
payments:
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Among any CREF and TIAA variable annuity accounts. |
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From the CREF and TIAA variable annuity to the TIAA Traditional Annuity. |
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From the TIAA Traditional Annuity to the CREF Stock, Equity Index, Growth, Global Equities,
and Social Choice Accounts via our ten-year Transfer Payout Annuity. |
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From TIAA Traditional's graded payment method to the standard payment method. |
Changes can be made as often as once per quarter, except for transfers out of TIAA Traditional, which can
be once per year. Post-retirement transfers aren't currently available through the Web Center, but
your customer (or you on your customer's behalf) can initiate transfers on any business day by calling
our Telephone Center at 1 800 842-2776 or the Advisor Resource Center at 1 888 842-0318.
Loans
To encourage greater plan enrollment, especially among less highly compensated employees, many
TIAA-CREF-participating employers include a loan option under their TDA plan, their basic retirement
plan, or occasionally both.
To avoid having the loan treated as a taxable distribution, various rules apply:
The loan must be repaid within five years -- unless it's used to acquire a primary residence,
in which case it must be repaid within 10 years.
The loan must be repaid in substantially equal amounts, with payments at least quarterly.
The loan cannot exceed $50,000 or half of the vested accumulation.
The employer or applicable contract provisions can place additional restrictions on the amount of the
loan -- for example, by limiting it to employee contributions or to a percentage of the accumulation.
But no restrictions can be placed on the purpose of the loan, for example, allowing a loan to purchase
a primary residence but disallowing one to purchase a car.
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