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Rollovers can be made to or from TIAA-CREF retirement and TDA contracts that are funding vehicles for
403(b), 401(a), and 403(a) plans, as well as to or from classic IRAs. If eligible, your clients can
roll over money from another employer's retirement plan to a TIAA-CREF annuity or to a classic IRA and
continue to maintain any tax deferral on the money. Similarly, they can roll over retirement plan funds
from a classic IRA or a TIAA-CREF annuity to another employer's retirement plan and maintain the tax
deferral.
Both direct and 60-day rollovers are available. A direct rollover takes place between
companies -- your client never touches the money. With a 60-day rollover, the money goes first to your
client, who has 60 days to deposit it into another plan or into an IRA before it's considered fully
taxable.
When money is first distributed to the individual, however, the company making the distribution must
withhold 20 percent of the taxable distribution for taxes -- even before your client gets the check
and even if he/she intends to roll it over within the 60-day period. The rollover withholding now creates
a tax problem: If your client rolls over only the amount of the actual check -- that is, 80 percent of
the taxable portion of the lump-sum distribution -- the 20 percent that has been withheld will continue
to be treated as a distribution. He/she will have to pay taxes on it, and possibly an early distribution
penalty.
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