Update from TIAA-CREF on Possible Relief from Required Minimum Distributions

President Bush is expected to sign legislation that would allow seniors who have reached the age of 70 ½, and are subject to the required minimum distribution rules, to temporarily defer withdrawals from their retirement plan or Individual Retirement Accounts in 2009 without triggering a penalty.  The suspension would help provide relief for seniors whose retirement savings accounts have dropped as a result of faltering markets.

The decision whether to defer taking a “required minimum distribution” is voluntary.  The legislation treats equally individuals who usually take the “required distribution” amount monthly and those who take a lump sum amount at the end of the year. TIAA-CREF is currently evaluating the process to put in place on how participants and beneficiaries who will have this option can defer taking the payment.

TIAA-CREF participants who are subject to required minimum distribution rules in 2008 will continue to be required to take their distribution.  The legislation won't help seniors who were hoping to avoid taking a withdrawal in 2008, or have already taken a withdrawal.  While the U.S. Treasury Department is considering relief with respect to minimum distributions made in 2008, the Department has not yet announced what form such relief may take and has said that there is no reason for individuals to delay 2008 required minimum distributions.

Of course, the suspension of required minimum distributions in 2009 means that seniors will have more time to potentially recoup losses in their retirement accounts.

TIAA-CREF has been supportive of efforts to provide temporary relief from the minimum distribution rules and is actively engaged with the Treasury Department on the issue. Please be assured that we will communicate about additional changes as soon as any action is taken.

Participants who have questions about required minimum distributions can call TIAA-CREF at 1 800 842-2776.

TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.   Annuity products are issued by TIAA (Teachers Insurance and Annuity Association), New York, NY