Basic Retirement Plan
Making a cash withdrawal and tax implications
When your RF employment ends, you may surrender your Basic Retirement Plan vested TIAA contracts for the cash value, subject to IRS regulations, if your TIAA Traditional Annuity retirement annuity accumulation is less than $2,000, and your total TIAA retirement annuity accumulation from employer-paid premiums is not over $4,000 and annuity payments have not begun, including a TIAA Transfer Payout Annuity.
Cash distributions are subject to ordinary income taxes and may be subject to an additional early withdrawal tax penalty.
TIAA must withhold 20 percent from any single sum benefit paid to you, and send it to the IRS. The IRS will apply the amount toward income taxes due.
A 10 percent tax penalty will generally apply to cash withdrawals made before age 59½, unless you have medical expenses exceeding the tax-deductible limit or you become disabled, die, or end employment after age 55. There is no tax penalty applied to payments made to children or to a divorced spouse in accordance with a qualified domestic relations order.
If you are married, your spouse must consent in writing to the cash withdrawal. For more information, refer to Selecting your beneficiary: spousal rights in the Benefits Handbook or Postdoctoral Employee Benefits Handbook.
TIAA will provide additional tax reporting information when a distribution is made. Neither this Web site nor the information provided by TIAA is intended to be relied upon solely for tax advice. You are encouraged to consult a tax advisor.
Rollover to another qualified retirement plan or traditional IRA
Since 2002, the IRS has allowed the rollover of distributions between different types of retirement plans (e.g., to or from 401(a), 403(a), 403(b), 457(b), and IRA plans). The plan sponsor’s rules must also permit this, however. The RF’s plans do not permit distributions before termination of employment.
A qualified rollover will not be taxed. If, however, you take a distribution, and then do not roll the funds over into another qualified retirement plan or to a traditional Individual Retirement Annuity (IRA) account within 60 days of receipt, the IRS will consider the distribution a lump sum withdrawal and will tax the amount you received.
A mandatory 20 percent federal withholding tax applies to an indirect rollover (that is, one that is made to you, not directly sent to a recipient plan or IRA), which will be refunded by the IRS if the rollover is completed. If you use a direct rollover, the distribution is not received by you, therefore, taxes are not withheld.
You cannot roll over to a Roth IRA. However, you may be able to convert the assets to a Roth IRA based on IRA guidelines. Contact TIAA for information.