Benefits Plans - 457(b) Deferred Compensation Plan:
What are My Options When I Leave U-M?
1. Leave your money where it is.
By leaving the accumulations in the University of Michigan 457(b) Plan, you postpone paying taxes on the contributions and earnings until you decide to take a distribution at a later date. The accumulations will continue to experience the investment performance of your chosen funds. In addition:
- You will have access to the many services TIAA-CREF and Fidelity offer to participants such as free publications, workshops, individual counseling, and their expert investment of your funds.
- You can transfer your money between funds within TIAA-CREF or Fidelity.
- You can transfer money between TIAA-CREF and Fidelity.
2. Rollover your accumulations.
You may rollover your contributions and earnings to an IRA or to another eligible retirement plan at any age once you have retired or terminated employment. However, you may lose important tax benefits, such as the exemption to the IRS early withdrawal penalty. Consult with a qualified tax advisor.
3. Take a cash withdrawal.
Partial, total, and systematic cash withdrawals allow you to receive income only as you need it and provide a high degree of flexibility. Your remaining accumulations continue to be tax-deferred until you take a distribution, and will continue to experience the investment performance of your chosen funds. Keep in mind the following:
- Income tax is due on cash withdrawals.
- Your contributions and earnings are available for cash withdrawal at any age once you have terminated employment with the University.
4. Start a lifetime or fixed-period annuity with TIAA-CREF.
There is absolutely no requirement that you must choose an annuity from TIAA-CREF. However, when you leave your employment with the University, you may choose to receive a lifetime or fixed-period annuity from TIAA-CREF at any age. The amount of the annuity will be calculated based on variables such as your life expectancy, your age at the time the annuity option is taken, and whether a spouse-survivor option is chosen. Ask TIAA-CREF to calculate various scenarios for you; they will prepare the income projections at no charge. Alternatively, you may create your own custom income illustrations at the TIAA-CREF website.
5. Minimum distribution at 70 ½
TIAA-CREF and Fidelity pay you the minimum amount of income you are legally required to take each year by the IRS under this payment program. The balance of your accumulations remain tax-deferred and continue to experience the investment returns of your chosen funds.
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.