Benefits Plans - 457(b) Deferred Compensation Plan:
TIAA-CREF and Fidelity Income Options

Cash Withdrawals

You may elect a cash withdrawal at any age once you have retired or terminated employment. There are three types of cash withdrawals: single-sum, lump sum, and systematic.

Single-sum (partial) cash withdrawal
You withdrawal a portion of your accumulations and allow the balance to remain in the account to preserve its tax-deferred status. You may take further withdrawals as your needs indicate or convert the balance into one of the other income options.

Lump sum (total) cash withdrawal
You may elect to receive your entire account balance in a single, lump sum payment. However, this may dramatically increase your tax liability and there will be no further income benefits available to you from the plan.

Systematic Cash Withdrawals
This allows you to create your own income plan by specifying the amount and frequency of payment (monthly, quarterly, annually, etc.). Payments continue until:

  • You tell TIAA-CREF or Fidelity to stop;
  • You change the amount of the payments;
  • You convert the remaining accumulation to a lifetime annuity or to another income option such as minimum distribution;
  • Your money (including earnings) runs out;
  • You die (if you die while receiving systematic withdrawals, the remainder goes to your beneficiary).

You can change your request at any time, and there's no limit as to the number of times you can change a systematic withdrawal that's already under way. Plus, your remaining accumulations remain tax-deferred and continue to experience the investment returns of your chosen funds. It also allows you to postpone final decisions about annuitization.

Minimum Distribution at 70 ½

The IRS requires that you begin receiving distributions by April 1 of the calendar year following the calendar year you reach age 70 ½ once retired or terminated. If you are already over age 70 ½ when you retire or terminate, then you must take a distribution by April 1 of the following year.

When you elect this option, TIAA-CREF and Fidelity will calculate and pay you the minimum amount of income you are legally required to take each year. The balance of your accumulations remain tax-deferred and continue to experience the investment returns of your chosen funds.

This plan allows you to meet federal minimum distribution requirements without having to request payments each year or start a lifetime annuity. This may be an appropriate income plan if want to preserve your accumulations as long as possible and maximize benefits for your beneficiary(ies).

Return to 457(b) Deferred Compensation Plan Intro

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.