Benefits Plans - Retirement Savings Plans: Cash Withdrawals - Former Employees


Overview

Former employees who have terminated employment with the University of Michigan may take a cash withdrawal from the Basic Retirement Plan and/or the SRA. However, some restrictions apply on access to the university contributions and earnings under the Basic Retirement Plan (see below).

Termination of employment does not include being on a leave of absence, layoff ( RIF), phased retirement, 0% appointment effort, retirement furlough, or being on long-term disability. If you are on one of these statuses, you are still employed with the University because the employee-employer relationship is still in effect. You are not eligible for these withdrawals until your employment is formally terminated.

Call the SSC Contact Center to determine if you are eligible for a cash withdrawal or rollover if you were previously enrolled in the retirement plans as an instructional staff member and now have a 0% appointment.

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Basic Retirement Plan

This is the plan in which you contribute 5% of your salary on a tax-deferred basis and the University provides a 10% matching contribution.

Cash withdrawals are available from the Basic Retirement Plan to faculty and staff members who have terminated their employment with the University of Michigan, including those who have officially retired from the University (see SPG 201.83).

How much can I withdraw?

  • Your 5% employee contribution and earnings are available for withdrawal at any age once you have terminated employment.
  • The University 10% matching contribution and earnings are available for withdrawal at age 55 or older once you have terminated employment.

I’m a University retiree but under age 55, can I cash out the University contribution?

Yes. Faculty and staff members who have officially retired from the University according to the age and service requirements of SPG 201.83 may elect a withdrawal of University contributions and earnings prior to age 55.  Therefore, University retirees may withdraw all contributions and earnings at any age upon retirement. However, this does not exempt you from the IRS early withdrawal penalty.  Remember that the IRS 10% early withdrawal penalty will generally still apply until you reach age 59½.

Aren’t TIAA Traditional accumulations under additional restrictions?

Yes. Accumulations in TIAA Traditional in the Basic Retirement Plan are not available for lump-sum cash withdrawals, rollovers, or transfers. These transactions occur over a nine-year period through a process called the TIAA Traditional Transfer Payout Annuity. Contact TIAA-CREF for information on how this process works.

Is there an IRS penalty for taking a cash withdrawal?

Cash withdrawals made prior to age 59½ are generally subject to an IRS 10% early withdrawal penalty. You should consult with a qualified tax advisor for complete details.

Do I have to pay income tax on the withdrawal?

Yes, you will have to pay income tax on the amount you cash out. TIAA-CREF and Fidelity Investments are required by federal regulations to withhold 20% of the amount of the withdrawal for income tax purposes.

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Supplemental Basic Plan TIAA-CREF

This is the option that allows you to invest your supplemental contributions in the Basic Plan at TIAA-CREF, as opposed to investing in a separate TIAA-CREF SRA account.

You can take a cash withdrawal of supplemental contributions made to TIAA-CREF under the Basic Plan at any age upon termination of employment. Simply call TIAA-CREF and request a withdrawal application.

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Supplemental Retirement Account (SRA)

SRA Contributions are those you make to a separate account in addition to the 5% under the Basic Plan, or as the primary type of contribution if you are not eligible for the Basic Plan.

Cash withdrawals from the SRA are available at any age to faculty and staff members who have terminated their employment with the University of Michigan. Alternatively, you may take a loan from your SRA if you don’t want to cash it out.

How much can I withdraw?

Your entire SRA accumulations (contributions and earnings) are available for withdrawal at any age once you have terminated employment.

Aren’t TIAA Traditional accumulations under additional restrictions?

No. While accumulations in TIAA Traditional in the Basic Plan are subject to a nine-year payout time span, TIAA Traditional accumulations in the SRA may be cashed out in a lump sum.

Is there an IRS penalty for taking a cash withdrawal?

Cash withdrawals made prior to age 59½ are generally subject to an IRS 10% early withdrawal penalty. You should consult with a qualified tax advisor for complete details.

Do I have to pay income tax on the withdrawal?

Yes, you will have to pay income tax on the amount you cash out. TIAA-CREF and Fidelity Investments are required by federal regulations to withhold 20% of the amount of the withdrawal for income tax purposes.

Qualified distributions of after-tax Roth 403(b) SRA amounts are tax free.  For more information visit Roth FAQs.

How do I arrange for a cash withdrawal from the Basic Retirement Plan?

  1. Contact TIAA-CREF or Fidelity to request a cash withdrawal or rollover:

    1. TIAA-CREF: 1-800-842-2776
    2. Fidelity Investments: 1-800-343-0860

  2. Fidelity offers “By-Phone Distributions” which allows you to provide verbal instructions on a recorded line for your withdrawal or rollover request.  No paper forms are needed.
  3. TIAA-CREF will allow you to submit a withdrawal or rollover request online:
    1. Log into www.tiaa-cref.org with your PIN
    2. Select the tab at the top of the page called, “Manage My Portfolio”
    3. Page down to select “Request a Withdrawal”
    4. Complete the online information to initiate your withdrawal or rollover. Please note that TIAA-CREF has established a lifetime limit of $50,000 in withdrawals or rollovers that may be requested using this online method.
  4. You may submit your request using a paper form rather than using the by-phone and online methods, however, it will take longer to process.  Call TIAA-CREF or Fidelity at the numbers listed above to obtain the withdrawals forms.
  5. Send your completed forms directly to TIAA-CREF or Fidelity for processing.
    1. Disregard the “Employer Authorization” on the form asking you to obtain a signature from the Benefits Office.  Do not mail, FAX, or bring your forms to the Benefits Office for this signature.
    2. Call our office at 734-615-2000 and request an electronic authorization be sent to TIAA-CREF or Fidelity for your withdrawal or rollover request.
    3. The University of Michigan will electronically supply your date of termination and “Employer Authorization” to TIAA-CREF or Fidelity within 24 hours that will approve your withdrawal or rollover.

Please be advised that the University of Michigan does not sign paper forms to approve Basic Plan distributions for security and compliance reasons.  The electronic approval process replaces the need to obtain a signature on the form.

This will also increase the speed and efficiency with which TIAA-CREF or Fidelity will process your request.  If a telephone service representative at TIAA-CREF or Fidelity indicated obtaining the employer signature was mandatory, they have done so in error.  Disregard those instructions.


  1. Regardless of which process you use, TIAA-CREF and Fidelity will contact our office immediately if they are missing any information needed from the University of Michigan to process your request.

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Limitations
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.