Benefits Plans - Retirement Savings Plans: Rollovers and Transfers -
Rollovers out of the U-M Plan
The information below covers rollovers from the University of Michigan Retirement Savings Plan to another retirement savings plan or IRA. For information on rolling over accumulations from another employer’s retirement plan into the U-M Retirement Savings Plan, please see Rollovers into the U-M Plan. See the Cash Withdrawals, Rollovers, Transfers, and Loans Chart (PDF) for a comparison to other options.
| Basic Plan | SRA | |
|---|---|---|
Current Employees |
Not available |
Age 59½ or older |
| Former Employees |
|
At any age |
What is a rollover?
A rollover is a tax-free transfer of all or any portion of an eligible rollover distribution from one qualified or non-qualified retirement plan into another or into an IRA.
What is an eligible rollover distribution?
An eligible rollover distribution is any taxable portion of a cash withdrawal or payment this is part of a series of periodic distributions made for a time period of less than 10 years. It involves withdrawing funds from an employer’s retirement plan and then “rolling over” the withdrawal into another funding vehicle such as another employer’s retirement plan or an IRA.
| Eligible for Rollover | Not Eligible for Rollover |
|---|---|
Cash withdrawals |
Hardship withdrawals |
Fixed period annuities of less than 10 years |
Minimum distribution payments |
TIAA Traditional IPRO payments |
Disability withdrawals |
TIAA Traditional Transfer Payout Annuity |
Lifetime annuities |
TIAA-CREF Retirement Transition Benefit |
Fixed period annuities of 10 years or longer |
How does a transfer differ from a rollover?
A direct transfer moves accumulations between companies that are within an employer’s retirement plan and can be done at any time. The transferred amounts maintain all the plan features such as withdrawals and loans.
A rollover removes amounts from an employer’s retirement plan and eliminates all features, rights, and options available through the plan. By doing so, it also ends t he employer’s compliance and tracking responsibilities once the funds are cashed out and rolled over.
How does a rollover work under the U-M Retirement Plan?
A rollover allows you to move your TIAA-CREF and Fidelity Investment accumulations out of the U-M Retirement Plan to another investment carrier through an IRA or another employer’s retirement plan.
Since a rollover is a considered to be a distribution that is immediately followed by a rollover into another investment vehicle, you must first be eligible to take a cash withdrawal. Note that federal regulations do not permit hardship and disability withdrawals to be rolled over and certain other types of plan distributions are also not eligible ( see chart).
Can these issues affect how I manage a transfer or rollover?
It is critical that you know which type of transaction you are asking for so the investment carrier will send you the correct paperwork.
Example: if you want to move accumulations out of TIAA-CREF or Fidelity you should ask for a rollover, not a transfer. If TIAA-CREF or Fidelity is not clear on your intentions you may receive the incorrect form and your rollover will be delayed until the correct paperwork is received.
When can I make a rollover under the Basic Retirement Plan?
Current Employee - Accumulations in the Basic Retirement Plan are not available for rollover while you are an employee.
Former Employee - Once you have terminated your employment you may roll over your five percent contribution and earnings at any age; the University ten percent contribution and earnings are available at age 55 or older. Termination of employment does not include being on a leave of absence, layoff ( RIF), phased retirement, retirement furlough, or being on long-term disability.
University Retiree – Faculty and staff who have officially retired from the University (see SPG 201.83) may elect a rollover of all contributions and earnings at any age; the age 55 restriction on the University contributions and earnings does not apply.
QDRO Alternate Payee – an alternate payee under a QDRO may elect a rollover at any age.
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.
When can I make a rollover under the SRA?
SRA contributions and earnings are available for rollover at age 59½ for active employees and at any age once you have terminated employment.
Aren’t TIAA Traditional accumulations in the SRA also 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 rolled over in a lump sum.
Is minimum distribution grandfathering lost when I take a rollover?
Yes. The IRS generally requires that an individual begin to take a minimum distribution from his or her account by age 70½ in order to avoid a severe tax penalty. Amounts attributable as of December 31, 1986 are grandfathered, and are not subject to minimum distribution until age 75. Electing a rollover eliminates this grandfathering feature; this may be important for tax planning.
What other features do I lose when I take a rollover?
- Michigan Income Tax: Distributions from the Basic Retirement Plan are generally allowed as a subtraction in your adjusted gross income from Schedule I of the Michigan MI-1040 tax form. This reduces your income that is subject to Michigan income tax. Your ability to take a subtraction may be limited if you also receive benefits from a private pension. However, this can be an important tax benefit to you. Accumulations that are rolled over to an IRA may still be taken as a subtraction when distributed from the IRA, but under much more strict guidelines. As always, you should seek a qualified tax advisor for questions. You may also contact the Michigan Department of Treasury for details at 800-487-7000.
- Bankruptcy and Creditors: Accumulations in qualified employer retirement plans like 403(b) and 401(k) plans have a certain protection from assigning your plan benefits to a third party like creditors under what is called “anti-alienation.” This protection is lost when you elect a rollover to an IRA.
- Waiver of Fees: Many fees are waived when you participate in an employer retirement plan. These include recordkeeping and account maintenance fees and minimum balance requirements to invest. When you elect an IRA rollover you often become subject to many of these fees that were waived through the U-M Retirement Plan.
- Closed Funds: Some investment funds are open only to investors through an employer retirement plan. Your access to some funds may be closed off when you elect an IRA rollover.
How do I elect a rollover under the Basic Retirement Plan?
- You must have terminated employment to be eligible for a cash withdrawal and rollover (see above). If you have not terminated, you are not eligible for a rollover.
- Contact the investment carrier that has the accumulations you want to rollover and request the cash withdrawal application. Tell TIAA-CREF or Fidelity how much you want to rollover: the entire account balance or just a portion, the Basic Retirement Plan or the SRA, your contribution or just the University contribution. This will determine how many forms they will send to you.
- Complete the cash withdrawal form and the rollover section and return it to TIAA-CREF or Fidelity.
Why do I ask for a cash withdrawal form if I want a rollover?
A rollover is a cash withdrawal. The withdrawal form will contain a section to indicate you want a rollover instead of receiving the distribution. It will ask how much you want to rollover, the name of the investment company to receive the rollover, and your account information at the receiving company.
How do I elect a direct rollover under the SRA?
- You must be eligible for a cash withdrawal to elect a rollover (see above).
- Contact the investment carrier that has the accumulations you want to rollover and request a cash withdrawal form and rollover form.
- Return the form once completed directly to TIAA-CREF or Fidelity.
Who can I talk to if I have questions or need help with a rollover?
You can speak with a consultant with TIAA-CREF and Fidelity Investments for questions and to request forms for a rollover at the following numbers:
TIAA-CREF 800-842-2776 Fidelity Investments 800-343-0860
You can also meet with a consultant from TIAA-CREF and Fidelity Investments for questions or help on completing the applications. To make an appointment with a consultant assigned to work with the University of Michigan Retirement Plan call:
TIAA-CREF 734-332-3504 Fidelity Investments 800-642-7131
How do I arrange for a rollover?
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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.