TIAA-CREF 403b Rollover to IRA

Submitted by Gary Warner on Thu, 2015-12-10 23:10

I have a client who is 71 years old and she wants to roll over her TIAA-CREF 403b to an IRA so she can have some flexibility on how she can access the funds in the future. TIAA-CREF said that they will allow a 5 year payout and that they can send directly to the IRA custodian or withhold 20% and send a check to the client. Obviously the direct rollover is the preferred option, but in our two follow up calls with TIAA-CREF we got two different answers regarding a direct rollover, the first representative said we could do the direct rollover and TIAA-CREF would first send the RMD to the client and then rollover the remainder to the IRA Custodian. The second representative said that TIAA-CREF will not send the RMD to the client and just send the entire amount to the IRA Custodian. If the second representative is correct they client is pretty much stuck as the 403b RMD can not be taken from the IRA.

Is there something I am missing that may allow a direct rollover to occur?

If TIAA-CREF sends the check directly to the client and the client then sends the money in excess of her 403 RMD to her IRA within 60 days is she going to be OK with the IRS? If yes how does the RMD on the TIAA-CREF get calculated each year? as I believe they consider this option a 5 year annuitization.

Thanks for any help.



Submitted by Alan - IRA critic on Fri, 2015-12-11 02:58

  • The first step is to define the RMD amount included in the annual distribution since that amount is not eligible for rollover. While it is up to the 403b plan to clarify the RMD amount, I think that that individual account and not the annuity RMD rules apply here.
  • Either way, the second rep is incorrect because there would always be an RMD component included in the annual distribution. Accordingly, the best way to approach this is have the RMD as identified by the plan distributed to the client first. Mandatory withholding does not apply to RMDs, but client may elect optional withholding. After the RMD distribution, the remainder of the annual distribution should be directly rolled over to an IRA. The plan will have a year end account balance enabling on which the RMD calculation would be based.
  • While an entire distribution could be made to the client, only the non RMD portion would be subject to mandatory 20% withholding. This could cause some confusion since the client cannot roll over any of the RMD, but would have to factor in the withholding  as part of the RMD amount to determine the correct amount to roll over to the IRA.


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