TIAA-CREF Lifetime Annuity and 72(t) SEPP

Submitted by Bob Friedman on Thu, 2019-06-27 18:34

Hello Sir,

Would the TIAA lifetime annuity meet the 72(t) SEPP exemption, such as for early retirement at age 53, or instead would it lead to a “busted” 72(t) distribution because the annuity calculation does not meet the IRS SEPP requirements. If it is possible, then is a letter from TIAA sufficient to show the IRS that the annuity meets the SEPP requirements?

The other question is for a different scenario – whether 72(t) SEPP distributions from a qualified plan could be stopped at age 60 and then the remaining amount used to purchase a TIAA lifetime annuity, or does the SEPP have to continue for a lifetime with only very limited modification.

Thank you for reading this.



Submitted by Alan - IRA critic on Thu, 2019-06-27 23:54

  • With qualified money there are only 3 approved calculation methods that meet the “substantially equal” penalty exception, so DB plans will not qualify since they mostly use years of service and a final average salary amount. That said, I would check with TIIA since they have been in this business for a century and may know of some other exception. Just ask them if they will code the 1099R with Code 2 at least until 59.5.
  • The standard substantially equal exception needs only continue for the longer of 5 years or until 59.5. After that if the plan admintrator offers other options, it should be OK.

Submitted by Bob Friedman on Fri, 2019-06-28 01:32

Thank you for the guidance.

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