RMD From TIAA-CREF Transfer Payout Annuity (Rollover to IRA)

Submitted by Steven Stern on Fri, 2016-09-16 02:16

I have a 403(b) that is in a TIAA-CREF Transfer Payout Annuity being rolled over to my IRA for 10 years. I am currently over 70.5 and in the past few years, we have asked TIAA-CREF for the RMD amount and I have taken this amount from my other IRA (Fidelity). However, I understand if this was a 403(b), I technically should be taking an RMD from the Transfer Payout Annuity and a separate RMD from my IRA.

TIAA-CREF Doesn’t seem to be able to advise me. The only options seem to be to continue what I am doing now or to open a new account with TIAA and send the payouts to that non-qualified account to satisfy the RMD. Has anyone been through this and do you think I should change what I am currently doing?



Submitted by Alan - IRA critic on Fri, 2016-09-16 03:33

  • No expert on TIIA, but since a payout of 10 years or more does NOT meet the definition of an eligible rollover distribution (ERD), my guess is that the 10 transfers technically are done in 9 years and 1 day and TIIA has IRA approval to consider this a 9 year period even though there are 10 payments. That allows the payments to be rolled to an IRA as direct rollovers.
  • Google tells me that many people have had trouble getting TIIA to address RMDs, since an RMD is not eligible for rollover. Starting in the year you turn 70.5 (unless you had pre 1987 accruals in the annuity for which RMDs do not start until 75), part of your payout is considered the RMD. Because the RMD is being directly rolled over, the RMD is still satisfied but you would have an excess IRA contribution up to the RMD amount for that year. You would have to request a corrective distribution from the IRA under usual rules, and there is no statute of limitations for excess IRA contributions.
  • What mystifies me is why TIIA does not explain all this when the transfer payout is elected. They know how much pre 87 money the annuity contains and they know your age. They also execute tens of thousands of these while apparently providing little explanation to you or thousands of others who have raised this question for the last decade or more.
  • I guess your first challenge is to determine how much “grandfathered” money (12/31/1986 balance) you have in the account. By now it is probably 0 because all the transfers were deemed to be from the old money until that balance was used up. You would then have to determine if you had any old money left in the year you reached 70.5. If not, the excess IRA contributions start then. Again, the RMD will be much smaller than a 10% payout, so your excess IRA contribution would be less than half of each transfer.
  • 403b RMDs can be aggregated only with other 403b accounts, not with IRA accounts. Is it possible that TIIA thinks you are taking your 403b RMDs from some other 403b account?
  • Will wait for your reply or from anyone else who is more familiar with this problem before getting into solutions. How may payments are left and in what year did you reach 70.5?

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