Cash Withdrawals and Loans

Basic Retirement Savings Plan
	Cash Withdrawals	Loans
Current Employee	Not Available	Not Available
Former Employee	Employee contributions and earnings at any age, university contributions and earnings at age 55 or older	Not Available
U-M Retiree	At any age	Not Available

403(b) Supplemental Retirement Account (SRA)
	Cash Withdrawals	Loans
Current Employee	At age 59½ or older; hardship; disability	At any age
Former Employee	At any age	At any age
U-M Retiree	At any age	At any age

457(b) Deferred Compensation Plan
	Cash Withdrawals	Loans
Current Employee	At age 70½ or older; One-time withdrawal if account is less than $5,000 when specific conditions are met. See below for details.	At any age
Former Employee	At any age	At any age
U-M Retiree	At any age	At any age

Eligibility and Procedures for Cash Withdrawals and Loans

Following is information on when you may qualify for a loan from your U-M retirement plans, when you may qualify for a cash withdrawal, and the procedures to request a loan or cash withdrawal.

Loans
Loans may be available from your retirement accounts as follows:

Basic Retirement Plan – No loans are available at any time.

403(b) SRA – You may borrow from your 403(b) SRA at any time, for any reason, regardless of whether your employment is active or terminated.

457(b) Deferred Compensation Plan – You may borrow from your 457(b) Deferred Compensation Plan account at any time, for any reason, regardless of whether your employment is active or terminated.

Generally, you may borrow up to 45% of your TIAA SRA and 50% of your Fidelity SRA accumulation. The minimum loan amount is $1,000 and the maximum is $50,000. This is a combined loan limit and applies to all of your U-M 403(b) SRA and 457(b) accounts with both vendors. You may continue to participate in the U-M retirement savings plans if you take a loan from either plan.

There are no charges or fees for taking a loan from your 403(b) SRA or 457(b) Deferred Compensation Plan account, and there is no income tax due or tax penalty. However, interest will be charged while you repay the loan. The rate is determined by the investment company and is not tax-deductible. You may choose the length of repayment period, from one to five years. If the loan is used solely for the purchase of your principal residence, you may choose a repayment period up to 10 years. Monthly payments are made directly to TIAA or Fidelity Investments. Payroll deductions are not available through the university. If you default on the loan, it is then treated as a withdrawal, and taxes and penalties are due. You can prepay the loan with no penalties.

To arrange for a 403(b) SRA or 457(b) Deferred Compensation Plan loan, contact TIAA (800) 842-2776 or Fidelity (800) 343-0860 and request a loan application. University authorization is not needed to take a loan.
Cash Withdrawal Eligibility
Current Employees

Current employees may be eligible for a cash withdrawal as follows:

Basic Retirement Plan cash withdrawals are not available while you are still employed.

403(b) SRA cash withdrawals are available at age 59½ or in the event of disability or financial hardship.

457(b) Deferred Compensation Plan cash withdrawals of any amount are available at age 70½ or you may take a one-time withdrawal of your entire account before age 70 ½ if you meet certain criteria.

University retirees and former employees who are rehired into a job title that is not eligible to participate in the Basic Retirement Plan may elect a cash withdrawal at age 59½ or older.

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 and now have a 0% appointment.

Former Employees

Former employees may be eligible for a cash withdrawal as follows:

Basic Retirement Plan – Employee contributions and earnings may be withdrawn at any age. University contributions and earnings are available at age 55 and older.

403(b) SRA cash withdrawals are available at any age.

457(b) Deferred Compensation Plan cash withdrawals are available at any age.

Termination of employment does not include being on a leave of absence, layoff (RIF), phased retirement, retirement furlough, 0% appointment, a period of non-appointment, or being on long-term disability.

U-M Retirees

Faculty and staff who have officially retired from the University (see SPG 201.83) may elect a cash withdrawal of all contributions and earnings from the Basic Retirement Plan, the 403(b) SRA and the 457(b) at any age.
Cash Withdrawals from the Basic Retirement Plan
To take a cash withdrawal from the Basic Retirement Plan:

Contact TIAA ((800)842-2776) or Fidelity ((800)343-0860) to request a cash withdrawal or rollover:

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.

TIAA will allow you to submit a withdrawal or rollover request online:

Log into the TIAA website with your PIN

Select the tab at the top of the page called, “Manage My Portfolio”

Page down to select “Request a Withdrawal”

Complete the online information to initiate your withdrawal or rollover. Please note that TIAA has established a lifetime limit of $50,000 in withdrawals or rollovers that may be requested using this online method.

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 (800) 842-2776 or Fidelity (800) 343-0860 to request the withdrawals forms.

Send your completed forms directly to TIAA or Fidelity for processing.

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.

Call the SSC Contact Center at (734) 615-2000 and request that an electronic authorization be sent to TIAA or Fidelity for your withdrawal or rollover request.

The University of Michigan will electronically supply your date of termination and “Employer Authorization” to TIAA or Fidelity within 24 hours that will approve your withdrawal or rollover.

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

Please be advised that the University of Michigan does not sign paper forms to approve Basic Retirement 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 or Fidelity will process your request. If a telephone service representative at TIAA or Fidelity indicated obtaining the employer signature was mandatory, they have done so in error. Disregard those instructions.

403(b) SRA Cash Withdrawals

Review the withdrawal considerations if you make a withdrawal from your 403(b) SRA while you are a current U-M employee.

403(b) SRA In-Service Withdrawal Options
Withdrawal Considerations	Disability	Hardship	Age 59½	SRA Loan
Generally subject to IRS 10% early withdrawal penalty?	No	Yes	No	No
Income tax due for tax-deferred SRA?	Yes	Yes	Yes	No
Income tax due for after-tax-Roth SRA?	Qualified distributions: No Yes if it is not qualified	Qualified distributions: No Yes if it is not qualified	Qualified distributions: No Yes if it is not qualified	No
Can you still contribute to the Basic Retirement Plan?	Yes	No, participation suspended for six months	Yes	Yes
Can you still contribute to the 403(b) SRA?	Yes	No, participation suspended for six months	Yes	Yes
Requires Benefits Office approval?	Yes	Yes	No	No
Do you have to repay it?	No	No	No	Yes
How much can you access?	Entire 403(b) SRA accumulation	Contributions only, earnings are not available	Entire 403(b) SRA accumulation	45% of TIAA 403(b) SRA, 50% of Fidelity 403(b) SRA

Notes:

Qualified distributions from the after-tax Roth 403(b) SRA are generally tax-free when made after a 5-taxable-year period of participation and when it is: 1) made on or after the date you attain age 59½, or 2) made after your death, or 3) your being disabled as defined by Internal Revenue Code (IRC) Section 72(m)(7). If the distribution does not meet these criteria it is not qualified and income tax is due on the earnings. However, income tax is not due on the contributions of a nonqualified distribution since those amounts were subject to taxation when deducted from your paycheck.
A 10% penalty generally applies to withdrawals made prior to age 59½ and generally applies to nonqualified distributions of after-tax Roth 403(b) SRA amounts. Consult with a qualified tax advisor for information on taxation of distributions and the IRS early withdrawal penalty.
If you default on repayment of the 403(b) SRA loan, income taxes are due and an IRS early withdrawal penalty may apply if you are under age 59½.

403(b) SRA Disability Withdrawal

If you have a 403(b) SRA with TIAA or Fidelity, or both, you may withdraw your accumulations (up to all contributions and earnings) while you are still working for the university if you become disabled. The Internal Revenue Code defines an individual to be disabled if they are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to be of long-continued and indefinite duration. Individuals applying for a disability withdrawal must provide verification of disability to the Benefits Office, such as proof of Social Security disability benefit entitlement. Income tax will be due on the amount you cash out (except for qualifying distributions of after-tax Roth 403(b) SRA amounts). The IRS 10% early withdrawal penalty does not apply to a disability withdrawal.

To arrange for a disability withdrawal, contact TIAA (800) 842-2776 or Fidelity (800) 343-0860 to request an SRA Disability Withdrawal Application. After completing your sections of the application, mail, fax, or deliver the application to the Benefits Office along with documentation of your disability status. The Benefits Office will complete the employer authorization section and forward the application to your investment carrier within three business days.

403(b) SRA Hardship Withdrawal

You may be eligible to withdraw your contributions (earnings are not available) if you have a 403(b) SRA with TIAA or Fidelity Investments due to a financial hardship. Income tax is due on the amount you cash out (except for qualifying distributions of after-tax Roth 403(b) SRA amounts) and cash withdrawals made prior to age 59½ are generally subject to an IRS 10% early withdrawal penalty. In addition, U.S. Treasury Department regulations require that you must take a loan from the 403(b) SRA and 457(b) plan (if participating) to meet the financial need before taking a hardship withdrawal. A hardship must meet two requirements, per regulations issued by the U.S. Treasury Department.

First, you must have an immediate and heavy financial need that falls under one of the following six categories determined by the IRS:

Expenses for medical care that would be tax-deductible under Internal Revenue Code (IRC) section 213(d), for the employee, spouse, or dependents;
Costs directly related to purchase of the principal residence (excluding mortgage payments) of the employee;
Payment of tuition, related educational fees, and room and board expenses for the employee, spouse, or dependents for the next 12 months of post-secondary education;
Payments necessary to prevent eviction of the employee from the employee’s principal residence or foreclosure on the mortgage of that residence.
Payments for burial or funeral expenses for the employee’s deceased parent, spouse, children, or dependents;
Expenses for the repair of damage to the employee’s principal residence as a result of a casualty loss defined by the IRS as damage, destruction, or loss of property resulting from an identifiable events that is sudden, unexpected, or unusual that would qualify for the casual deduction under IRC section 165.

Second, the hardship withdrawal cannot exceed the amount necessary to relieve the financial need and it cannot be satisfied from other resources reasonably available to you (“Safe Harbor method”). It must meet the following criteria:

The distribution is not in excess of the need;
You have taken all distributions and loans available from all employer plans; and
Your elective deferrals (voluntary contributions) to your employer plans are suspended for a minimum of six consecutive months. This includes your contribution and the university matching contribution to the Basic Retirement Plan and any additional contributions you make to a 403(b) SRA and the 457(b) Deferred Compensation Plan. If you are a compulsory participant in the Basic Retirement Plan, you will be enrolled in the Reduced Benefit Option. You must re-enroll if you wish to restart your participation in the retirement savings plans after six months. You are not automatically re-enrolled.

To arrange for a 403(b) SRA hardship withdrawal, contact TIAA (800) 842-2776 or Fidelity (800) 343-0860 to speak with a counselor to determine if you are eligible. If you meet the eligibility criteria, TIAA or Fidelity will send you an application for the hardship withdrawal. Return your completed forms to the vendor with the appropriate documentation demonstrating the amount of the need and that it meets one of the six qualifying expenses.

403(b) SRA Age 59½ Withdrawal

If you have a 403(b) SRA with TIAA or Fidelity, or both, you may withdraw your accumulations (up to all contributions and earnings) while you are still working for the university starting at age 59½. Income tax will be due on the amount you cash out (except for qualifying distributions of after-tax Roth 403(b) SRA amounts). TIAA and Fidelity Investments are required by federal regulations to withhold 20% of the amount of the withdrawal for income tax purposes. There is no IRS 10% early withdrawal penalty on a withdrawal made at or after age 59½.

To arrange for a withdrawal, contact TIAA (800) 842-2776 or Fidelity (800) 343-0860 and request a 403(b) SRA withdrawal application.

457(b) Withdrawals
457(b) Age 70½ Withdrawal

You may withdraw any portion or your entire accumulations while you are a current member of the faculty or staff at age 70½ or older for any reason. Income tax will be due on the amount you cash out (except for qualifying distributions of after-tax Roth 457(b) amounts). You can rollover this withdrawal if you wish.

This type of withdrawal is not the same as a minimum distribution. If you are over 70½ when you retire or terminate, the IRS requires that minimum distributions begin by the following April 1. In contrast, this withdrawal option is available to you while you are still working at 70 ½ or older and is not considered to be a minimum distribution but merely an in-service cash withdrawal.

To initiate a 457(b) Age 70½ Withdrawal, contact TIAA ((800) 842-2776) or Fidelity ((800) 343-0860) for a withdrawal application.

457(b) One-Time Withdrawal

You may withdraw your entire 457(b) Deferred Compensation Plan accumulations under a special provision while you are a current member of the faculty or staff if the following conditions are met:

The total account balance (not counting rollovers you made into the plan) is no more than $5,000;

No amount has been deferred under the plan during the two-year period that ends on the date of distribution; and

No previous distribution was taken under this special provision.

Income tax will be due on the amount you cash out (except for qualifying distributions of after-tax Roth 457(b) amounts), but there is no additional tax penalty. You can rollover this withdrawal if you wish.

To initiate a 457(b) One-Time Withdrawal, contact TIAA (800) 842-2776 or Fidelity (800) 343-0860 for a withdrawal application.
Minimum Distribution at Age 70½

The IRS requires that you begin receiving distributions from your retirement accounts by April 1 of the calendar year following the calendar year you reach age 70½ once retired or terminated. If you are already over age 70½ when you retire or terminate, then you must take a distribution by April 1 of the following year. This applies to the Basic Retirement Plan, the 403(b) SRA and the 457(b) plan.

Generally, 403(b) accumulations as of December 31, 1986 are grandfathered under a special rule. Distributions of these amounts do not have to begin until age 75 once retired or terminated. This grandfathering is forfeited for those accumulations you rollover to an IRA. This special provision on grandfathering does not apply to qualified plans under Internal Revenue Code sections 401(a), 403(a), and 401(k).

When you elect the minimum distribution income plan, TIAA and Fidelity will calculate and pay you the minimum amount of income you are legally required to take each year. The balance of your accumulations remains tax-deferred and continues to experience the investment returns of your chosen funds. This plan allows you to meet federal minimum distribution requirements without having to request payments each year or start a lifetime annuity. This may be an appropriate income plan if you want to preserve your accumulations as long as possible and maximize benefits for your beneficiaries. Keep in mind that there may be potential tax costs when these assets are passed on to your beneficiaries as they may be subject to both estate and income taxes.
TIAA Traditional

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 for more information.
Taxes and Penalties

Income tax is due on withdrawals, and a 10% penalty generally applies to withdrawals made prior to age 59½. Qualified distributions from the after-tax Roth 403(b) SRA and from the after-tax Roth 457(b) are generally tax-free when made after a 5-taxable-year period of participation and is either: 1) made on or after the date you attain age 59½, or 2) made after your death, or 3) your being disabled according to Internal Revenue Code (IRC) Section 72(m)(7). Consult with a qualified tax advisor for information on taxation of retirement plan distributions and the IRS early withdrawal penalty.

Questions About Your Benefits?

Call the SSC Contact Center at 5-2000 from the Ann Arbor campus, (734) 615-2000 locally, or (866) 647-7657 toll free, Monday through Friday from 8 a.m. to 5 p.m.

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. Every effort has been made to ensure the accuracy of the benefits information in this site. However, if any provision on the benefits plans is unclear or ambiguous, the Benefits Office reserves the right to interpret the plan and resolve the problem. If any inconsistency exists between this site and the written plans or contracts, the actual provisions of each benefit plan will govern.

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Cash Withdrawals and Loans

Compare Your Options for Cash Withdrawals and Loans

Eligibility and Procedures for Cash Withdrawals and Loans

Current Employees

Former Employees

U-M Retirees

403(b) SRA Disability Withdrawal

403(b) SRA Hardship Withdrawal

403(b) SRA Age 59½ Withdrawal

457(b) Age 70½ Withdrawal

457(b) One-Time Withdrawal

Questions About Your Benefits?

Limitations

Benefits Office

Cash Withdrawals and Loans

Compare Your Options for Cash Withdrawals and Loans

Eligibility and Procedures for Cash Withdrawals and Loans

Current Employees

Former Employees

U-M Retirees

403(b) SRA Disability Withdrawal

403(b) SRA Hardship Withdrawal

403(b) SRA Age 59½ Withdrawal

457(b) Age 70½ Withdrawal

457(b) One-Time Withdrawal

Questions About Your Benefits?

Limitations

Benefits Office

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