Rollovers and Direct Transfers

Compare your options for cash withdrawals, rollovers, transfers, and loans at a glance.

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Direct Transfers

A direct transfer allows you to move your U-M retirement savings plan accumulations between TIAA-CREF and Fidelity Investments, tax-free. Direct transfers are available to current and former employees at any age, at any time. U-M authorization is not needed for a direct transfer.

A direct transfer is different from a rollover in that it occurs between two investment companies under the same employer retirement plan. You cannot make a direct transfer to an IRA, to another employer’s retirement plan, or to an investment company that is not TIAA-CREF or Fidelity. Likewise, you cannot make a direct transfer between U-M plans (for example, between your U-M 403(b) SRA and 457(b) Deferred Compensation Plan accounts).

How to Complete a Direct Transfer

  1. If you do not have one already, open an account with TIAA-CREF or Fidelity or both so the rollover will have a destination account ready to accept the assets. You may open your account online by selecting the type of plan for which you want to create an account and following the screen prompts.

  2. Contact the investment company you want to receive the transfer and request the direct transfer form (e.g., you will need Fidelity’s form to transfer assets from TIAA-CREF to Fidelity).

  3. Complete the direct transfer application and return it to the investment company you want to receive the transfer.

  4. Use Employee Self-Service > Benefits on Wolverine Access if you want to designate that future paycheck contributions go to the same company as the one that will receive the transfer of assets.

Change Future Payroll Contributions

A direct transfer only moves accumulations between TIAA-CREF and Fidelity already on deposit; it does not change where your on-going monthly payroll contributions go. Use Employee Self-Service > Benefits on Wolverine Access if you want to designate that future paycheck contributions go to the same company as your direct transfer. Otherwise, paycheck contributions will continue to go to the same company out of which you just transferred assets.

Grandfathering of Pre-1987 Amounts

Accumulations attributable as of December 31, 1986 retain their grandfathered status under a direct transfer. The receiving investment carrier will track any pre-1987 amounts that are transferred so that minimum distribution does not have to begin until age 75 as opposed to age 70½ on post-1986 amounts. This preservation of grandfathering status is lost when you rollover funds out of TIAA-CREF and Fidelity Investments under the University of Michigan Retirement Plan and into an IRA or another employer’s retirement plan.

Rollovers Into the U-M Plans

You may rollover assets from another employer’s retirement plan or from an IRA into the U-M Basic Retirement Plan, the 403(b) SRA, or the 457(b) Deferred Compensation Plan at any time. U-M authorization is not required.

The following types of pre-tax eligible rollover distributions can be accepted: 401(a), 403(a), 401(k), 403(b), Governmental 457(b), and IRA. After-tax Roth amounts can only be rolled over to another plan that allows participants to make after-tax Roth elective deferrals. At U-M, these plans include the 403(b) SRA and the 457(b) Deferred Compensation Plan. The Basic Retirement plan cannot accept a rollover of Roth amounts from another plan.

In addition, you cannot rollover amounts from a nongovernmental 457(b) into the U-M 457(b) plan. For example, you cannot rollover amounts from a 457(b) you had at a private university or college into the U-M 457(b) plan due to difference in taxation under federal regulations.

Rolling over amounts into the retirement savings plans gives you access to the lower-cost share class of mutual funds that are available through the U-M plans. Amounts you roll into any of the U-M plans are available for withdrawal while you are working for the university or after you terminate employment. Amounts you rollover into the 403(b) SRA and the 457(b) are also available to take as a loan.

How to Rollover Assets into a U-M Plan

  1. Contact your previous employer and/or the investment company for their retirement plan to determine if you are eligible for a rollover. You may be required to fill out rollover forms for your previous employer and/or their investment company.

  2. If you do not have one already, open an account with TIAA-CREF or Fidelity (or both) so the rollover will have a destination account ready to accept the assets. You may open your account online by selecting the type of plan for which you want to create an account and following the screen prompts.

  3. Request or download and complete the TIAA-CREF or Fidelity rollover form. The form will ask into which U-M plan you want to rollover assets.  Refer to the Plan Names and Numbers for the plan types and their record keeping number with TIAA-CREF and Fidelity. 

  4. Return all rollover forms, including any from your previous employer and their investment company, to TIAA-CREF or Fidelity for processing.

  5. TIAA-CREF or Fidelity will contact your previous employer and their investment company to request the assets be sent to them.

  6. The investment company for your previous retirement plan will send the rollover assets to TIAA-CREF or Fidelity for deposit into your account.

  7. Review your account online and quarterly statement to confirm the rollover was completed successfully.

Refer to the Rollovers into the U-M Plan How-to Guide for printable version of this information.

Tax Considerations

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 that are 403(b) accumulations 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.

In addition, if you are rolling over assets into one of the U-M plans from a different type of plan you had at a previous employer, it may affect the tax treatment of distributions that you will take later.  This may cause you to lose important tax advantages. 

Example:

Distributions from a 457(b) plan are not subject to the IRS 10% penalty for withdrawals made prior to age 59½.  This penalty applies to a 401(a), 401(k), 403(a) annuity, 403(b), or an IRA.  If you rollover a 457(b) plan into an IRA or a plan that is subject to the penalty, the exemption to the 10% is generally lost.  Consult with a qualified tax adviser to determine if you may be impacted by electing a rollover.

Rollover Into an IRA

You can rollover assets into an IRA with TIAA-CREF or Fidelity instead of into the U-M plans. Rollovers into an IRA will give you flexibility for cash withdrawals, will consolidate your assets with TIAA-CREF or Fidelity alongside your U-M retirement accounts, and provides you a single quarterly statement.  However, you will not have access to the lower-cost share class of mutual funds that are available through the U-M plans.

Rollovers Out of the U-M Plans

A rollover out of the U-M retirement plans allows you to move your TIAA-CREF and Fidelity Investment accumulations to another investment carrier through an IRA or another employer’s retirement plan. A rollover is a considered to be a distribution that is followed by a rollover into another investment vehicle. You must first be eligible to take a cash withdrawal in order to elect a rollover.

Rollover Eligibility

Current employees:

  • Basic Retirement Plan – Rollovers are not available.

  • 403(b) SRA – Accumulations may be rolled over at age 59½ or older.

  • 457(b) Deferred Compensation Plan – Accumulations may be rolled over at age 70½ or upon taking a one-time withdrawal.

Former employees:

  • Basic Retirement Plan – Employee contributions and earnings may be rolled over at any age. University contributions and earnings may be rolled over at age 55 or older.

  • 403(b) SRA – Accumulations may be rolled over at any age.

  • 457(b) Deferred Compensation Plan – Accumulations may be rolled over at any age.

U-M retirees:

  • 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.

Alternate payees:

  • An alternate payee under a QDRO may elect a rollover at any age.

How to Rollover Assets Out of a U-M Plan

  1. Contact TIAA-CREF or Fidelity Investments. Certain rollovers may be done via telephone on a recorded line or online at the vendor website.

  2. If you are using a rollover form return it to TIAA-CREF or Fidelity.

Eligible Rollover Distributions

The following types of distributions from a U-M plan are eligible to be rolled over:

  • Cash withdrawals

  • 403(b) SRA disability withdrawals

  • Fixed period annuities of less than 10 years

  • TIAA Traditional IPRO payments

  • TIAA Traditional Transfer Payout Annuity

  • TIAA-CREF Retirement Transition Benefit

These types of distributions from a U-M plan are not eligible to be rolled over:

  • 403(b) SRA hardship withdrawals

  • Minimum distribution payments

  • Lifetime annuities

  • Fixed period annuities of 10 years or longer

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-CREF for more information. This limitation does not apply to TIAA Traditional accumulations in the 403(b) SRA or the 457(b) plan.

Other Considerations

A rollover removes amounts from an employer’s retirement plan and eliminates all features, rights, and options available through the plan.  Consult with a qualified tax advisor before rolling over funds.

Minimum Distribution Grandfathering 

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 403(b) accumulations 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.

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.

Low Cost Share Class 

All TIAA-CREF mutual funds and several Fidelity mutual funds are offered at the lowest-cost share class through the U-M plan. These funds are not available to you through an IRA.

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.