The U-M retirement savings plans provide an important source of income in retirement in addition to Social Security and your personal savings. U-M does not have a pension plan. Here is a summary of your retirement income options. 

TIAA Income Options

Download a printable chart that describes common options for receiving income from your TIAA retirement savings account after you retire.

Lifetime Annuities

A lifetime annuity is the only income option that is guaranteed to last as long as you live. You can start a TIAA one-life or two-life annuity at any age once you have terminated employment with the University of Michigan. If you are on phased retirement, you may start a lifetime annuity of up to 100% of accumulations. A lifetime annuity may be appropriate if you want a regular income to replace your salary once you have retired. It is also an irreversible arrangement. Once you begin receiving payments, you can’t stop them.

One-Life Annuity

With a one-life annuity, you receive an income for as long as you live. At your death, payments can continue to a designated beneficiary if you include a guaranteed period.

Two-Life Annuity

This option pays lifetime income to you and an annuity partner (spouse or any other person you name) for as long as either of you live. At the death of both you and your annuity partner, payments can continue to your designated beneficiary if you include a guaranteed period. TIAA offers three kinds of two-life annuities. All three are available to you if your spouse is your annuity partner; otherwise, your annuity partner’s age might restrict the use of some options.

Full Benefits to Survivor

You and your annuity partner receive lifetime income. The income to your survivor doesn't change at your death. This is the only option that doesn't reduce income for the survivor when the annuitant dies. However, since it pays more to the surviving partner than the other two options listed below, the income payments are smaller.

Half Benefit to Second Annuitant

You and your annuity partner receive lifetime income. If your annuity partner dies first, your income remains the same. If you die first, payments to your annuity partner continue at half the amount.

Two-Thirds Benefit to Survivor

You and your annuity partner receive lifetime income. At the time of your death or your annuity partner’s death, income drops to two-thirds of the amount to the survivor. This is the only two-life annuity option that reduces your monthly income if your annuity partner dies first.

Guaranteed Periods

With a guaranteed period, if you die (under the one-life option) or both you and your annuity partner die (under the two-life option) during the guaranteed period, income continues to your beneficiary for the remainder of the period. If you and your partner both outlive the guaranteed period, no payments will be made to your beneficiaries when you and your annuity partner die. TIAA offers guaranteed periods of 10, 15, or 20 years. In some cases, federal tax law affects your choice of a guaranteed period. You are generally not allowed to select a period that would continue payments beyond your life expectancy, based on the Internal Revenue Service’s (IRS) mortality tables.

TIAA Traditional Transfer Payout Annuity

You may start receiving income under the TIAA Traditional Transfer Payout Annuity at any age once you have terminated employment. 

This option allows you to take distributions from TIAA Traditional accumulations in the Basic Retirement Plan in annual installments over 9 years. Each year, you’ll receive about 10% of the total amount you chose to withdraw. In addition, you can convert the value of your remaining payments to lifetime annuity income at any time. If you die while receiving income under the TIAA Traditional Transfer Payout Annuity, your beneficiaries can either receive the income for the rest of the period or take the commuted (discounted) value of the remaining payments in a lump sum.

TIAA Traditional Interest Payment Retirement Option (IPRO)

This option provides monthly payments drawn from the current interest credited to your TIAA Traditional accumulation in the Basic Plan. Since only the interest is paid to you, your accumulation remains untouched. This option is available starting at age 55 to those who have terminated employment, retired, or faculty and staff on phased retirement. In general, you must convert from IPRO to a lifetime annuity, a fixed-period annuity, or the Minimum Distribution Option by April 1 following the year you reach your applicable Required Minimum Distribution (RMD) age if you are no longer working — or following the year you retire or terminate, whichever is later.

Fixed-Period Annuity

You may begin receiving income under a fixed-period annuity at any age once you have terminated employment. 

A fixed-period annuity makes regular payments over a specific number of years (generally 2-30 years), which you choose in advance. By the end of the period, you will have received all of your principal and any earnings. If you live beyond this period, your annuity payments will not continue. If you die during the payment period, payments continue to your beneficiary. Fixed-period annuity payments of less than 10 years are subject to 20% federal tax withholding and may also be rolled over.

TIAA and Fidelity Income Options

Cash Withdrawals

You may elect a cash withdrawal of all contributions and earnings at any age once you have terminated employment. 

Single-sum (partial) cash withdrawal

You withdrawal a portion of your accumulations and allow the balance to remain in the account to preserve its tax-deferred status. You may take further withdrawals as your needs indicate or convert the balance into one of the other income options.

Lump sum (total) cash withdrawal

If eligible, you may elect to receive your entire account balance in a single, lump sum payment. However, this may dramatically increase your tax liability and there will be no further income benefits available to you from the plan.

Systematic Cash Withdrawals

This allows you to create your own income plan by specifying the amount and frequency of payment (monthly, quarterly, annually, etc.). Payments continue until:

• You tell TIAA or Fidelity to stop;

• You change the amount of the payments;

• You convert the remaining accumulation to a lifetime annuity or to another income option such as minimum distribution;

• Your money (including earnings) runs out;

• You die (if you die while receiving systematic withdrawals, the remainder goes to your beneficiary).

You can change your request at any time, and there's no limit as to the number of times you can change a systematic withdrawal that's already under way. Plus, your remaining accumulations remain tax-deferred and continue to experience the investment returns of your chosen funds. It also allows you to postpone final decisions about annuitization.

Required Minimum Distributions

Required Minimum Distributions (RMDs) are the minimum amounts you must withdraw from your tax-deferred retirement accounts each year once you have retired or terminated employment and reach a certain age. Note the following:

Generally, you must start taking distributions by April 1 of the year after your RMD age once you are retired or terminated from U-M.  If you are already older than your applicable RMD age when you retire or terminate from U-M, you must begin RMDs by April 1 of the following year.

RMDs apply to tax-deferred amounts in the U-M Basic Retirement Plan, the 403(b) Supplemental Retirement Account, and the 457(b) Deferred Compensation Plan. It also includes assets from another retirement plan or IRA that you have rolled into any of the U-M plans. However, the after-tax Roth 403(b) SRA and after-tax Roth 457(b) are exempt from RMD.  

Age 75 Grandfathering

A special rule allows you to postpone distributions of 403(b) accumulations as of Dec. 31, 1986 until age 75 once retired or terminated. This grandfathering is forfeited for accumulations you roll over to an IRA. This special provision on grandfathering does not apply to other plans such as a 401(a), 403(a), or 401(k).

If You Are Still Working at U-M

You can postpone RMDs attributable to your U-M retirement plans while you are still working for U-M. However, assets in another retirement plan outside of the U-M plans or in an IRA cannot be postponed once your RMD age has been reached, even if you are still employed at U-M.

You must be employed by U-M and have salary and wages reported on a University of Michigan W-2 that are subject to federal income taxation in order to postpone RMDs for your U-M plan assets. You do not have an employment relationship that allows you to postpone the RMD if you are not receiving salary or wages reported on a University of Michigan W-2, even if you are performing services. Consult with a tax adviser to determine if you need to fulfill your RMD requirements.

What is the Year of Retirement or Termination

Your year of retirement or termination is the final year you received W-2 reported salary or wages by U-M. This affects when you must begin taking your RMDs.

Example:

• Your faculty appointment ends Dec. 31, 2025 and you are 78.

• Your retirement begins on Jan. 1, 2026.

• Your date of retirement is Dec. 31, 2025 since it is the last year you received W-2 salary and wages from U-M.

• Jan. 1, 2026 is not your date of retirement but your first day as a retiree. You cannot postpone RMDs if you do not have U-M salary and wages for 2026.

• You must begin taking RMDs no later than April 1, 2026.

Disclaimer

The above is an overview of federal regulations on retirement plan minimum distribution requirements and is based on the university’s current understanding of highly complex Internal Revenue Code (IRC) and U.S. Treasury Department regulations. It is provided for general informational purposes only and is not intended to constitute tax or legal advice. Not all possible scenarios are covered by this information and it is the responsibility of each plan participant to comply with federal tax regulations. Questions or concerns regarding RMD requirements should be addressed with a tax adviser.