Distribution of Benefits

Events Permitting Distribution of Benefits – Death, Disability or Termination of Employment

Generally, you can receive your benefits upon reaching age 59½ or when you terminate employment or become disabled. Payment of your benefits is also subject to the terms and conditions of the Record Keeper(s) in which you have invested.

For Plan purposes, you are considered disabled if you are unable to engage in any substantial gainful activity due to any medically determinable physical or mental impairment that can be expected to result in death or to be of long-continued and indefinite duration.  Generally, the Plan will base the determination of whether you are disabled on the decision of the Social Security Administration or the claims administrator of the RIT long-term disability plan.

While the terms of the custodial account agreement or annuity contract that apply to your investments will ultimately govern the form and timing of benefits, you generally may receive benefits in the form of a lump sum, installment payments over a fixed period of time or an annuity (although, not all custodial account agreements or annuity contracts will offer all of these choices).

Distributions After Termination of Employment

If the aggregate value of a participant’s accounts is greater than $1,000, any distribution paid prior to the participant’s required beginning date shall only be made with the written consent of the participant.  If the aggregate value of the participant’s accounts is $1,000 or less, the participant’s accounts may be paid out to the participant in the form of a lump sum without the consent of the participant, subject to the terms of the annuity contract or custodial account contract in which a participant’s accounts are invested.

Withdrawals Pursuant to a QDRO

Your benefits may be distributed immediately to an alternate payee under the terms of a qualified domestic relations order, or QDRO.  A QDRO is a decree or order issued by a court that makes you pay child support or alimony, or otherwise allocates a portion of your account, to your spouse, former spouse, child or other dependent.  If a QDRO is received by the Plan Administrator, all or a portion of your benefits may be used to satisfy that order.  The Plan Administrator will determine if the decree or order issued by the court meets the requirements of a QDRO with respect to your account balances held with Fidelity.  TIAA will determine if the decree or order issued by the court meets the requirements of a QDRO with respect to your account balances held with TIAA.  Participants and beneficiaries can obtain a description of the procedures for QDRO determinations at no charge from the Plan Administrator.

Any amount payable to an alternate payee under the terms of a QDRO that is valued at $1,000 or less may be paid out without the consent of the alternate payee, subject to the terms of the annuity contract or custodial account contract in which an alternate payee’s accounts are invested. 

Hardship Withdrawals

If eligible, you can make a hardship withdrawal of your salary reduction contributions (but not the earnings thereon) to the Plan; provided that hardship distributions are not permitted from pre-2012 salary reduction contributions (or the earnings thereon) made to the Rochester Institute of Technology Basic Retirement Plan.  A “hardship” is an immediate and heavy financial need that you cannot satisfy from other resources.  For these purposes, you have an immediate and heavy financial need if you have:

  1. Expenses incurred for medical care or necessary to obtain medical care for you, your spouse, or your dependent (as defined in Internal Revenue Code § 152),
  2. Costs directly related to the purchase of your principal residence (but not mortgage payments),
  3. Tuition or related educational fees for the next 12 months of post-secondary education for you, your spouse, or your dependent (as defined in Internal Revenue Code § 152),
  4. Payments necessary to prevent eviction from or foreclosure on your principal residence,
  5. Payment for burial expenses for your deceased parent, spouse, or dependents (as defined in Internal Revenue Code § 152),
  6. Expenses for the repair of damages to your principal residence that would qualify for a casualty deduction under Internal Revenue Code § 165 (determined without regard to whether the amount exceeds 10% of adjusted gross income), or
  7. Another reason that triggers the right to a hardship distribution under the IRS safe harbor hardship distribution rules.

If you have one of the above immediate and heavy financial needs, you must provide a written statement to the Plan Administrator specifying your financial need and why you lack other financial resources reasonably available to you to meet the financial need.  In addition, you must take all loans available to you under this or any other plan, unless taking the loan itself would cause a financial hardship.  If you take a hardship withdrawal, you will not be able to make any contributions to any of RIT’s retirement plans for at least six (6) months after the hardship withdrawal.

Loans

Loans are only permitted from your salary reduction contributions (including related earnings thereon) to the Plan; provided that loans are not permitted from pre-2012 salary reduction contributions (or the earnings thereon) made to the Rochester Institute of Technology Basic Retirement Plan.  Effective July 2, 2012, new loans are only permitted through a Fidelity account, and loans originated after that date will be repaid through payroll deductions.  Loans originated before July 2, 2012, will continue to be repaid directly to TIAA.  You can transfer money from a TIAA account to a Fidelity account if you want to apply for a loan (subject to any transfer restrictions that may apply to the TIAA-CREF Account).  In addition to any requirements imposed by Fidelity, Plan loans are subject to the following terms and conditions:

  1. You must pay a reasonable rate of interest and your loan must be adequately secured;
  2. If married, you must obtain the notarized consent of your spouse;
  3. When added to the outstanding balance of all other loans from this Plan and all of RIT’s other plans, your loan cannot exceed the lesser of:
    • $50,000, reduced by the highest outstanding amount of loans during the twelve month period before the loan or the outstanding balance of loans on the date the loan is made, or
    • 50% of your account balance.
  4. You must repay the loan over a period of no more than five (5) years unless the loan is used to acquire a dwelling unit that will be used as your principal residence within a reasonable time after taking the loan, in which case the loan must be repaid in no more than 15 years; and
  5. Principal and interest on your loan must be amortized over the loan term and you must make payments at least quarterly.

Because your loan must comply with the annuity contract or custodial agreement, there may be other requirements.  For example, there may be minimum amounts required for any loan (e.g., $1,000) and there may be restrictions on the number of loans permitted at any given time.

Joint & Survivor Spouse Benefits

Benefits that are payable in the form of an annuity are subject to the joint and survivor annuity rules required by federal law.  Under these rules, if you are married, your normal form of benefit must be a joint and survivor annuity with your spouse as the surviving annuitant.  This form of payment uses your account balance to purchase a monthly benefit for your spouse after your death equal to 50 percent of the amount you were receiving.  Your benefit will be paid in this form unless you elect another form of benefit and your spouse consents in writing to your election.  Your spouse’s consent must acknowledge the effect of the election and be witnessed by a plan representative or notary public.  The Plan Administrator can provide you with more information regarding your ability to elect or waive the joint and survivor annuity form of benefit.

Mandatory Distribution at age 70 1/2

If you terminate employment or become disabled you can generally receive the total vested value of your account at any time.  However, federal law requires your benefits to commence no later than April 1st of the calendar year after the year when you reach age 70½ unless you are still working for RIT.  If you are still working for RIT when you reach age 70½, you can delay payment of your benefits until April 1 of the calendar year after the year that you retire.

Death Benefits

You can designate a beneficiary who is eligible to receive payment of your vested benefit after your death.  You can make this election by contacting the Record Keeper with whom you have chosen to invest your assets.  You will need to elect a separate beneficiary designation for each Record Keeper (TIAA and Fidelity) that holds your assets under the plan.  It is important that you keep your beneficiary designation up to date.  If you fail to validly designate a beneficiary or your beneficiary is not alive on the date of your death, the default election will be 100% to your surviving spouse, if married, otherwise 100% to your estate.

As noted above, if you are married at the time of your death, your spouse will have the right to receive a benefit that is at least equal to 50% of the full value of your entire vested benefit unless you have designated another beneficiary and your spouse has consented to that designation.  The consent of your spouse must be in writing, be witnessed by a notary public or plan representative, and acknowledge the effect of your designation of another beneficiary.

Death before receiving benefits

If you die before receiving any benefits under the Plan and your benefit is payable in the form of an annuity, a distribution of at least 50% of the value of your account will be made to your spouse as an annuity for the life of your spouse, unless you and your spouse elect another payment option available from the Record Keeper(s) in which your account is invested.  The remaining portion of your account will be paid to your designated beneficiary. 

If you are not married and die before receiving any benefits under the Plan, your full account balance will be paid in accordance with your current beneficiary designation.  However, your benefits will be paid to your estate if you are not married and (a) you fail to designate a beneficiary, (b) your beneficiary designation is not valid, or (c) your beneficiary dies before you.

Generally, your entire account must be distributed within five years of death if you die before benefits have begun.  However, this five-year rule does not apply if payment to your beneficiary begins within one year of your death and is made over your beneficiary’s life or over a period that does not exceed your beneficiary’s life expectancy.  If your beneficiary is your spouse, a special rule permits the distribution to be delayed until the date that you would have become age 70½.  If this special rule applies, your benefits can be paid over the life of your spouse or over a period not exceeding the life expectancy of your spouse.

Death after benefits commence

If you die after you begin receiving benefits due to retirement and your benefit is paid in the form of a joint and 50% survivor annuity with your spouse designated as the survivor annuitant, your surviving spouse will receive a retirement benefit of at least 50% of the retirement benefit payable during the joint lives of you and your spouse.  You can waive this post-retirement survivor benefit (i.e., joint and survivor annuity) only during the 180 days before retirement benefit payments commence.  You can also revoke the waiver during the same 180-day period before retirement benefit payments commence.  However, the waiver cannot be revoked after retirement payments begin.

Summary of Payment Options

The following is a summary of the forms of payment available to you under the Plan.

 

TIAA RA and SRA

FIDELITY

Single Lump-Sum Payment

(Not Available from TIAA Traditional RA)

Single Lump-Sum Payment

Periodic Installment Payments

(Not Available from TIAA Traditional RA, except as a Transfer Payout Annuity [described next])

Periodic Installment Payments

Transfer Payout Annuity (Receive income in 10 substantially equal annual installments)  (Available Only from TIAA Traditional RA)

 

Interest Payment Retirement Option (IPRO) Available Only from TIAA Traditional RA)

 

Single Life Annuity

 

Single Life Annuity with 10, 15, or 20 Year Guaranteed Period

 

Two-Life or Survivor Annuity with 0, 10, 15, or 20 Year Guaranteed Period†:

• Three Quarter Benefit to Survivor

• Two Thirds Benefit to Survivor

• Full Benefit to Survivor

• Half Benefit to Survivor

 

 

†  Note:  Single Life Annuity options guarantee to pay a lifetime income that you cannot outlive regardless of how long you live.  Two-Life or Survivor Annuity options pay you and your annuity partner (usually your spouse) a lifetime income.  The annuity options with a guaranteed period pay you (and your annuity partner if you elected a Two-Life or Survivor Annuity Option) a lifetime income, but provide payments to a beneficiary if you (and your annuity partner, if applicable) die within the period you selected

Weight: 
-1