Taking Distributions from Your Retirement Plans
Once you’ve put money into your retirement plan, when can you take money out of it? Since retirement plans are regulated by the federal government, there are specific rules as to when you can take distributions from your account.
Retirement plans are intended to provide you with much-needed financial resources once you’ve retired from the working world and are no longer earning a regular income. Generally, this means that you should only take money out of your plan once you’re officially in retirement. However, there may be times when you truly need to access your savings before retirement—for example, to buy a home or pay college tuition. Read below for details about when you can take distributions from your Penn retirement plans.
While you’re actively employed at Penn, you can only take a distribution from your Penn retirement plan under certain circumstances, as detailed below.
Hardship Withdrawals
If you’ve made pre-tax contributions to the Supplemental Retirement Annuity (SRA) plan, you may be able to request a hardship withdrawal from your account. The withdrawal must be necessary to satisfy an immediate and heavy financial need, and must only be taken after all other reasonably available financial resources have been exhausted. Examples of hardship needs include medical expenses, the purchase of a principal residence, and tuition fees. Hardship withdrawals are taxable and you may be subject to an early withdrawal penalty if you’re under age 59 ½. Click here for more information about hardships and how to apply.
Loans
If you’ve made pre-tax contributions to the Supplemental Retirement Annuity (SRA) plan, you may be able to request a loan from your account. Loans may be taken through TIAA-CREF only. If you’re interested in taking a loan, please call the Retirement Call Center at 1-877-PENN-RET (1-877-736-6738) for further information.
Other Distributions
Tax-Deferred Retirement Plan (TDR)—Generally, you cannot take a distribution from your TDR account while employed, except as follows:
- During a period of disability when you are receiving Social Security disability benefits;
- You are 55 years or older and you elect to begin receiving income under the TIAA Interest Payment Retirement Option (IPRO);
- You are age 59 ½ and participate in the University’s “phased retirement” program; or
- You are age 70 ½ and elect to begin receiving your required minimum distribution.
Supplemental Retirement Annuity Plan (SRA)—Other than hardship distributions and loans, you may take money out of your SRA account while still employed under the following circumstances:
- You are 55 years or older and you elect to begin receiving income under the TIAA Interest Payment Retirement Option (IPRO);
- You are age 59 ½;
Retirement Allowance Plan (RAP)—There are no distribution options under the RAP while still actively employed at Penn.
Distributions after Employment Has Ended
Once your active employment at Penn has ended, your distribution options will depend on the reason for the termination of your employment as well as the retirement plan(s) in which you were participating.
Termination of Employment other than Retirement
- Tax-Deferred Retirement Plan (TDR) and/or Supplemental Retirement Annuity Plan (SRA)—You may elect to have your account paid to you immediately or to defer the distribution of your account. In general, you cannot defer payment beyond April 1 of the calendar year following the year in which you (a) reach age 70 ½ or (b) terminate employment with Penn, whichever occurs later. You may choose to receive payment as a lump sum, a life annuity, or in some other form as offered by the investment provider with whom your account is invested. For more information about payment options, please contact your investment provider at 1-877-736-6236 (TIAA-CREF) or 1-800-523-1188 (Vanguard).
- Retirement Allowance Plan—Generally, RAP benefits are only available once you’ve reached retirement age. If you terminate employment prior to retirement age, you may only opt to receive a distribution if the value of your vested benefit is below $5,000. Please refer to the RAP Summary Plan Description [pdf] for more information.
Retirement
- Tax-Deferred Retirement Plan (TDR) and/or Supplemental Retirement Annuity Plan (SRA)—You may elect to have your account paid to you immediately or to defer the distribution of your account. In general, you cannot defer payment beyond April 1 of the calendar year following the year in which you (a) reach age 70 ½ or (b) terminate employment with Penn, whichever occurs later. You may choose to receive payment as a lump sum, a life annuity, or in some other form as offered by the investment provider with whom your account is invested. For more information about payment options, please contact your investment provider at 1-877-736-6236 (TIAA-CREF) or 1-800-523-1188 (Vanguard).
- Retirement Allowance Plan (RAP)—Your benefits under the RAP will differ according to whether your retirement is classed as “Normal Retirement”, “Early Retirement” or “Postponed Retirement”. To learn exactly how your retirement status is determined, and how it will impact your retirement benefits, please consult pages 8-11 of the RAP Summary Plan Description [pdf].
Death