Accessing Your Plan Money 

Retirement plans are meant to provide you with income in your retirement years. Generally, this means that you should take money out of your plan only when you’re officially retired. There may be times, however, when you need to access your savings before then – for example, to buy a house or pay college tuition.

Retirement plans are regulated by the federal government, so there are specific rules pertaining to when you can access your retirement plan money.

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Accessing Your Money While Employed by Penn

If you are receiving compensation for hours worked at Penn, you are considered an active employee for the purposes of the retirement savings plan. That includes working during phased retirement; Penn Retirees (according to the Rule of 75) who are still working for Penn; emeritus faculty; regular employees who have reduced their hours to part-time, temporary, or occasional employment, etc. It doesn’t matter whether the pay originates from Penn or a grant.

Here are the options for accessing your money as an active employee:

Basic Plan Matching Plan SRA Plan
In-Service Withdrawal Age 70 1/2 Age 70 1/2 Age 59 1/2
Withdrawal of Money Rolled Into the Plan Same as in-service withdrawal above Same as in-service withdrawal above Yes, any age
Withdrawal of After-Tax Money Same as in-service withdrawal above Same as in-service withdrawal above Yes, any age
Loan No No Yes
Hardship Withdrawal No No Yes
Disability Withdrawal (you must be receiving a benefit from Penn's long-term disability plan) Yes Yes Yes

You can request a withdrawal or loan by logging into your TIAA account online, or by calling the TIAA Retirement Call Center at 877-736-6738.

If requesting a withdrawal, be sure to ask for the correct withdrawal type. Each withdrawal type has its own form with terms specific to that withdrawal type. If an incorrect form is submitted for the intended withdrawal type, the request will need to be declined and you'll need to submit a new request.

Loans

Loans are available from the SRA Plan. Loans may be taken by active employees, and a maximum of two loans may be outstanding at a time.

A loan from the SRA Plan is a binding obligation. You are required to repay it.

Effects of a Loan on Your Retirement Savings

When you take a loan from the SRA Plan, you borrow money from your account and then repay it to your account with interest. There are drawbacks that you should understand before taking a loan, including but not limited to:

  • Decreased opportunity for long-term growth – When you take a loan, the loan balance doesn’t benefit from investment experience while it’s out of your account. That can significantly reduce the amount of money you accumulate for retirement.
  • Double taxation – You repay your loan with money on which you’ve already been taxed, but regulations require it go into your account in its original pre-tax form. When you eventually take a taxable distribution from the Plan, that money will be taxed again.

You can learn more about the drawbacks on TIAA's flyer, Retirement Plan Loans: What To Know Before Taking One.

Defaulting on a Loan

If you fail to repay the loan according to the repayment terms, the loan will be in default. If the loan isn’t repaid in full with applicable interest by the end of the quarter following the quarter in which the default occurred, the unpaid amount of the loan will be deemed a distribution and will be reported as taxable income in the year of the default (you will also incur the IRS’ 10% early withdrawal penalty if you’re under age 59 ½). This deemed distribution, however, does not relieve you of your obligation to repay the loan. A plan loan is not intended to be a distribution, and regulations require that it still be repaid. If you have an outstanding deemed distribution when you become eligible for a distribution from the SRA Plan, your plan account will be reduced to repay the outstanding loan. 

If a defaulted loan is outstanding, another loan may not be taken until the defaulted loan is paid off.

Click here for the IRS FAQ on loans.

Hardship Withdrawals

Rules regarding hardship withdrawals are established by the IRS. Because hardship withdrawals are meant to be a last resort for “immediate and heavy financial need,” the IRS’ rules for hardship withdrawals are strict. The permissible reasons for hardship withdrawals are:

  • Medical expenses for the employee or the employee’s spouse, children or dependents, or primary beneficiary under the plan
  • Costs directly related to the purchase of a principal residence
  • Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure of the mortgage on that residence
  • Payment of tuition related educational fees, room and board expenses for the next 12 months of post-secondary education for the employee or the employee’s spouse, children or dependents, or primary beneficiary under the plan (books, transportation, and club fees are not covered)
  • Payments for burial or funeral expenses for the employee’s deceased parents, spouse, children or dependents, or primary beneficiary under the plan
  • Expenses to repair damage or to make improvements to a primary residence

TIAA handles the review and approval process for all hardship withdrawals. For additional information about hardship withdrawals, or to request a hardship withdrawal, please contact the TIAA Retirement Call Center at 877-736-6738.

Accessing Your Money after Separating from Penn

Once you're completely separated from service and no longer have an employment relationship with Penn, you may take a "separation-from-service" distribution from the retirement plans at any time (subject to any restrictions on your investment funds – you would have agreed to such restrictions before choosing these funds).

Your Options

One you leave Penn, your options for the retirement plan are:

  • roll your money over to another employer plan, or to an IRA
  • leave your money in Penn’s plan
  • cash it out

The first two options, rolling it over or keeping it in Penn’s plan, won’t trigger a taxable event. Rolling it over allows you to consolidate your retirement savings. Some people, however, decide to leave their money in their former employer’s plan because the investment options or other plan features better suit their investment goals. 

The third option, cashing out your account, might be a significant financial setback if it not taken as retirement income. Cashouts are taxable as income; if you’re under age 59 ½, the IRS will also typically impose a 10% early withdrawal penalty. Unless you are cashing out your account for planned retirement income, we suggest meeting with a TIAA retirement plan consultant or a financial planner to discuss the long-term impact of the cashout.

 

Rollover Withdrawal Separation-from-Service Withdrawal
Basic, Matching, and SRA Plans Basic, Matching, and SRA Plans
Non-taxable Taxable; if you're under 59 1/2 years of age, the IRS will typically impose a 10% early withdrawal penalty.

You can request a withdrawal or loan by logging into your TIAA account online, or by calling the TIAA Retirement Call Center at 877-736-6738.

If requesting a withdrawal, be sure to ask for the correct withdrawal type. Each withdrawal type has its own form with terms specific to that withdrawal type. If an incorrect form is submitted for the intended withdrawal type, the request will need to be declined and you'll need to submit a new request.

Required Minimum Distributions (RMDs)

The SECURE Act 2.0 changes the age requirements for RMDs. The age at which RMDs must begin is now 73. Those who attained age 72 in 2022 or earlier are unaffected.

TIAA administers RMDs for Penn's retirement plans. They will notify you of the amount that their records indicate you need to take for a given year. For more information about RMDs, contact the TIAA Retirement Call Center at 877-736-6738.

Click here for the IRS FAQ on Required Minimum Distributions.

Participant's Death

The payment of your account in the event of your death is determined by several factors, including whether payment had already begun, whether you have a spouse/partner, and if there is a named beneficiary (see Designating Your Beneficiaries for more information). For more information about payment options, please see the Summary Plan Descriptions.