Accessing Your Retirement Savings

Retirement plans are designed to provide income during your retirement years, which generally means withdrawing funds only once you are officially retired. However, there may be situations where you need to access your savings earlier, such as to buy a home or pay for college tuition.

Because retirement plans are regulated by the federal government, there are specific rules governing when and how you can access your plan funds.

How to Request a Distribution or Loan

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.

In-Service Distributions

You are considered an active employee for the retirement savings plan if you are receiving pay for work at Penn. This includes: phased retirement employees; Penn retirees (under the Rule of 75) continuing to work; emeritus faculty; and regular employees with part-time, temporary, or occasional hours.

Pay may come from Penn or a grant—it does not affect your active status.

As an active employee, you have the following distribution options:

Basic Plan Matching Plan SRA Plan
Aged-Based In-Service Withdrawal Age 70 1/2 Age 59 1/2 Age 59 1/2
Withdrawal of Rollover Contributions Yes, any age Yes, any age Yes, any age
Withdrawal of After-Tax Contributions – refers to non-Roth after-tax money Yes, any age Yes, any age Yes, any age
Hardship Withdrawal No Yes Yes
Disability Withdrawal – available if you are receiving benefits from Penn’s long-term disability plan Yes Yes Yes

If you are requesting a withdrawal, be sure to select the correct withdrawal type. Each type requires a specific form with terms unique to that withdrawal. If the wrong form is submitted, the request will be declined, and you will need to submit a new request.

Hardship Withdrawals

Hardship withdrawals are available from the Matching Plan and SRA Plan. The IRS sets the rules for these withdrawals, which are intended as a last resort to address “immediate and heavy financial need.” Because of this, the IRS imposes strict requirements. The allowable reasons for hardship withdrawals include:

  • 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 manages the review and approval of all hardship withdrawals. For more information or to request a hardship withdrawal, contact the TIAA Retirement Call Center at 877-736-6738.

Retirement Plan Loans

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

A loan from these Plans is a binding obligation. You are required to repay it.

Effects of a Loan on Your Retirement Savings

When you take a loan from these Plans, you are borrowing money from your account and repaying it with interest. Before taking a loan, it’s important to understand the potential drawbacks, including:

  • Reduced long-term growth – While your loan is outstanding, the borrowed amount is not invested, so it misses any potential investment gains. This can significantly reduce the total amount you accumulate for retirement.

  • Potential double taxation – Loan repayments are made with after-tax dollars, but regulations require the money to be credited back to your account in its original pre-tax form. When you later take a taxable distribution from the Plan, that money may be taxed again.

Defaulting on a Loan

If you fail to repay a loan according to the repayment terms, the loan will be considered in default. If the loan, including interest, is not repaid in full by the end of the quarter following the quarter in which the default occurred, the unpaid balance will be treated as a deemed distribution. This amount will be reported as taxable income in the year of the default, and if you are under age 59½, the IRS 10% early withdrawal penalty will also apply.

However, a deemed distribution does not relieve you of your obligation to repay the loan. A plan loan is not intended to be a distribution, and federal 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.

You cannot take another loan from the plan while a defaulted loan is outstanding; a new loan may only be taken after the defaulted loan is fully repaid.

Click here for the IRS FAQ on loans.

Separation-from-Service Distributions

Once you are fully separated from Penn, you may take a separation-from-service distribution from your retirement plans at any time, subject to any restrictions you agreed to when selecting your investment funds.

Your Options

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

  • roll your money over to another employer plan or an individual retirement account (IRA)
  • leave your money in Penn’s plan
  • cash it out

The first two options—rolling over your account or leaving it in Penn’s plan—do not trigger a taxable event. Rolling over your account allows you to consolidate your retirement savings, while some people choose to leave their money in their former employer’s plan because the investment options or plan features better align with their goals.

The third option, cashing out your account, can have significant financial consequences if not used as retirement income. Cashouts are taxed as income, and if you are under age 59½, the IRS generally imposes a 10% early withdrawal penalty. Unless the cashout is part of your planned retirement income, it is recommended that you consult a TIAA retirement plan consultant or a financial planner to understand the long-term impact.

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.

If you are requesting a withdrawal, make sure to select the correct withdrawal type. Each type requires a specific form with its own terms. Submitting the wrong form will result in your request being declined, and you will need to submit a new request.

Participant's Death

The distribution of your account upon your death depends on several factors, including whether payments have already begun, whether you have a spouse or partner, and whether you have a named beneficiary (see Designating Your Beneficiaries for more information). For details on payment options, please refer to the Summary Plan Descriptions.

Required Minimum Distributions

TIAA administers Required Minimum Distributions (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.

RMDs While Still Employed

IRS rules may allow retirees who continue working for Penn to delay RMDs until after leaving employment. To determine your requirements, consult a qualified tax advisor.

If you are an active retiree who wishes to take an optional RMD while still working, be sure to request it as an In-Service RMD.

Click here for the IRS FAQ on Required Minimum Distributions.