univ of michigan deferred compensation plan

7/25/2019 Univ of Michigan Deferred Compensation Plan

http://slidepdf.com/reader/full/univ-of-michigan-deferred-compensation-plan 1/27



Benefits InformationThe HR/Payroll Service Center can answer many ofyour benefits questions. Call 734-615-2000 or toll free1-866-647-7657. Service Center Representatives areavailable Monday–Friday, 8:00 a.m.–5:00 p.m. Haveyour UMID number available when you call. You canalso meet with a Benefits Consultant on a walk-in basisat both the Ann Arbor and Flint campus locations.

U-M Ann Arbo r CampusWolverine Tower-Low Rise G250 (Ground Floor)3003 S. State Street

Ann Arbor, MI 48109-12788 a.m. to 5 p.m., Monday – Friday, EST

U-M Flint CampusUHR - Flint213 University Pavilion303 E. KearsleyFlint, MI 48502-1950

810-762-31508 a.m. to 5 p.m., Monday – Friday, EST

Telephone Services fo r People Who are Deaf, Hardof Hearing, or Have Speech DisordersTTY/TDD phone service is available through theMichigan Relay Center. Call 800-649-3777 (toll free)and ask the operator to connect you to the HR/PayrollService Center.

LimitationsThe University of Michigan in its sole discretion may modify,amend, or terminate the plan. Nothing in these materials givesany individuals the right to continued plan benefits beyond

those accrued at the time the university modifies, amends, orterminates the plan. Anyone seeking or accepting any of thebenefits provided will be deemed to have accepted the termsof the plan and the university’s right to modify, amend, orterminate the plan.

Statement of IntentThis booklet describes the University of Michigan 457(b)Deferred Compensation Plan. It is intended to provideinformation to U-M faculty and staff about participating in theplan. Every effort has been made to ensure the accuracy ofinformation in this booklet. However, if statements in thisbooklet differ from applicable contracts, certificates or riders,then the terms and conditions of those documents, asinterpreted by the Benefits Office, prevail. Possession of this

booklet does not constitute eligibility for the plan. IRCregulations, as well as university and investment companypolicies, are subject to change and/or correction withoutnotice. Information is based on the university’s currentunderstanding of highly complex Internal Revenue Code (IRC)and U.S. Treasury Department regulations and is provided forgeneral informational purposes only. The University ofMichigan does not provide tax or investment advice. Questionsor concerns should be addressed to a qualified tax advisor.

Contents

Ask the Experts ............................................................ 1

The U-M 457(b) Plan at a Glance ................................ 2

How Does the 457(b) Plan Work? ................................ 4 457(b) or a 403(b) SRA? .............................................. 5

IRS Saver’s Credit ........................................................ 6

TIAA-CREF .................................................................. 7

Fidelity Investments ..................................................... 8

Eligible Compensation ................................................. 9

Enroll Online Using Self Service > Benefits ................10

Enrolling with TIAA-CREF and Fidelity Investments ...11

Designate Your Beneficiary .........................................12

How Much Can I Contribute? ......................................13

Rollovers into the U-M 457(b) Plan .............................14

Quarterly Statements ..................................................15

Military Leave of Absence ...........................................16

Direct Transfers...........................................................17

Transfers for Purchase of Service Credit ....................17

Cash Withdrawals: Current Faculty and Staff .............18 Age 70½ Withdrawal ..............................................18

One-Time Withdrawal .............................................18Loans ..........................................................................19

What Are My Options When I Leave U-M? .................20

Rollovers Out of the U-M Plan.....................................21

Cash Withdrawals:Former Faculty and Staff Members ......................22

Federal Income Tax ....................................................22

TIAA-CREF Income Options .......................................23

TIAA-CREF and Fidelity Income Options ....................24

Plan Administrator

University of Michigan Benefits OfficeWolverine Tower G4053003 S. State Street

Ann Arbor, MI 48109734-615-2000

www.benefits.umich.edu/plans/retire/457b



1

Ask the Experts

Have a question?Need help?

Contact TIAA-CREF and Fidelity Investmentsfor these inquiries and services:

Questions/help choosing your investmentfunds

Account and income information

Brochures and booklets on services andfinancial planning

Change of address or beneficiary

Divorce, Qualified Domestic Relations Order(QDRO)

Rollovers into the U-M 457(b) Plan

Forms for cash withdrawals and distributions,rollovers, transfers, loans, and income options

Changing your investment funds

Transferring accumulations between funds andbetween TIAA-CREF and Fidelity Investments

Income and payment methods (lifetimeannuity, cash withdrawals, etc.)

Tax questions (withdrawal penalty, minimumdistribution, federal withholding)

Schedule individual counseling; register forworkshops

Information on fund management fees

TIAA-CREF730 Third Avenue

New York, NY 10017

http://www.tiaa-cref.org

24-Hour Automated Phone Center1-800-842-2252

Telephone Counseling Center1-800-842-2776M - F, 8:00 a.m. to 10:00 p.m. Eastern timeSaturday 9:00 a.m. 6:00 p.m. Eastern time

Schedule an individual counseling session1-800-732-8353

Fidelity InvestmentsP.O. Box 770002Cincinnati, OH 45277-0090

http://www.fidelity.com

24-Hour Automated Phone Center1-800-343-0860

Fidelity Retirement Specialists1-800-343-0860M - F, 8:00 a.m. to midnight, Eastern time

Schedule an individual counseling session1-800-642-7131

Visit TIAA-CREF and Fidelity Investments Online

TIAA-CREF and Fidelity Investments websites provide a variety of tools and information, including:

Current information on fund descriptions, performance, and investment strategy to assist you choose your investment

funds. Interactive worksheets and calculators.

Check your account balance, change the funds you invest in, and transfer accumulations between funds.

Request forms and many free publications.

Information about other available products and services.



2

The U-M 457(b) Plan at a Glance

Type of Plan 457(b) governmental deferred compensation plan

Investment Companies TIAA-CREF and Fidelity Investments

Enrollment Voluntary

Enrollment Deadline Enrollment may occur at any time and is generally effective no earlier than themonth following the date your applications or elections are filed with theBenefits Office.

Vesting Schedule All contributions are immediately vested.

Eligibility All faculty and staff members with an appointment effort of 1% or greater, anduniversity funding for 4 continuous months or longer. Temporary staff are noteligible to participate.

Tax Treatment Contributions and earnings are tax-deferred until distribution. Subject to FICAwithholding, but not state or federal taxation at time of contribution. Taxed asordinary income at distribution.

Contribution Rate You elect to contribute a fixed dollar amount per pay period.

There is no university contribution.

Changing Your Contribut ion You may increase, decrease, or cancel your contribution at any time; all suchchanges are effective the month following the date your forms or electionsare filed with the Benefits Office.

Changing Investment Funds You may change your investment funds at TIAA-CREF and Fidelity anytime.

Transfers Between TIAA-CREF andFidelity Investments

You may transfer accumulations between TIAA-CREF and Fidelity at anytime. Contact the company that will receive the transfer for assistance.

Eligible Compensation You may make contributions on earned compensation that is paid to you as aU-M faculty or staff member, subject to federal income tax withholdingthrough the university, and reported on a W-2 issued by the university.

Your Limit for 2009 $16,500 general limit.

$22,000 if you are age 50 or older.

Contributions made to another plan, except another 457(b) plan, will notreduce your limit for making contributions to the U-M 457(b) plan. Consult

with a qualified tax advisor to ensure your total contributions to all plan typesdo not exceed Internal Revenue Code limits.



3

The U-M 457(b) Plan at a Glance (continued)

Cash Withdrawal

Current Faculty or Staff Member

One-time withdrawal if your account balance is no more than $5,000 and

you have made no contributions to the plan for two years prior to the dateof distribution.

At age 70½ or older.

Cash Withdrawal Former Faculty or Staff Member 1

At any age.

Rollovers You may rollover your U-M 457(b) to another eligible retirement plan at anyage once you have retired or terminated employment.

IRS 10% Penalty Appl ies? No

Minimum Distribu tion at 70½? Yes, once you have retired or terminated employment1.

Loans Yes

Options When You Leave U-M Lifetime or fixed-period annuity

Cash withdrawal (partial, total, systematic)

Minimum distribution at 70½

Rollover to another eligible retirement plan

Leave the accumulations until a later date.

Enroll Online Using Self Service > Benefits

1. Go to the Wolverine Access Gateway at http://wolverineaccess.umich.edu

2. Select Employee Business

3. Enter your uniqname and password

4. Select Benefits

5. Select Initiate SRA/457(b) Election

6. Review the effective date and confirm you wish to proceed.

7. Follow the online instructions to designate your per pay period contribution and choice of investment carrier(s).

8. You must Submit and Finalize your elections in order to complete the enrollment process.

9. Select your investment funds and designate your beneficiary directly with TIAA-CREF and Fidelity Investments. Seepages 11 and 12 for more information.

1 A former faculty or staff member is someone who has retired or terminated employment with the University of Michigan. Terminationof employment does not include being on a layoff(RIF), leave of absence, phased retirement, furlough, long-term disability, 0% effortappointment, or periods of non-appointment.



4

How Does the 457(b) Plan Work?

What is a 457(b) Plan? A 457(b) is a non-qualified deferred compensation

plan. You authorize a pre-tax payroll contribution(called a Salary Deferral Amount) that is investedwith mutual funds and annuities through TIAA-CREF and/or Fidelity Investments. Contributionsand earnings are tax-deferred until you take adistribution. You do not pay state or federalincome taxes on your contributions at the timethey are made. However, you still pay the 7.65%FICA (Medicare and Social Security) tax.

What is the purpose of a 457(b)?The purpose of a 457(b) is to allow a person to

postpone or defer receiving earned compensationand the associated tax liability until a future date,typically in retirement.

Who may sponsor a 457(b)?These plans can only be offered by state or localgovernments and nonchurch nongovernment tax-exempt organizations. Any agency orinstrumentality of a state may offer a 457(b),including a public college or university.

Who contributes?You contribute a fixed dollar amount with eachpaycheck; there is no university contribution.

What is the 457(b) contributionlimit?The annual limit for 2009 is $16,500; the limit is$22,000 if you are age 50 or older.

May I contr ibute to both the U-M457(b) and the Retirement Plan?Yes. Contributions made to one plan do not offsetthe amount you may contribute to the other. Thisallows you to essentially double your pre-taxcontributions by participating with both plans.

What are my income options?You can select a variety of payment methods at

any age once you have terminated employment orretired, such as a lifetime or fixed-period annuity,cash withdrawals, or minimum distribution at 70½.

Is a 457(b) plan subject to IRSMinimum Distribution?Yes. You must begin taking distributions by April 1following the calendar year in which you reachage 70 ½, or retire or terminate employment,whichever is later.

May I rollover a 457(b)?Yes. Once you have terminated employment orretired, you may rollover your accumulations intoan IRA, 401(k), 401(a), 403(b), or anothergovernmental 457(b). You may also elect arollover at age 70½ as a current member of thefaculty or staff. You lose an important tax benefit ifyou elect a rollover, see page 21 for details.

Are 457(b) withdrawals madeprior to age 59 ½ subject to theIRS 10% penalty?No. The withdrawal penalty does not apply tocontributions and earnings in a 457(b) plan.However, withdrawals of amounts you have rolledinto the U-M 457(b) from another type of plan aregenerally still subject to the penalty. Your ability totake a withdrawal from the U-M 457(b) while acurrent member of the faculty or staff is verylimited. See page 18 for details.

Enrol ling in the 457(b) does not

enroll you in the Retirement Plan. The 457(b) allows you to save on a tax-deferredbasis. However, it is not the retirement plan foruniversity faculty and staff. The 457(b) is aseparate plan that can help you reach yoursavings goals, but remember to enroll in the U-MBasic Retirement Plan, if you are eligible.



5

457(b) or a 403(b) SRA? The University of Michigan sponsors a 457(b) Deferred Compensation Plan and a 403(b) SupplementalRetirement Account (SRA) to save tax-deferred for retirement. What’s the difference between the two?

How are the 457(b) and the SRA similar? Both plans have the following in common:

Tax-deferred contributions and earnings.

The same investment fund options.

The same income options at any age onceterminated or retired.

The ability to take a loan.

Cash withdrawals and rollovers at any ageonce terminated or retired.

How are the 457(b) and the SRA di fferent? The IRS 10% penalty on withdrawals made

prior to age 59½ does not apply to the 457(b),but it does apply to the SRA.

The SRA allows cash withdrawals as a currentmember of the faculty or staff if you becomedisabled, in the event of f inancial hardship, orat age 59½ or older. These options are notavailable under the 457(b).

The 457(b) allows cash withdrawals as acurrent member of the faculty or staff at 70½ orolder, or as a one-time withdrawal if your

account balance is no more than $5,000 and you have made no contributions to the planduring the two years prior to the distribution.

Can I contribute to the 457(b) and latertransfer it to an SRA in order to get accessto the SRA cash withdrawal options?No. Federal regulations do not permit directtransfers between a 457(b) and an SRA.However, once you have retired or terminatedemployment, you may rollover the 457(b) toanother eligible retirement plan or an IRA.

The SRA may be of interest if:You want the flexibility to cash out the SRA beforeyou retire or terminate employment due to:

Disability

Financial hardship

At age 59½ or older

The 457(b) may be of interest if:

You already contribute the maximum allowableto the 403(b) SRA and want to save more.

You do not need to cash out theaccumulations before you retire, terminateemployment or reach age 70½.

You anticipate taking a cash withdrawal beforeage 59½ (because you retire, terminate, ortake the one-time withdrawal) and you want toavoid the IRS 10% penalty.

457(b) vs. SRA

Plan Feature 457(b) SRA

In-service disabilitywithdrawal?

No Yes

In-service hardshipwithdrawal?

No Yes

In-service withdrawalat age 59½?

No Yes

In-service withdrawalat age 70½?

Yes Alreadyavailable at

59 ½

Subject to minimumdistribution at 70½?

Yes Yes

Subject to IRS earlywithdrawal penalty?

No Yes

Loans Yes Yes

Income tax is due on withdrawals. An IRS 10% penaltygenerally applies to withdrawals made prior to age 59½ on theSRA but not the 457(b). Consult with a qualified tax advisor forinformation on taxation of distributions and the IRS earlywithdrawal penalty. If you default on the loan, income taxesare due, and an IRS early withdrawal penalty may apply if youare under age 59½ on the SRA loan.



6

IRS Saver’s Credit

What is the Saver’s Credit?This is a nonrefundable tax credit available to

eligible individuals who make electivecontributions to certain types of retirement plans.Its purpose is to encourage people to save forretirement. Consult with a qualified tax advisor formore information and to see if you qualify.

Eligible ContributionsYou may be eligible for a credit of up to $1,000 forcombined voluntary contributions you make to thefollowing types of plans:

Employer-sponsored 401(k) or 403(b) plans, agovernmental 457(b) plan, SIMPLEs, andSEPs.

Individual or spousal contributions to an IRA,(both traditional and Roth).

After-tax contributions you make to a qualifiedretirement plan.

Maximum Contribution and Credit Annual contributions of up to $2,000 may beconsidered for this credit. Depending on youradjusted gross income, you may be eligible totake the credit for up to 50% of the contribution,

with a maximum credit of $1,000.

Who is Not EligibleYou are not eligible for the credit if any of the

following conditions apply to you:

Your adjusted gross income for 2009 is morethan $27,750 ($41,625 if head of household;$55,500 if married filing jointly).

You are under age 18.

You are claimed as a dependent on anothertaxpayer’s tax return, or are a full-time student.

The Amount of the CreditIf you are eligible, the amount of the saver’s creditis based on the adjusted gross income (AGI) ofyou and your spouse. See the chart below formore specific information.

Other ConsiderationsThe credit is reduced by taxable distributionstaken from an employer-sponsored retirementplan or IRA by you or your spouse during the yearthe credit is claimed, during the two precedingyears, or during the time between the end of theyear the credit is claimed and the due date for thetaxpayer’s income tax return. The reduction alsoapplies to any Roth IRA distribution that is notrolled over, regardless of whether it is taxable.

Eligibility and Amount o f Credit

2008 ADJUSTED GROSS INCOME AMOUNT OF CREDIT

Single orMarried filing separately Head of household Married filing jointly

Less than $16,000 Less than $24,000 $32,000 or less 50%

$16,001 to $17,250 $24,001 to $25,875 $32,001 to $34,500 20%

$17,251 to $26,500 $25,876 to $39,500 $34,501 to $53,000 10%

These limits are periodically indexed by the IRS.



7

TIAA-CREF

Founded in 1918, TIAA-CREF is the nationwideretirement and financial services system forpeople who work at more than 15,000 colleges,

universities, independent schools, and othernonprofit education, hospital and health care, andresearch institutions throughout the United States.In fact, the University of Michigan was the first inthe nation to offer TIAA in 1919.

TIAA-CREF fund fees are among the lowest in thevariable annuity and mutual fund industry. Inaddition, TIAA holds top ratings from all fourleading insurance company agencies: A.M. Best,Co., Fitch, Moody’s Investors Service, andStandard & Poor’s.

What does the name TIAA-CREF mean?TIAA is the Teachers Insurance and Annuity

Association, an insurance company founded in1918 by the Carnegie Foundation for the

Advancement of Teaching. CREF is the CollegeRetirement Equities Fund, first set up in 1952 andnow registered with the Securities and ExchangeCommission as an open-end, diversifiedmanagement company under the federalInvestment Company Act of 1940.

Meet with TIAA-CREF Call 1-800-732-8353

Sign-up online at www.tiaa-cref.org/moc

TIAA-CREF Ann Arbor Office333 Maynard St., Suite 500

Ann Arbor, MI 481041-866-842-2949

Two Ways to Invest with TIAA-CREF

1. Lifecycle FundThe investment fund designation for TIAA-CREFis automatically a Lifecycle fund. Your date ofbirth will be included with your enrollment datathat will be sent to TIAA-CREF in order todetermine the Lifecycle fund that is appropriate foryou based on your age. Each fund is a diversifiedportfolio of TIAA-CREF mutual funds, includingstocks, bonds, and real estate investment truststargeted to a specific retirement date.

Lifecycle Funds

Lifecycle Fund 2010

Lifecycle Fund 2015 Lifecycle Fund 2020

Lifecycle Fund 2025

Lifecycle Fund 2030

Lifecycle Fund 2035

Lifecycle Fund 2040

Lifecycle Fund 2045

Lifecycle Fund 2050

2. Create a Custom Portfolio

TIAA-CREF offers more than 40 funds, including

mutual funds, and fixed and variable annuities.Domestic and international stock funds, bondfunds, money market funds and real estate fundsare available, along with a guaranteed fixedannuity and funds that are socially responsible.Your welcome packet from TIAA-CREF willcontain information about how to change yourinvestment choices if you do not want a LifecycleFund.

www.tiaa-cref.org

TIAA-CREF Telephone Counseling Center

1-800-842-2776

http://www.tiaa-cref.org/moc






8

Fidelity Investments

Fidelity Investments was founded in 1946 byEdward C. Johnson II and today is the largestmutual fund company in the world. Fidelity

Investments is one of the nation’s top providers of403(b) retirement savings plans for not-for-profitorganizations, including colleges and universities,healthcare institutions, foundations, and charitableorganizations. The University of Michigan addedFidelity Investments to its retirement plan in 1989.

Fidelity Investments offers over 100 mutual funds,including domestic and international stock funds,bond funds, money market funds and real estatefunds. In addition, numerous Select PortfolioFunds are available that allow you to invest inhighly specialized sectors of the U.S. economy.

Meet with Fidelity Investments

Call 1-800-642-7131

Sign-up online atwww.fidelity.com/atwork/reservations

Fidelity Investments Ann Arbor Office500 E. Eisenhower Pkwy., Suite 100

Ann Arbor, MI 48108

Two Ways to Invest with Fidelity

1. Freedom FundThe investment fund designation for FidelityInvestments is automatically a Freedom fund.Your date of birth will be included with yourenrollment data that will be sent to FidelityInvestments in order to determine the Freedomfund that is appropriate for you based on yourage. Each fund is a diversified portfolio of FidelityInvestments mutual funds, including stocks,bonds, and money market funds targeted to aspecific retirement date.

Freedom Funds

Fidelity Freedom Fund 2005








2. Create a Custom Portfolio

You can create your own custom-made portfolio

by allocating your contributions among the variousFidelity mutual funds. Fidelity will mail you awelcome packet after you have been enrolled withinformation on the many Fidelity mutual funds youmay choose from if you do not want a FreedomFund.

https://www.mysavingsatwork.com/atwork.htm

Fidelity Retirement Specialists

1-800-343-0860

http://www.fidelity.com/atwork/reservations





9

Eligible Compensation

Eligible compensation definedNot everything you receive in a paycheck can beput into the 457(b) plan. Compensation must meetfederal requirements in order to be deferred. Itmust be earned compensation that is paid to youas a University of Michigan faculty or staffmember for services performed, subject to federalincome tax withholding through the university, andreported on a W-2 issued by the university.

Federal income tax withholdingCertain forms of compensation may be subject tofederal income tax but cannot have withholdingtaken by the university. In these cases, you maynot make a pre-tax contribution to the 457(b) plan

because the university cannot provide a pre-taxbenefit on compensation that is not subject to taxwithholding. A fellowship is an example ofcompensation not subject to tax withholdingthrough the university.

No after-tax payments; it must be takenpretax from your paycheckSalary deferrals must be made as a pre-taxcontribution from your paycheck. For example,you cannot write a check to the University ofMichigan to have it sent to TIAA-CREF or FidelityInvestments.

Visit the Payroll Office website for a complete listof the types of compensation that may bedeferred. Generally, compensation that may becontributed to the retirement plan may also bedeferred into the 457(b).

http://www.finops.umich.edu/payroll

Eligible Compensation Ineligible Compensation

Examples of compensation that are eligible to bedeferred under the University of Michigan 457(b)Plan include:

Examples of compensation and payments that arenot eligible to be deferred under the University ofMichigan 457(b) Plan include:

Base salary and wages

Overtime

Shift differential

Administrative differential

Incentive payments (Risk Pay) under theMedical Service Plan

Longevity pay

Summer salary for university-year appointees

Fellowship, scholarship, and stipends

Flex credits for opting out of benefit plans

Allowances for housing, uniforms, and travel

Royalty payments

Long-term disability plan benefit payments

Temporary employee earnings Worker’s Compensation






10

Enroll Online Using Self Service > Benefits

1. Go to the Wolverine Access Gateway athttp://wolverineaccess.umich.edu

2. Select Employee Business 3. Enter your uniqname and password

4. Select Benefits

5. Select Initiate SRA/457(b) Election

6. Review the effective date and confirm youwish to proceed.

7. Select 457(b) and follow the onlineinstructions to designate your per pay periodcontribution amount and choice of investmentcarrier(s).

8. You must Submit and Finalize your electionsin order to complete the enrollment process.

9. Select your investment funds and designateyour beneficiary directly with TIAA-CREF andFidelity Investments. See pages 11 and 12for more information.

You will receive a follow-up confirmation of yourenrollment by email after you have submitted andfinalized your elections. If you do not receive theconfirmation email, you have not completed theenrollment process.

Effective Date

Per IRS regulations, enrollment and anyelections to change your deferral amount inthe 457(b) plan is generally effective no earlierthan the month following the date yourapplications or elections are filed with theBenefits Office.

Please note that this is di fferent from theBasic Retirement Plan and SRA, which can beeffective in the same month that you submit

your enrollment or election to change yourcontribution amount.

Canceling, Increasing or DecreasingYour Salary Deferral

Use Self Service > Benefits on Wolverine Accessanytime during the year to cancel, increase, orreduce your existing salary deferral contribution.

All changes are effective no earlier than the monthfollowing the date you submit and finalize yourelections.

Please note that you may make only one electionusing Self Service > Benefits per month.

Designate your beneficiary and choiceof funds directly with TIAA-CREF

and/or Fidelity Investments

There are no paper applications to open youraccount with TIAA-CREF and/or FidelityInvestments.

Once you have completed and finalized theonline enrollment process the Benefits Officewill send an enrollment notice to your choseninvestment carrier(s) to establish youraccount.

TIAA-CREF and/or Fidelity Investments willmail you a packet with information on how to

designate your beneficiary. The investment fund will automatically be a

TIAA-CREF Lifecycle or Fidelity InvestmentsFreedom fund, based on your date of birth.You may change this at any time.



11

Enroll ing with TIAA-CREF and Fidelity Investments

What forms do I complete to open myaccount wi th TIAA-CREF and/or

Fidelity Investments?There are no paper forms to complete to openyour account with TIAA-CREF and/or FidelityInvestments.

How is my account established? The Benefits Office will send an enrollment noticeto your chosen investment company to createyour account once you have completed the onlineenrollment process using Wolverine Access.Notifications are sent to Fidelity Investments on a

weekly basis. Notifications to TIAA-CREF aresent with your first contribution; this is the firstbusiness day of the month after your firstdeduction.

What should I do next?

1) Designate Your BeneficiaryThe investment company you selected will sendyou a welcome packet with information on how tohow to designate your beneficiary.

Fidelity Investments will include abeneficiary designation form in thepacket.

Contact TIAA-CREF at 800-842-2776 torequest a beneficiary designation form orupdate it online at: www.tiaa-cref.org

Complete the form and return it to the investmentcompany as soon as possible.

2) Choose Your Investment Funds

The investment fund will automatically be an age-appropriate Lifecycle Fund if you select TIAA-CREF or a Freedom Fund if you select FidelityInvestments. You may change this by contactingTIAA-CREF or Fidelity Investments directly at anytime.

What is a Lifecycle or Freedom Fund? A TIAA-CREF Lifecycle or Fidelity InvestmentsFreedom Fund is a mutual fund that is adiversified portfolio of other mutual funds offeredby that company. This includes domestic andinternational stock funds, bond funds, and moneymarket funds.

Each Lifecycle or Freedom fund automaticallyselects the allocation of stock, bond, and moneymarket funds that are appropriate for a targetretirement date of approximately age 65. Thefund will adjusts its holdings periodically tomaintain an asset allocation appropriate for itstarget retirement date to maximize returns andminimize risks.

Your date of birth will be included in theenrollment notice sent to your chosen investmentcompany. This will determine into which specificLifecycle or Freedom Fund you will be enrolled.

Lifecycle and Freedom Funds provide a simplesolution if you lack the time, confidence, orinvestment knowledge to create and manage awell-diversified portfolio. Each fund isprofessionally managed and provides you with asimple, single investment fund.

Do I have other investment choices?TIAA-CREF and Fidelity Investments offer a wideselection of stock, bond, money market, and realestate funds. If you do not want your investmentfund to be a Lifecycle or Freedom Fund, contactTIAA-CREF or Fidelity Investments to designate adifferent fund.

Fidelity Investments: 1-800-343-0860

TIAA-CREF: 1-800-842-2776 You may also create your account onlineat www.tiaa-cref.org/enroll by entering in

all caps UM457B

http://www.tiaa-cref.org/



http://www.tiaa-cref.org/enroll







12

Designate Your Beneficiary

Why do I need to designate abeneficiary?

The beneficiary you designate will receive theaccumulations in your account in the event of yourdeath. Designating a beneficiary is critical toensure that your retirement account is paid to thebeneficiary of your wishes, and helps avoid legaldisputes over your account.

It is important to keep your beneficiarydesignations up to date. Family status changes,such as marriage, divorce, birth, or adoption mayaffect your desired beneficiary intentions. It isrecommended that you review and update yourbeneficiaries periodically to make sure they reflect

your wishes as your circumstance change.Please note that updating your beneficiary for lifeinsurance does not update it for your retirementsavings plan or 457(b) plan. You must complete aseparate beneficiary designation for each plan inwhich you are enrolled.

Doesn’t the enrollment processdeclare my beneficiary?No. You must designate your beneficiary directlywith TIAA-CREF and/or Fidelity Investments.

Isn’t my beneficiary automatically theone I listed for life insurance?

No. Life insurance and the 457(b) plan are twoseparate benefit programs. Designating orupdating a beneficiary for one plan does not affectthe other.

What happens in the event of my deathif I don’ t designate a beneficiary forthe 457(b) plan?

Under current plan terms, the order of thebeneficiary determination will be as follows:

TIAA-CREFThe beneficiary will be your estate. This willinvolve probate court determining who will receivethe benefits of your account.

Fidelity InvestmentsThe account will be paid according to person orpersons surviving you in the following order: a)spouse, b) children, c) parents, d) brothers orsisters, e) personal representative (executor oradministrator).

TIAA-CREFTo designate or change your beneficiary, visit the TIAA-CREF Web site at:www.tiaa-cref.org/support/forms/topics/benchange/interstitial/designation_of_benef.html

Or contact a TIAA-CREF representative by calling 800-842-2776, Monday through Friday, 8:00 a.m. to 10:00p.m., or Saturday 9:00 a.m. to 6:00 p.m. Eastern time.

Fidelity InvestmentsTo designate or change your beneficiary, complete the Fidelity Investments 457 or Nonqualified BeneficiaryDesignation Form at http://benefits.umich.edu/forms/457b_beneficiary.pdf

Or contact a Fidelity Retirement Services Specialist by calling 800-343-0860, Monday through Friday, 8:00a.m. to midnight Eastern time.

For more information visit: www.umich.edu/~benefits/events/beneficiary.htm

http://www.tiaa-cref.org/support/forms/topics/benchange/interstitial/designation_of_benef.html


http://benefits.umich.edu/forms/457b_beneficiary.pdf



http://www.umich.edu/~benefits/events/beneficiary.htm








13

How Much Can I Contribute?

General Limit of $16,500Your limit for making 457(b) elective deferrals is

$16,500 for 2009. If your salary is less than$16,500, your limit is your salary. However, if youearn less than $16,500 you cannot contribute yourentire salary because you must still pay the 7.65%FICA (Social Security and Medicare) tax. Youmust also pay for deductions for other benefitplans and deductions you have such as parking,United Way, and U.S. Savings Bonds.

Age 50 or Older Limit of $22,000If you are age 50 or older by the end of thecalendar year, your limit is $22,000.

Your Per Paycheck Contribution After you determine your annual limit, subtract anycontributions made during the same calendar yearto another employer’s 457(b) plan. Divide theremaining amount by the number of pay periodsleft in the calendar year to determine your perpaycheck contribution or salary deferral amount.

Your 457(b) salary deferral amount will continueuntil you change or cancel it using Self Service >Benefits through the Wolverine Access gateway. If

you reach the annual limit before the end of thecalendar year, the contributions will be suspendedfor the balance of the year. It will generallyresume automatically the following January.

If You Retire or TerminateYour limit for the year does not change becauseyou retire, terminate employment, take a leave ofabsence, or are placed on a layoff (RIF). Youmay reach your limit by increasing your 457(b)contribution before the event occurs.

You have one 457(b) limit no matter how manyemployers or plans you have. If you have reachedthe IRC 457(b) limit while at U-M and then go towork for another employer, you may not be able tocontribute to their 457(b) plan until the followingcalendar year. You will need to carefullycoordinate your elective deferrals if you plan towork for another employer and want to contributeto their 457(b) plan.

Vacation PayoffIf you are eligible to accrue vacation, any unused

accrual at termination of employment orretirement will be paid to you. This payment willnot have the 457(b) contribution taken if you areenrolled in the plan.

Do Not Exceed the LimitThe M-Pathways payroll system monitors youryear-to-date contributions and will automaticallysuspend them for the rest of the calendar year ifyou reach the IRC limit.

This only tracks your 457(b) deferrals at U-M.

If you contr ibute to another employer’s 457(b)during the same calendar year, you will needto carefully monitor your comb ined deferralsso they do not exceed IRC limits.

Elective deferrals to other types of plans that donot reduce your U-M 457(b) limit include:

403(b)

401(k)

408(k)(6) Salary Reduction SimplifiedEmployee Pension Plans (SARSEPs)

SEP-IRAs

SIMPLEs (Savings Incentive Match Plans forEmployees)

Consult with a tax advisor if you have questionsabout the need to aggregate your combinedelective deferrals so you do not exceed IRC limits.

It is your responsibility to make sure your

combined contributions to all plan typesdo not exceed IRC limi ts.



14

Rollovers into the U-M 457(b) Plan

Will the U-M 457(b) Plan accept rol lovers?Yes. You can rollover accumulations from

another eligible retirement plan into the Universityof Michigan 457(b) Plan at any time.

What kind o f ro llovers can the U-M 457(b)Plan accept?The following types of pre-tax eligible rolloverdistributions can be accepted into the U-M Plan:

401(a)

403(a)

401(k)

403(b) Governmental 457(b)

IRA

The ability to accept after-tax rollovers from theseplans is severely limited. Contact TIAA-CREF andFidelity Investments for more information on thespecific types of after-tax rollovers that can beaccepted.

Does the IRS 10% penalty apply to

amounts I rollover into the U-M 457(b)Plan?Yes. Amounts you rollover into a 457(b) fromanother type of plan, including an IRA, 403(b),401(k), 403(a), or 401(a), are tracked separately.

A subsequent distribution prior to age 59 ½ ofthese amounts are generally still subject to theIRS withdrawal penalty.

How do I arrange for a rollover of assetsinto the U-M 457(b) Plan?

1. Contact the investment carrier who has theaccumulations you want to rollover, or yourprevious employer who sponsored the plan, todetermine if you are allowed to take a rollover.

2. Enroll in the U-M 457(b) Plan and set up youraccount with TIAA-CREF and/or FidelityInvestments so the rollover will have adestination account established.

3. Obtain a rollover application from TIAA-CREFand/or Fidelity Investments. You may alsoneed to obtain a rollover application from theinvestment carrier that currently has the

amounts you wish to rollover. Some carrierswill allow you to use the TIAA-CREF andFidelity Investments forms; others will wantyou to also complete their own forms.

Who can I talk to if I have questions?You can speak with a consultant with TIAA-CREFand Fidelity Investments for questions and torequest forms for a rollover. You can also meetwith a consultant from TIAA-CREF and FidelityInvestments for questions or help on completingthe applications.



15

Quarterly Statements

What’s on the TIAA-CREF and Fidelityquarterly statements?Each quarter you will receive statements fromTIAA-CREF and Fidelity Investments that reflectactivity on your account that occurred during thetime period it covers. This includes deposits ofyour payroll contributions and any transfers youmade among the investment funds.

How are my 457(b) deferred compensationcontributions reported on the statements?The statements report the dates on whichcontributions were received by TIAA-CREF andFidelity Investments, not the dates they weretaken from your paycheck . This can causeconfusion if you are trying to reconcile yourpaycheck contributions with the amounts reportedon the statements during the same time period.Keep the following in mind:

All contributions are sent to TIAA-CREF andFidelity on the first business day of thefollowing month after they were taken fromyour paychecks. For example:

An Apri l 1 deposit represents contributions takenfrom your March paychecks.

A quarterly statement dated “April 1 - June 30”reflects deductions taken from your March, Apriland May paychecks.

The amount reported in your quarterlystatements are always one month off fromwhen the contributions were taken from yourpaychecks, because TIAA-CREF and Fidelityreport when they were received, not whenthey were deducted.

Because of this one month difference, you

cannot simply compare the quarterlystatement to paychecks issued during thesame months.

If you contribute to both TIAA-CREF andFidelity Investments, make sure you arecrediting the correct percentage of eachmonth’s contribution to each companyaccording to your allocation split.

Changes to your deferral amount will bereported in the following month. For example,if you change your amount in the June

paycheck, the new contribution amount will bereported by TIAA-CREF or FidelityInvestments as being received in July.Therefore, it will not appear until your thirdquarter statement that covers July throughSeptember, which will be mailed in earlyOctober (see chart below).

Comparing your pay stubs to thequarterly statements

Month checkissued &

deferral taken

When receivedby TIAA-CREF

& Fidelity

Quarterlystatement onwhich it will

appear

December January 1 First Quarter

January 1 –March 31January February 1

February March 1

March April 1 Second Quarter

April 1 – June 30 April May 1

May June 1

June July 1 Third Quarter

July 1 –September 30July August 1

August September 1

September October 1 Fourth Quarter

October 1 –December 31October November 1

November December 1



16

Military Leave of Absence

How does taking a mili tary leave ofabsence affect my 457(b)?

After you return from a military leave of absence,you are allowed to make extra contributions to theplan to make up for those you missed during theleave. This option is provided under theUniformed Services Employment andReemployment Rights Act (USERRA).

How do you calculate the contributionsthat were missed during the leave?The salary deferral amount in effect prior to yourleave is used to determine the amount you werecontributing before your leave of absence.

These per-paycheck amounts are multiplied bythe number of pay periods missed, according tothe start and end dates of your leave of absence.This determines the total amount eligible to bemade up.

When you return from the leave to an activeappointment at the university, you may choose tohave extra contributions taken over several payperiods to make up for those that were missedduring the military leave.

Am I required to make up the missedcontributions?No, this is completely voluntary. You may chooseto make up the total amount, a portion of it, ornone at all.

How long do I have to make up the missedcontributions?

You have up to three times the length of the leaveto make the extra contributions, capped at fiveyears. You may make up the missedcontributions in a shorter length of time if youprefer.

If I make extra contributions to the plan,won’t that count against the IRS limi t andreduce the amount I can tax-defer into theplan?No. USERRA grants a special exemption thatallows you to exceed the IRS limit that normally

caps 457(b) contributions. This permits you tomake extra contributions to make up for thosemissed during the leave in addition to thecontributions you will make on your salary afterreturning from your leave.

Can I make up contr ibutions if I wasn’tenrolled in the Plan prior to the leave?No. This option is only available if you wereparticipating in the plan before you took themilitary leave of absence.

Can I make up missed contr ibutions dueto o ther types of leaves of absence?No. This make up feature only applies in cases ofa military leave of absence.

How do I start the process to make up themissed contributions? Contact the Benefits Office at 734-615-2000 uponyour return from your military leave of absence.



17

Direct Transfers

What is a direct transfer? A direct transfer is a tax-free transfer madedirectly between investment carriers. You canmove your accumulations between TIAA-CREFand Fidelity Investments, as long as they remainin a U-M 457(b) Plan account. This can be doneat any time, regardless of whether you are acurrent, former, or retired faculty or staff member.However, you cannot transfer your 457(b) to theSRA in order to gain access to the SRA cashwithdrawal options.

How does a transfer differ from a rollover? A transfer is used to move accumulationsbetween investment carriers within an employer’s

457(b) plan. A rollover is a distribution that movesthe accumulations into another investmentvehicle, such as another employer’s retirementplan or an IRA.

Are direct t ransfers allowed to companiesother than TIAA-CREF and Fideli ty?No. TIAA-CREF and Fidelity Investments are thetwo companies for the University of Michigan457(b) Plan.

How to make a direct t ransferContact TIAA-CREF or Fidelity Investments andrequest a direct transfer application. Completeand return the form to the investment company.

If you do not have an account with the companythat you would like to receive the transfer, you willneed to complete an application to set up theaccount before the transfer can be processed.

Submitting the direct transfer and accountapplications only move accumulations already ondeposit; it does not change where your currentand future contributions are sent. To changewhich carrier receives future contributions, useSelf Service > Benefits on Wolverine Access.

Transfers for Purchase ofService Credit

If you participate in a defined benefitgovernmental plan (as defined in Internal

Revenue Code Section 414(d)), you may requesta direct transfer from this plan to the definedbenefit governmental plan if the transferred assetsare used for the following purposes:

The purchase of service credit (as defined inCode Section 415(n)(3)(A)) under the definedbenefit governmental plan; or

The repayment of contributions and earningsrelated to a previous forfeiture of service creditunder the defined benefit governmental plan.



18

Cash Withdrawals:Current Faculty and Staff

Age 70½ Withdrawal

How much can I withdraw?You may withdraw any portion or your entireaccumulations while you are a current member ofthe faculty or staff at age 70½ or older for anyreason.

Is there a tax penalty for doing so?No, but you will have to pay income tax on theamount you withdraw.

Is this a minimum distribution withdrawal?No. The IRS requires you to take a withdrawal by

April 1 after the year you retire or terminate. If youare over 70½ when you retire or terminate, thewithdrawal must occur by the following April 1. Incontrast, this withdrawal option is available to youwhile you are still working at 70½ or older and isnot considered to be a minimum distribution butmerely an in-service cash withdrawal.

Can I rollover this withdrawal?

Yes. Contact TIAA-CREF and/or FidelityInvestments for assistance.

How do I arrange for a withdrawal?Contact TIAA-CREF and/or Fidelity Investmentsto request a withdrawal application and completeyour sections of the form. Return the form to theappropriate investment carrier for processing.There is no employer authorization required forthis type of withdrawal.

One-Time Withdrawal

What is the one-time withdrawal?You may withdraw your entire accumulationsunder a special provision while you are a currentmember of the faculty or staff if the followingconditions are met:

1. The total account balance (not countingrollovers you made into the plan) is no morethan $5,000;

2. No amount has been deferred under the planduring the two-year period that ends on the

date of distribution; and

3. No previous distribution was taken under thisspecial provision.

Is there a tax penalty for doing so?No, but you will have to pay income tax on theamount you withdraw.

How do I arrange for a withdrawal?Contact TIAA-CREF and/or Fidelity Investments

to request a withdrawal application and completeyour sections of the form. Return the form to theappropriate investment carrier for processing.There is no employer authorization required forthis type of withdrawal.

Can I rollover this withdrawal?Yes. Contact TIAA-CREF and/or FidelityInvestments for assistance.



19

Loans

What is a 457(b) loan?You may borrow from your 457(b) account at anytime, for any reason, regardless of whether youremployment is active or terminated.

How much can I borrow?Generally, you may borrow up to 45% of yourTIAA-CREF accumulation or 50% of your Fidelityaccumulation. The minimum loan amount is$1,000 and the maximum is $50,000. ContactTIAA-CREF or Fidelity for details. This is acombined loan limit and applies to all of your U-MSRA and 457(b) accounts with both vendors.

Are there any fees for taking a loan?No.

Do I pay income tax for taking a loan?No. The loan is not treated as a cash withdrawal,so there is no income tax due. However, if youdefault on the loan, then it is deemed to be awithdrawal and taxes are due. Keep in mind thatyou are using after-tax dollars to repay your loanthat was funded with tax-deferred contributions.

How long do I have to repay the loan?You may choose the length of the repaymentperiod, from one to five years. You may choose alonger repayment period if the loan is used solelyfor the purchase of your principal residence.

How do I repay the loan?Payments are made directly to your investmentcarrier. Payroll deductions are not availablethrough the university; however, you can arrangean automatic debit from your checking or savingsaccount.

Will I be charged interest for the loan?Yes. The rate is variable; contact TIAA-CREFand/or Fidelity Investments for the current interestrates. The interest you pay is not tax-deductible.

Can I prepay my loan?Yes. You can pay off your loan early with no

penalties.

Does taking a loan affect my participationin the U-M plan?No. You may continue to participate in the U-M457(b) Plan if you take a loan.

How do I arrange for a loan?Contact your investment carrier and request aloan application. Employer authorization for a loanis not needed. Return the loan application to yourinvestment carrier after you have completed theform.



20

What Are My Options When I Leave U-M?

1. Leave your money where it is.By leaving the accumulations in the University of

Michigan 457(b) Plan, you postpone paying taxeson the contributions and earnings until you decideto take a distribution at a later date. Theaccumulations will continue to experience theinvestment performance of your chosen funds. Inaddition:

You will have access to the many servicesTIAA-CREF and Fidelity Investments offer toparticipants such as free publications,workshops, individual counseling, and theirexpert investment of your funds.

You can transfer your money between fundswithin TIAA-CREF or Fidelity Investments.

You can transfer money between TIAA-CREFand Fidelity Investments.

2. Rollover your accumulations.You may rollover your contributions and earningsto an IRA or to another eligible retirement plan atany age once you have retired or terminatedemployment. However, you may lose importanttax benefits, such as the exemption to the IRSearly withdrawal penalty. Consult with a qualifiedtax advisor.

3. Take a cash wi thdrawal.Partial, total, and systematic cash withdrawalsallow you to receive income only as you need itand provide a high degree of flexibility. Yourremaining accumulations continue to be tax-deferred until you take a distribution, and willcontinue to experience the investmentperformance of your chosen funds. Keep in mindthe following:

Income tax is due on cash withdrawals.

Your contributions and earnings are availablefor cash withdrawal at any age once you haveterminated employment with the university.

4. Start a lifetime or fixed-periodannuity wi th TIAA-CREF.There is absolutely no requirement that you mustchoose an annuity from TIAA-CREF. However,when you leave your employment with theuniversity, you may choose to receive a lifetime orfixed-period annuity from TIAA-CREF at any age.The amount of the annuity will be calculatedbased on variables such as your life expectancy,your age at the time the annuity option is taken,and whether a spouse-survivor option is chosen.

Ask TIAA-CREF to calculate various scenarios foryou; they will prepare the income projections at nocharge. Alternatively, you may create your owncustom income illustrations at the TIAA-CREF

website.

5. Minimum distr ibution at 70½TIAA-CREF and Fidelity Investments pay you theminimum amount of income you are legallyrequired to take each year by the IRS under thispayment program. The balance of youraccumulations remains tax-deferred andcontinues to experience the investment returns ofyour chosen funds.



21

Rollovers Out of the U-M Plan

May a distribution from the U-M 457(b)plan be rolled over into another eligible

retirement plan?Yes.

What is an eligible retirement plan? An eligible retirement plan includes the following:

401(a)

403(a)

401(k)

403(b)

Governmental 457(b)

IRA

What kinds of dist ributions can I rollover?

Cash withdrawals

Fixed period annuities of less than 10 years

What kinds of dist ributions cannot berolled over?

Minimum distribution payments

Lifetime annuities

Fixed period annuities of 10 years or longer

When am I eligible to take a rol lover as acurrent faculty or staff member?You may rollover your accumulations if you takethe one-time withdrawal (see page 18) or at age70½ or older.

When am I eligible to take a rol lover as aformer faculty or staff member?

At any age. A former faculty or staff member issomeone who has terminated employment withthe University of Michigan. Termination ofemployment does not include being on a leave ofabsence, layoff (RIF), period of non-appointment,0% appointment effort, phased retirement,retirement furlough, or being on long-termdisability.

How do I arrange for a rollover?Contact TIAA-CREF and/or Fidelity Investmentsand request a rollover application. Return theinvestment carrier’s application to them after you

have completed the form.

Rollovers May Result in the Loss of anImportant Tax Benefit!

If you rollover your U-M 457(b) accumulations toanother eligible retirement plan, you may lose theexemption to the IRS 10% penalty on withdrawalsmade prior to age 59½.

The exemption to the IRS 10% early withdrawalpenalty only applies to a 457(b) plan. Once youroll it over to another eligible retirement plan, likean IRA or 403(b), it generally becomes subject tothe 10% penalty if you cash it out before 59½.

Consult with a qualified tax advisor.



22

Cash Withdrawals:Former Faculty and Staff Members

Former employees who have terminatedemployment with the University of Michigan maytake a cash withdrawal at any age. Termination ofemployment does not include being on a leave ofabsence, layoff (RIF), period of non-appointment,0% appointment effort, phased retirement,retirement furlough, or being on long-termdisability.

Federal Income Tax

Contributions that were made with tax-deferreddollars will be subject to Federal income taxrequirements when you take a distribution fromyour account. Many people find it advantageous

to postpone withdrawals until they retire becausetheir income tax bracket is generally lower.

TIAA-CREF and Fidelity Investments are requiredby federal regulations to withhold 20% fromcertain types of distributions. This is not a penalty;it is a federal income tax withholding at the time ofdistribution. When you file your taxes for the year,you may owe more or less, depending on yourfinal tax liability.

The following types of distributions are subject tothe mandatory 20% withholding:

Cash withdrawals (single sum, lump sum andsystematic).

Fixed-period annuities of less than 10 years.

The following types of distributions are not subjectto the mandatory 20% withholding:

TIAA-CREF lifetime annuities.

Fixed-period annuities of 10 years or longer.

Minimum distribution payments.

This information is based on the university’s currentunderstanding of highly complex Internal RevenueCode (IRC) and U.S. Treasury Department regulations.It is provided for general informational purposes only.The University of Michigan does not provide tax advice.It is the responsibility of the plan participant to complywith federal tax regulations. Questions or concernsshould be addressed to a qualified tax advisor.



23

TIAA-CREF Income Options

One-Life AnnuityWith a one-life annuity, you receive an income for

as long as you live. No further payments aremade after your death, except under a guaranteedperiod. The amount you receive from a one-lifeannuity depends on the size of your accumulationand your age at the time you start receivingincome. The more money you “annuitize” (use tobuy a lifetime annuity), the larger your individualpayments will be. The longer your life expectancyat the time you annuitize, the smaller yourindividual payments will be, since youraccumulation will have to stretch further. If youlive beyond your life expectancy, payments willcontinue as long as you live.

Two-Life Annuity A two-life annuity guarantees lifetime income notonly for yourself but also for the lifetime of asecond person (called your annuity partner). Yourage and your annuity partner’s age will affect theamount of income you receive from a two-lifeannuity. The younger you and your annuitypartner are, the smaller the annuity payments willbe based on a given accumulation, because your joint life expectancy is longer. Furthermore, onceyou start receiving income under a two-lifeannuity, you can’t change your annuity partner.

TIAA-CREF offers three kinds of two-lifeannuities. All three are available to you if yourspouse is your annuity partner; otherwise, yourannuity partner’s age might restrict the use ofsome options. The best type of annuity option willdepend on the difference in ages, level of financialdependence and health.

Full Benefits to Survivor . You and yourannuity partner receive lifetime income. Theincome to your survivor doesn't change at yourdeath. This is the only option that doesn't

reduce income for the survivor when theannuitant dies. However, since it pays more tothe surviving partner than the other two optionslisted below, the income payments are smaller.

Half Benefit to Second Annuitant. You andyour annuity partner receive lifetime income. Ifyour annuity partner dies first, your incomeremains the same. If you die first, payments to

your annuity partner continue at half theamount.

Two-Thirds Benefit to Survivor . You andyour annuity partner receive lifetime income. Atthe time of your death or your annuity partner’sdeath, income drops to two-thirds of theamount to the survivor. This is the only two-lifeannuity option that reduces your monthlyincome if your annuity partner dies first.

Guaranteed PeriodsWith a guaranteed period, if you die (under theone-life option) or both you and your annuitypartner die (under the two-life option) during the

guaranteed period, income continues to yourbeneficiary for the remainder of the period. If youand your partner both outlive the guaranteedperiod, no payments will be made to yourbeneficiaries when you and your annuity partnerdie.

TIAA-CREF offers guaranteed periods of 10, 15,or 20 years. In some cases, federal tax law affectsyour choice of a guaranteed period. You aregenerally not allowed to select a period that wouldcontinue payments beyond your life expectancy,based on the Internal Revenue Service’s (IRS)

mortality tables.

Fixed-Period Annuity A fixed-period annuity makes regular paymentsover a specific number of years (5-30 years),which you choose in advance. By the end of theperiod, you will have received all of your principaland any earnings. If you live beyond this period,your annuity payments will not continue. If you dieduring the payment period, payments continue toyour beneficiary. Fixed-period annuity paymentsof less than 10 years are subject to 20% federal

tax withholding and may also be rolled over.



24

TIAA-CREF and Fidelity Investments Income Options

Cash WithdrawalsYou may elect a cash withdrawal at any age once

you have retired or terminated employment. Thereare three types of cash withdrawals: single-sum,lump sum, and systematic.

Single-sum (partial) cash wi thdrawal You withdrawal a portion of your accumulationsand allow the balance to remain in the account topreserve its tax-deferred status. You may takefurther withdrawals as your needs indicate orconvert the balance into one of the other incomeoptions.

Lump sum (total) cash withdrawalYou may elect to receive your entire accountbalance in a single, lump sum payment.However, this may dramatically increase your taxliability and there will be no further incomebenefits available to you from the plan.

Systematic Cash WithdrawalsThis allows you to create your own income planby specifying the amount and frequency ofpayment (monthly, quarterly, annually, etc.).Payments continue until:

You tell TIAA-CREF or Fidelity Investments tostop;

You change the amount of the payments;

You convert the remaining accumulation to alifetime annuity or to another income optionsuch as minimum distribution;

Your money (including earnings) runs out;

You die (if you die while receiving systematicwithdrawals, the remainder goes to yourbeneficiary).

You can change your request at any time, andthere's no limit as to the number of times you can

change a systematic withdrawal that's alreadyunder way. Plus, your remaining accumulationsremain tax-deferred and continue to experiencethe investment returns of your chosen funds. Italso allows you to postpone final decisions aboutannuitization.

Minimum Distribut ion at 70½The IRS requires that you begin receiving

distributions by April 1 of the calendar yearfollowing the calendar year you reach age 70½once retired or terminated. If you are already overage 70½ when you retire or terminate, then youmust take a distribution by April 1 of the followingyear.

When you elect this option, TIAA-CREF andFidelity Investments will calculate and pay you theminimum amount of income you are legallyrequired to take each year. The balance of youraccumulations remains tax-deferred andcontinues to experience the investment returns ofyour chosen funds.

This plan allows you to meet federal minimumdistribution requirements without having torequest payments each year or start a lifetimeannuity. This may be an appropriate income planif want to preserve your accumulations as long aspossible and maximize benefits for yourbeneficiary(ies).



Published byBenefits OfficeUniversity of MichiganWolverine Tower — Low Rise G4053003 S. State Street

Ann Arbor, MI 48109-1278

Phone 734-615-2000 or 866-647-7657(toll-free for off-campus long-distance calling within the U.S.)

Fax 734-936-8835

Email [email protected]

Web www.umich.edu/~benefits/

HR/Payroll Service CenterService Center Representatives are available byphone, Monday – Friday, 8 a.m. – 5 p.m. at 734-615-2000 (5-2000 from the Ann Arbor campus) or866-647-7657 (toll-free for off-campus long-distance calling within the U.S.).

September 2009

The Benefits Office is a unit of University HumanResources (UHR).

Laurita Thomas

Associate Vice President for Human Resources

Marty EichstadtDirector, Benefits Office

Board of Regents of the University of Michigan

Julia Donovan Darlow, Ann Arbor

Laurence B. Deitch, Bingham Farms

Denise Ilitch, Bingham Farms

Olivia P. Maynard, Goodrich

Andrea Fischer Newman, Ann Arbor

Andrew C. Richner, Grosse Pointe Park

S. Martin Taylor, Grosse Pointe Farms

Katherine E. White, Ann Arbor

Mary Sue Coleman, ex officio

Nondiscrimination Policy Statement

The University of Michigan, as an equalopportunity/affirmative action employer, complieswith all applicable federal and state lawsregarding nondiscrimination and affirmativeaction. The University of Michigan is committed toa policy of equal opportunity for all persons anddoes not discriminate on the basis of race, color,national origin, age, marital status, sex, sexualorientation, gender identity, gender expression,disability, religion, height, weight, or veteranstatus in employment, educational programs andactivities, and admissions. Inquiries or complaintsmay be addressed to the Senior Director for

Institutional Equity, and Title IX/Section 504/ADACoordinator, Office of Institutional Equity, 2072 Administrative Services Building, Ann Arbor,Michigan 48109-1432, 734-763-0235, TTY 734-647-1388. For other University of Michiganinformation call 734-764-1817.

univ of michigan deferred compensation plan

Documents