What Are The Federal Minimum Distribution Rules?

Federal minimum distribution rules require that you receive some income from your retirement plan accumulations (including your TIAA-CREF annuities) by April 1 after the year you either (1) turn 70 1/2, or (2) retire, whichever comes later. You also have to continue receiving enough income each year thereafter to satisfy these rules. If you don't comply with the rules, you could be subject to a 50% excise tax on the amount you should have received as income.

Generally your employment status will determine how long you can defer distributions from your retirement plan accumulations.

If you are not employed, you must begin distributions by April 1 following the calendar year you turn 70 1/2. Here are some examples of how this works:

• If you turn 70 1/2 during 1999, you must begin distributions no later than April 1, 2000.

• If you turn 70 1/2 during 2000, you must begin distribution no later than April 1, 2001.

Tax Tip: You may want to take your first payment in the year you turn 70 1/2 to avoid receiving two taxable payments within one tax year.

If you are still employed, you can postpone receiving a minimum distribution from the accumulation attributable to your current employer until April 1 following the year in which you retire, no matter how old you are. And if you have 403(b) accumulations from previous employers in the same contract, you may be able to defer income from these accumulations as well. However, if you have accumulations in a qualified plan, it is our understanding that only the accumulations from your current employer can be deferred.

NOTE: If you turn 70 1/2 by December 31, 1999, and you are still employed, you have the option to receive minimum distribution payments from all of your employers' accumulations. Remember, this is just an option to take in-service payments. You also have the option to defer receiving minimum payments if you don't need the income.

Exceptions to the General Rule:

• If you were born before July 1, 1917, and you're still employed, you can delay beginning distributions from the retirement plans of all employers (current and previous) until April 1 following the year you retire.

• Minimum distribution payments from Classic IRAs have to begin by the April 1 following the year you turn 70 1/2, regardless of your employment status.

• The minimum distribution rule does not apply to Roth IRAs.

• Retirement plans established under the Puerto Rican Internal Revenue Code of 1994 and in the Virgin islands are not subject to federal minimum distribution rules.