Even though you must pay taxes on your Minimum Distribution Option payments, you can reinvest those proceeds. For after-tax investments, TIAA-CREF offers a variety of products that can fit into your financial plan: TIAA-CREF Mutual Funds, the Teachers Personal Annuuity, and the TIAA-CREF Roth IRA.
TIAA-CREF Mutual Funds
TIAA-CREF Mutual Funds are designed to help you meet a wide variety of investment needs, whether you want to supplement your retirement savings or save for some other specific goal, like planning a dream vacation. You can invest any of your after-tax dollars, which can include your minimum distribution payments or any other discretionary income, in our International Equity, Growth Equity, Growth & Income, Managed Allocation, Bond Plus, and Money Market funds. What's more, out funds have a low minimum investment of $250 (or $25 with our Automatic Investment Plan), exceptionally low operating expenses, and no sales charges or account maintenance fees. Rememver, with mutual funds, whether you reinvest your dividends and capital gains or receive them as a distribution, they will be subject to federal income tax.
Teachers Personal Annuity
If you do not need the money for your basic income needs, you can reinvest your Minimum Distribution Option payments in the Teachers Personal Annuity. This product provides you with an additional long-term savings and investment vehicle that is funded by after-tax contributions. And unlike pretax retirement plans, you can choose to defer withdrawals beyond age 70 1/2, up to age 90. The Teachers Personal Annuity offers two investment choices: the Fixed Account and the Stock Index Account.
You will have easy access to your money through the availability of cash withdrawals and lifetime income options. Therefore, with the Teachers Personal Annuity, you can reinvest your Minimum Distribution Option proceeds and provide a death benefit to your heirs. And since you have already paid income tax on the principal, only the earnings will be taxable. Additionally, you can open a Teachers Personal Annuity account for as little as $250, or $25 if you use our Electronic Funds Transfer (EFT) Service. After your account is open, you can make additional contributions of as little as $25 whenever you want.
The TIAA-CREF Roth IRA
Roth IRAs provide an effective and flexible way to invest your earned income.* While contributions to a Roth IRA are made from after-tax money and are not deductible, they give you the opportunity to earn tax-free investment growth and interest. You can make penalty- and tax-free withdrawals after age 59 1/2 as long as the account has been open for at least five years. You can contribute up to $2,000 of earned income if your adjusted gross income (AGI) is $150,000 or less if you are married and file jointly, or $95,000 if you are single. The ability to contribute is reduced for income between $150,000 and $160,000 if you are married and file jointly, and between $95,000 and $110,000 if you are single. Remember, contributions to the Roth IRA are only available if you have earned income (income resulting from employment).
* TIAA-CREF Roth IRAs are subject to approval by state regulatory agencies.
To make the process easier, you can automatically direct your Minimum Distribution Option payment to any of our after-tax savings and investment products listed above by filling out the "Payment Destination Instructions" section on the Minimum Distribution Option form. If you have questions or would like to request enrollment materials for TIAA-CREF Mutual Funds, or the Teachers Personal Annuity, call our Planning and Service Center toll free at 1 800 223-1200, weekdays from 8:00 a.m. to 11:00 p.m. ET and Saturday and Sunday from 9:00 a.m. to 6:00 p.m. ET. Remember, you can also request enrollment materials for your spouse.