This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.
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Divorce and retirement accounts
These answers are presented for general guidance. If you have further questions, please speak to your qualified domestic relations order (QDRO) relationship manager at TIAA for specifics pertaining to your situation. If you do not have a QDRO relationship manager, please contact us to begin the process.
"When TIAA receives notice that a property distribution proceeding is pending, does this limit a participant’s rights (e.g. right to transfer, or cash withdrawals if available; right to select a payout option; right to take loans or change a beneficiary)? How do these activities impact the implementation of the Qualified Domestic Relations Order (QDRO)?"
Until TIAA receives a restraining order or court entered Qualified Domestic Relations Order (QDRO), we cannot restrict a participant from making withdrawals. Internal transfers are allowed but with caution that it does not impede the instructions in the QRDO.
Once we receive a restraining order or QDRO a participant must cease account activity until the QDRO is implemented. When the QDRO is received, it will be implemented to the extent of the funds available in the accounts. Any balance has to be worked out among the claimants. TIAA cautions participants not to make withdrawals while they are still negotiating how property will be distributed.
If the participant makes further contributions, has elected withdrawals or transfers after the QDRO date, the contributions and transactions will be reflected solely on the participant’s account except for Required Minimum Distribution Options (MDO) elections and loans. While the marital property distribution is pending, obtaining the written consent of the spouse in exercising ownership options is required during the marriage for REACT-governed accumulations. Also, spousal consent may be required to execute certain transactions while the distribution settlement is pending. To find out whether your accumulations are governed by REACT call our counselors at 800-842-2776 weekdays from 8 a.m.-10 p.m. (ET) and Saturdays from 9 a.m.-6 p.m. (ET).
Please allow us four weeks to complete the transfer.
If division dates prior to the date of transfer are specified in the QDRO or the documentation received is insufficient, that will delay implementation of the order.
If the transfer has not been completed after four weeks, please call us at 800-842-2252 weekdays, 8 a.m.-10 p.m. (ET) and Saturdays, 9 a.m.- 6 p.m. (ET).
We'll divide the retirement annuity accumulations in accordance to the QDRO order.
If the effective division date is prior to the date of transfer, the deferred annuity accumulation amounts transferred from TIAA Traditional will reflect interim interest earned until the split is completed. However, the TIAA Real Estate and CREF accounts are variable accounts and may increase or decrease in value from one day to the next. As such, the amounts transferred will reflect the interim investment experience of the variable account(s).
After a divorce, if there is a loan in the retirement account, there will be restrictions on TIAA’s ability to split those balances if needed to secure the loan. Consider transferring other TIAA contract assets, or other property, in lieu of an interest in a loan contract.
Please check your quarterly statement for outstanding loan information.
It is important to update and maintain current beneficiary designations on all insurance and annuity products. As your beneficiary designation supersedes your will, it is important to keep all beneficiary designations current while the QDRO proceeding is pending and afterwards.
Interim beneficiary designations on all retirement annuities and insurance policies should be reviewed with your attorneys. Before the dissolution of marriage, TIAA will distribute preretirement death benefits in compliance with the provision of the Retirement Equity Act (REACT).1
1The Retirement Act, among other things, essentially requires spousal consent for any action that would reduce the amount available to a surviving spouse to less than 50 percent of the retirement annuity accumulation. This Act does not apply to all annuity contracts accumulations and inquiry should be made to determine whether updating the beneficiary designation while the divorce is pending is feasible.
If we receive a formal notice of the filing of an appeal after the division of annuities, withdrawals and transfers from the affected accounts will be prohibited until the appeals process is completed.
Any successful appeal will be implemented only to the extent of the options and accumulations available at the time of receipt of an amended Qualified Domestic Relations Order (QDRO).
No. We must apply the awarded amount to the same product line of business from which the funds have been awarded. For instance, if a Retirement Annuity is divided, the alternate payee will receive a newly issued Retirement Annuity. If a Group Supplemental Retirement Annuity is divided, the alternate payee will receive a newly issued Group Supplemental Retirement Annuity. Once the funds have been applied to the newly issued contracts in the alternate payees name, the funds may then be rolled over to an IRA (assuming cash withdrawals are permitted by the source institution(s).
All withdrawals or settlements by the alternate payee will be subject to ordinary income taxation. Withdrawals initiated prior to the alternate payee attaining age 59½ are generally not subject to the IRS 10% early withdrawal penalty.
Yes. Allocation changes may be made only after the QDRO split is implemented and pursuant to the terms of the contracts and the plan. We offer Automated Telephone Service and web-based services to facilitate such transfers amongst accounts.
Once we apply the funds to newly awarded retirement contracts issued in the name of the alternate payee, he/she will be subject to restrictions/rules of the contract with regards to the timing and amount of funds they receive.
For example, any income option(s) restricted by the contributing institution(s) plan will also be restricted for the nonparticipant spouse. If any restriction on income distribution is age specific, TIAA will allow the alternate payee to use the participant’s age (if more favorable) to meet requirements.
The availability of lump-sum withdrawals from deferred annuity contracts may be restricted by the terms of the contracts and the provisions of the sponsoring retirement plan. In addition, loans are not permitted under contracts issued to an alternate payee through a QDRO.
No. We will issue contracts in the name of the alternate payee for the awarded funds. The alternate payee’s personal information listed in the QDRO will be used to establish the account. Unless specified in the QDRO, the awarded amount will be prorated across all investment funds in the participant’s account.
No. Current tax law does not allow the combining of self-remitter and employer-sponsored plan contributions. Therefore, self-remitter contributions may not be applied to a contract awarded to an alternate payee.
The alternate payee would need to open a separate account if they would like to participate in other investment products.
The IRS requires us to obtain the signed Federal Taxpayer Identification Number and Certification form W-9 before completing the division process. The W-9 form certifies the alternate payees' Social Security number.
Generally, once we receive the QDRO, payments will be put on hold, and the process to divide them implemented. Then, the benefits will be released for receipt by the first of the following month unless otherwise specified.
Once payments have started under the participant’s MDO contract they must continue, even if some of the accumulation is placed into a contract for an Individual who has not attained their required beginning date.
However, the alternate payee can roll the remaining accumulation under the newly issued MDO contract into an IRA (if cash is available under the retirement plan), and further distributions can be delayed until the alternate payee reaches the required beginning date.
A. The following sample documents are available. Please select the one applicable to type of contracts owned.
- Deferred Annuity (DA) Sample DRO
This QDRO should be used for all Employer Sponsored Retirement Plans including all Minimum Distribution (MDO), Transfer Payout Annuity (TPA) and Interest Only contracts (IO).
- Immediate Annuity (IA) Sample DRO
This QDRO should be used for all Life annuity contracts.
- Individual Retirement Account (IRA) Sample DRO
This QDRO should be used to divide IRA contracts only.
- QDRO for IRAs Letter of Instruction
- Approval Guidelines And Procedures for QDRO Opens pdf
- FAQ Retirement Accumulations And Domestic Relations Matters Opens pdf
Note: If the client is dividing IRA contracts as well as DA contracts then the Deferred Annuity (DA) Sample DRO can be used for both. The IRA QDRO cannot be used to divide DA contracts.