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Dear TIAA-CREF Tax Deferred Annuity Participant:
The SUNY Board of Trustees adopted a resolution permitting loans under the SUNY Tax Deferred Annuity Program. This provision, as well as recent changes to the cash policy, offers employees participating in the tax deferred annuity greater flexibility in managing their voluntary retirement savings account.
Employees will be permitted to take one loan per twelve-month period. Interest will be charged and the loan must be repaid from within five years, or up to ten years if you use the loan solely to purchase your primary residence. How much you can borrow depends on the amount currently in your TIAA-CREF Retirement Annuity that is available for loans. Your maximum loan amount is the lesser of $50,000 or 45% of your combined TIAA and CREF Retirement Annuity accumulations.
Although this new loan provision offers an enhancement to your tax-deferred annuity, employees should be mindful that there are serious tax consequences if the loan is not repaid in accordance with the terms. If the loan is in default, it will be considered a "deemed distribution" and the outstanding loan balance (including accrued interest) will be reported to the Internal Revenue Service (IRS) as current taxable income, which may result in a substantial and immediate tax liability. In addition, if you are under 59 ½, your default may also be subject to an additional 10% federal tax penalty for an early distribution. Employees may also wish to consider that interest paid on the retirement loan is not tax deductible; this tax advantage may be available through other loan options.
Additional information regarding the loan provision and the requirements of TIAA-CREF is available by contacting TIAA-CREF directly at 1-800-842-2776. |
