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Annuity Contracts Deemed Distributed?


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Plan Sponsor has old TIAA individual contracts in 403(b) plan.  More than 90 of these contracts belong to terminated participants.  We (the TPA) would like TIAA to take some action to show that these contracts are distributed for 5500 purposes.  Has anyone had experience they could share with this issue?

Thanks!

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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My recollection from about a decade ago is that many of TIAA's contracts have 10-year withdrawal provisions. This means that you cannot get your money any quicker than the time period in the extensive contract provides. We have seen that TIAA is not willing to negotiate any shorter W/D periods for small employers, but occasionally has done it for larger employers (anecdotally). [ Not to be cynical, but ever since my experience with their contracts, I always wondered what their tag line "For the greater good" really meant.]

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Thanks but withdrawal provisions are irrelevant.  The money does not have to come out of the contracts.  TIAA just has to distribute the contracts.  This is done all the time when a plan terminates.

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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On 4/16/2018 at 10:14 AM, Patricia Neal Jensen said:

Thanks but withdrawal provisions are irrelevant.  The money does not have to come out of the contracts.  TIAA just has to distribute the contracts.  This is done all the time when a plan terminates.

Has the plan been terminated?  In other words, what circumstances exist that would require TIAA to show that the annuity contracts have been distributed?  Also, is there some ulterior motive for showing these particular annuity contracts as distributed?  

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  • 2 weeks later...

Motive is to get this client below the large plan filer count.   If these accounts were in a group contract, we could use the cashout rules to get this money and, consequently these accounts, out of this plan and get the participant count down.  The individual annuity contracts present a different problem.

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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  • 1 year later...

Patricia, Were you ever able to get this issue resolved? I am now dealing with the same issue with small individual annuity contracts at TIAA. Employer has since moved to a group contract with Empower, but the Plan still has many small (less than $5K) post-2004 individual contracts with TIAA. The Employer directed TIAA to distribute contracts to the individuals, but TIAA said they would not do so. Thanks.

John Nelson

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