TAMRA provision that allows higher deferrals for HCEs

[Guest Lonnie Tomlin]

We have a university client with a TSA that requires faculty & admin staff to contribute to a TIAA-CREF plan and must be go to the Retirement Annuity Account. This account requires money stay in this account until the participant reaches 62 and terminates. They have been told that under TAMRA, there is a benefit to the highly compensated ees, ie increased deferrals if all ee ctbns go to the RA and in fact the maximum deferral opportunity would decrease if contributions are made to the Supplemental Retirement Annuity. They are considering allowing ees to put their money in either the RA or SRA. The SRA allows access to funds at 59 1/2 while employeed and also provides for loans. Is the TAMRA reference real or is this a "ploy" to keep the money with TIAA-CREF as long as possible? If it is real can I get a TAMRA reference? THANK YOU!

[Guest LFrankel]

As a higher ed plan administrator (TAMRA-RA and SRA plans with TIAA-CREF), I would question who has told your hce's that there is an enhanced benefit by contributing solely to the RA. The possible deferrals are calculated based on sections of the Internal Revenue Code. The only component of the calculations that might enhance contributions to the RA is the er contribution, but that is not an issue you raised. If it's a TAMRA plan, additional deferrals are calculated after the ee's mandatory contributions. You should get the same deferral amount now matter how you slice it.

In addition, it is your client who has designated how long the money must stay in the RA account, not the funding vehicle (TIAA-CREF).

[Guest Brent Rowell]

I'm not sure that I understand the facts .....

Sounds like the employer is talking about a mandatory contribution from the employee...

If so the advantage is that these funds are treated as employer contribution not employee elective. Thus the employee is still free to use his/her full elective salary reduction up to legal limits.

The additional rules (like age 62) are probably employer imposed restrictions