Income Sources - 403(b) Plans: Savings for Retirement Plan and Faculty and Staff Retirement Plan
You will need to make decisions regarding the withdrawal of your
retirement
funds. These are important decisions that impact the level of income you will
receive, the taxability of that income, and how long that income will last. For
detailed information on the taxability, contact your
investment carrier(s), a
professional financial planner or tax advisor.
- You are responsible for selecting your retirement payment option.
- You do not have to annuitize your accumulations even if your funds are
invested with one of the annuity investment carriers, AIG Retirement or TIAA-CREF.
However, if you do wish to annuitize some or part of your money, you may
contact any of Duke's five investment carriers for annuity information.
- To obtain more specific information regarding your choices, please
contact your investment carrier(s).
- You have to be retired on our payroll system in order to take a
distribution from your retirement plan. Your separation date is usually
updated with your retirement carrier(s) within two weeks of your final pay
check.
Payment Options
The following highlights some of the many options you have available:
Systematic withdrawals: This payment option allows for flexibility in
the amount and/or frequency of payments. You may change the amount or stop the
withdrawal at any time.
- Systematic withdrawals may be appropriate if you are waiting for other
income to begin (such as Social Security or an employer pension), or if you
want to offset an income loss or reduction (such as transitioning into
retirement by reducing your work schedule).
- Generally, systematic withdrawals are taxable as ordinary income.
- Specific funds may have restrictions that do not allow for systematic
withdrawals. You will need to contact your investment carrier for further
information.
Lump Sum Payments: Generally, full or partial withdrawals of account
values may be requested at any time. Specific funds may have restrictions that
do not permit full withdrawals. Annuities: An annuity can provide
steady income that is guaranteed for your lifetime, regardless of how long you
live. Once you have selected this option, you will not be able to change your
election or the amount of the payment. Annuity payments may or may not keep up
with inflation. There are two basic types of annuities:
- Fixed Income Annuity-The company providing the annuity makes long
term investments and the monthly income is guaranteed at a pre-set rate. For
example, you receive the same benefit for life.
- Variable Income Annuity-This type of annuity is based upon a
variety of investment options such as stocks, bonds, and money markets.
Market fluctuations will affect the income payments under a variable annuity
and the resulting payment could decrease or increase.
Within these two types of annuities, you can choose from a variety of annuity
income options, including, but not limited to:
- Single Life-The income is paid only during your lifetime. Upon
death, payment ceases.
- Joint and Survivor-Provides two people with income for as long
as either one lives.
- Guaranteed Period-An annuity that provides guaranteed income
for a fixed period of years. Should you die before the period is complete,
benefits will continue to your beneficiaries for the remainder of the
period.
If you would like an annuity distribution to be made, arrangements must be
made with your investment carrier(s). Once you have selected an annuity
payment option and have signed and submitted the paperwork, your decision is
irrevocable. Other Options: Many investment carriers have
specifically designed distribution methods to meet the varying needs of
individuals. Monthly Paid Employees Who Were Previously Paid Biweekly
If you are currently a monthly paid employee and at some point in your career
at Duke you were paid on a biweekly basis, you may be eligible for a benefit
from the Employees' Retirement Plan (ERP). Please carefully review the
ERP
section and contact the Human Resource Information Center at
919-684-5600 for additional information.
Other Considerations: Minimum Distribution Laws
You may wish to defer beginning your retirement income. However, you should
be aware that there are federal minimum distribution rules, which require you to
receive some income from your retirement plan contributions and earnings.
- Retirement contributions and earnings that were invested after 1986
are subject to minimum distribution by April 1 following the calendar
year you either turn 70 ½ or retire, whichever comes later. Therefore,
you must begin to receive some income from your retirement plan at this
time.
- Only contributions and earnings up to 1987 (account balance on
1/1/1987) are known as your "grandfathered accumulations". These
contributions only become subject to minimum distribution rules at age
75.
- Once you begin minimum distributions, you must continue to receive
income each year thereafter to satisfy these rules. You are responsible
for beginning minimum distributions; your investment carrier(s) can
provide you with guidance.
- If you do not comply with these rules, you could become subject
to a 50% excise tax on your minimum distribution.
- If you are of sufficient age to begin minimum distributions, you may
wish to select the minimum distribution payment option as your payment
option. This option may be appropriate if you want to maximize income
deferral and preserve your accumulation, you have other income that is
adequate for your basic income needs or you want to postpone selecting
an annuity or other distribution method.
Note: Please consult with your 403(b) investment carrier(s) to obtain more
information.
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