TIAA-CREF Lifetime Annuity and 72(t) SEPP | Ed Slott and Company, LLC

TIAA-CREF Lifetime Annuity and 72(t) SEPP

Hello Sir,

Would the TIAA lifetime annuity meet the 72(t) SEPP exemption, such as for early retirement at age 53, or instead would it lead to a "busted" 72(t) distribution because the annuity calculation does not meet the IRS SEPP requirements. If it is possible, then is a letter from TIAA sufficient to show the IRS that the annuity meets the SEPP requirements?

The other question is for a different scenario - whether 72(t) SEPP distributions from a qualified plan could be stopped at age 60 and then the remaining amount used to purchase a TIAA lifetime annuity, or does the SEPP have to continue for a lifetime with only very limited modification.

Thank you for reading this.

  • With qualified money there are only 3 approved calculation methods that meet the "substantially equal" penalty exception, so DB plans will not qualify since they mostly use years of service and a final average salary amount. That said, I would check with TIIA since they have been in this business for a century and may know of some other exception. Just ask them if they will code the 1099R with Code 2 at least until 59.5.
  • The standard substantially equal exception needs only continue for the longer of 5 years or until 59.5. After that if the plan admintrator offers other options, it should be OK.

Thank you for the guidance.


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