Optional Retirement Program Loans and Cash Withdrawals

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MEMORANDUM

To: West Campus and HSC State Employees

From: Rebecca West, Assistant Director Human Resource Services

Date: May 21st, 2004

Loans

The SUNY Board of Trustees has adopted a resolution permitting loans in the Optional Retirement Program. Employees will be permitted to take one loan per carrier per twelve month period. The total amount borrowed from any one carrier may not exceed 50% of the accumulated value of the employee's contracts. Carriers may have their own regulations which result in lesser amount of funds being available.

The loan program will be administered by the Optional Retirement Program carriers. Employees who wish to explore their loan options should contact their carrier directly for information and application forms. Carriers will establish interest rates and repayment options. Please note payroll deduction is NOT an option for the repayment of loans.

All loans are subject to IRS regulations. Current IRS regulations set a maximum loan balance of $50,000. This balance applies to all loans from an employer's retirement and tax-deferred savings plans combined. It is the responsibility of the employee to see that they do not exceed this combined limit.

Loan provisions apply to tax-deferred annuities provided by TIAA-CREF.

Employees should be aware of the consequences of loan default. Defaults are taxable as ordinary income in the year in which they occur. In addition, employees under the age of 59 may be subject to an additional 10% federal tax penalty. Loan default also reduces the retirement income an employee will receive.

Employees wishing to take a loan should contact the carrier directly as follows:

  • TIAA-CREF: 1-800-842-2776
  • VALIC: 1-800-44-VALIC
  • Met Life: 1-800-560-5001
  • ING *: 1-800-677-4336 (Note: Beginning September 2004)

Employee's with TIAA-CREF may apply for a loan using the TIAA-CREF's website.

Cash Withdrawals

The SUNY Board of Trustees has also adopted a resolution permitting cash withdrawal from the Optional Retirement Program and Tax-deferred Annuity Program upon separation of employment prior to age 55. Employees who wish to take cash withdrawal upon separation from SUNY Service should contact their carrier directly.

In an effort to provide the best customer service for those requesting cash withdrawals, we request that you provide a daytime telephone number; this will enable us to notify you when your application has been signed. You may provide the Benefits Office with instructions to forward your application to the appropriate carrier after the application has been completed.


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