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ORP: Withdrawal Limitations & Options

The State of Tennessee - Rules for the 50% Cashability

Effective July 1, 2002, the State of Tennessee passed a law allowing an individual with an accumulation of greater than $15,000 in any Optional Retirement Plan (ORP) account to have access of up to 50% of those accumulations at termination or retirement. The one stipulation is that a lifetime payout must be initiated on an amount equal to the distribution. Additional restrictions may be imposed by the ORP company on distributions from a fixed account.  Lifetime distributions may take several different forms. Among these are:

Annuity-taking monthly, quarterly, or annual payments, with or without guarantee periods, for the life of the employee and an annuity partner (if applicable).

Interest Only Option for fixed accounts-taking receipt of the interest from the fixed accounts (TIAA, ING fixed, or VALIC fixed account plus). This can only be done until age 70 1/2 at which time either a lifetime annuity or minimum distribution must be started.

Life Expectancy Option-a recalculation method to provide an income stream for one or two lives without beginning an annuity.

Minimum Distribution Option-for individuals over age 70 ½ to satisfy IRS tax restrictions while not beginning an annuity. This recalculation method can be done for one or two lives.

Should an individual not want to cash out half of their accumulation, they may cash out up to 50%, but must begin a lifetime payout on an amount equal to the cash distribution. A cash distribution can also be for a rollover to an IRA. One caution here, should an individual roll a sum to an IRA that may be attached in a law suit.

TN Law       Summary of Withdrawal Restrictions 07.2010    

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RESOURCES:

Campus/Institute Contacts:
Chattanooga   
Family Practice- Chatt. 
Health Science Center  
Knoxville Area    
Martin   
UTSI    
UT Memorial Hospital

SEND FORMS TO:
Deferred Compensation (401k, 457, 403b) Forms:
     Total Rewards/ Benefits & Retirement Office
     600 Henley St, #115
     Knoxville, TN  37996-4115

Insurance Forms:
     Insurance & Retirement
     P115 Andy Holt Tower
     1331 Circle Park
     Knoxville, TN  37996-0100

Retirement Forms:
     Total Rewards/ Benefits & Retirement Office
     600 Henley St, #115
     Knoxville, TN  37996-4115

Other Links:
Deferred Compensation (State site)
Deferred Compensation (Empower Retirement site)
Optional Retirement Program (ORP State site)
Tennessee Consolidated Retirement System (TCRS State site)
Office of Personnel Management- OPM (CSRS & FERS)