I don't know if this happens in any other country of the world. But in America, if you save some money in a retirement account (like IRA) and you turn 70 1/2, hell breaks loose on you. People older than me have experienced this already. But those who are still young and trying to build a retirement nest egg, be warned. It is not going to be pleasant when you turn 70 1/2 years.
Let me elaborate. I turned 70 1/2 years this year. And I indeed had an IRA account with the credit union of the institution where I worked. Way back in April, my credit union notified me that I must receive a minimum distribution from that account by December 31 of this year (or by April 15 of 2012 - IRS gives some grace period to those who are first time victims of this law). Else almighty IRS will charge me hefty penalty. When asked how much is the minimum required distribution, the lady said that was a complicated calculation but if I wanted she would be happy to calculate that for me and would get back to me. I agreed. Next day she called me back and told me the amount and said she was going to mail me the necessary forrms to fill out, sign, and mail back to her.
In a couple of days I received those Required Minimum Distribution forms. My God, who knew they would be so complicated and so lengthy? I could not even figure out what to write in some of the places. So I called the credit union lady and asked for help. She was a sweetheart. She told me what to write where. So with her help, I completed the forms, signed, and mailed them back to her. I was relieved. I won't have to face that stiff IRS penalty for not withdrawing the required minimum amount from my IRA account.
All on a sudden, earlier this month, I received a letter from TIAA CREF which said I must contact them immediately to receive some important account information. So I called them and learned that I must receive the rquired minimum distribution from two of my accounts with them to avoid serious tax penalty. I did not even know that I had any retirement account with them. (I had some investments with them through my employer.) When asked, they explained when I retired, my employer had put my vacation cashout (vacation days that was due to me but I did not take) and something else (which I still don't know what) in two separate retirement accounts in my name to help me save on taxes up front. TIAA CREF volunteered to calculate the Required Minimum Distribution for me since the formula IRS uses to calculate this amount is rather complicated for human beings without extra-ordinary brain power. I thanked the TIAA CREF customer service representative for his generosity. He also said the amount in one of these accounts was rather small, so I would be better off withdrawing the full amount (100%) from that account and take the minimum distribution from the other account. I agreed. He promised to put the necessary application blanks in the mail the very next day for me to fill out, sign, and mail back to them.
Sure enough, in about 4-5 days I received two large envelopes from TIAA CREF. I knew what they contained. But when I opened the envelopes, I really got pissed off. The application blanks were each 8-pages long with elaborate instructions for each thing that I needed to fill out. Each needed my wife's signature in one place and her signature needed to be notarized or certified by my former employer's authorized representative. Each form also required my former employer's rep's signature at a different place basically giving consent to my money withdrawal request. None of these were required in the form the credit union had me fill out as described above. So I called TIAA CREF again to find out if these steps were really necessary as these meant that both me and my wife must travel to my former employer's office to fulfill these requirements. The TIAA CREF rep. checked something in the computer and said it would not be necessary since the amount involved in both cases was less than $5000. He asked me to write a note on the respective spaces in the forms saying since the amount was less than $5000, wife's signature verification would not be needed. For the employer's consent part he said they can do that for me by faxing the form over to my employer. The employer could sign and fax back the form to them. I was relived and thanked him profusely for making our lives a little easy. I then filled out the rest of these 8-page long forms and mailed them back to TIAA CREF.
In a few days, the forms were returned to me by TIAA CREF saying wife's signature verification and employer's consent are both MANDATORY IRRESPECTIVE OF THE AMOUNT INVOLVED. "Fuck this" came out of my mouth spontaneously!
To make a long story short, my wife and I went to my former's employer's office the next day and completed the paperwork to the Tee. Then I mailed back the forms to TIAA CREF.
In a few days two small amounts were deposited in my bank account coming from TIAA CREF. Now listen to this: one of the amounts was $3.29 ($3.87 less taxes -- this is from the retirement account that I decided to close by withdrawing the whole amount)! I spent more than $3.29 for postage (sending out the 8-page long forms twice to TIAA CREF) and traveling to my former's employer's office to get their signature on two places in the form.!!!
Long live Federal Paperwork Reduction Act!
Postscript: I was told by my former employer's rep. that it was TRUE that if the amount inolved was less than $5000, verification of spouse's signature was not required by law.
Shoban Sen
Let me elaborate. I turned 70 1/2 years this year. And I indeed had an IRA account with the credit union of the institution where I worked. Way back in April, my credit union notified me that I must receive a minimum distribution from that account by December 31 of this year (or by April 15 of 2012 - IRS gives some grace period to those who are first time victims of this law). Else almighty IRS will charge me hefty penalty. When asked how much is the minimum required distribution, the lady said that was a complicated calculation but if I wanted she would be happy to calculate that for me and would get back to me. I agreed. Next day she called me back and told me the amount and said she was going to mail me the necessary forrms to fill out, sign, and mail back to her.
In a couple of days I received those Required Minimum Distribution forms. My God, who knew they would be so complicated and so lengthy? I could not even figure out what to write in some of the places. So I called the credit union lady and asked for help. She was a sweetheart. She told me what to write where. So with her help, I completed the forms, signed, and mailed them back to her. I was relieved. I won't have to face that stiff IRS penalty for not withdrawing the required minimum amount from my IRA account.
All on a sudden, earlier this month, I received a letter from TIAA CREF which said I must contact them immediately to receive some important account information. So I called them and learned that I must receive the rquired minimum distribution from two of my accounts with them to avoid serious tax penalty. I did not even know that I had any retirement account with them. (I had some investments with them through my employer.) When asked, they explained when I retired, my employer had put my vacation cashout (vacation days that was due to me but I did not take) and something else (which I still don't know what) in two separate retirement accounts in my name to help me save on taxes up front. TIAA CREF volunteered to calculate the Required Minimum Distribution for me since the formula IRS uses to calculate this amount is rather complicated for human beings without extra-ordinary brain power. I thanked the TIAA CREF customer service representative for his generosity. He also said the amount in one of these accounts was rather small, so I would be better off withdrawing the full amount (100%) from that account and take the minimum distribution from the other account. I agreed. He promised to put the necessary application blanks in the mail the very next day for me to fill out, sign, and mail back to them.
Sure enough, in about 4-5 days I received two large envelopes from TIAA CREF. I knew what they contained. But when I opened the envelopes, I really got pissed off. The application blanks were each 8-pages long with elaborate instructions for each thing that I needed to fill out. Each needed my wife's signature in one place and her signature needed to be notarized or certified by my former employer's authorized representative. Each form also required my former employer's rep's signature at a different place basically giving consent to my money withdrawal request. None of these were required in the form the credit union had me fill out as described above. So I called TIAA CREF again to find out if these steps were really necessary as these meant that both me and my wife must travel to my former employer's office to fulfill these requirements. The TIAA CREF rep. checked something in the computer and said it would not be necessary since the amount involved in both cases was less than $5000. He asked me to write a note on the respective spaces in the forms saying since the amount was less than $5000, wife's signature verification would not be needed. For the employer's consent part he said they can do that for me by faxing the form over to my employer. The employer could sign and fax back the form to them. I was relived and thanked him profusely for making our lives a little easy. I then filled out the rest of these 8-page long forms and mailed them back to TIAA CREF.
In a few days, the forms were returned to me by TIAA CREF saying wife's signature verification and employer's consent are both MANDATORY IRRESPECTIVE OF THE AMOUNT INVOLVED. "Fuck this" came out of my mouth spontaneously!
To make a long story short, my wife and I went to my former's employer's office the next day and completed the paperwork to the Tee. Then I mailed back the forms to TIAA CREF.
In a few days two small amounts were deposited in my bank account coming from TIAA CREF. Now listen to this: one of the amounts was $3.29 ($3.87 less taxes -- this is from the retirement account that I decided to close by withdrawing the whole amount)! I spent more than $3.29 for postage (sending out the 8-page long forms twice to TIAA CREF) and traveling to my former's employer's office to get their signature on two places in the form.!!!
Long live Federal Paperwork Reduction Act!
Postscript: I was told by my former employer's rep. that it was TRUE that if the amount inolved was less than $5000, verification of spouse's signature was not required by law.
Shoban Sen
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