Valuethinker wrote: sscritic wrote:
If you are not of RMD age, the first money out of Traditional in a 403(b) is from the "grandfathered" amounts* (pre-1987). All other money comes out proportionally from all vintages.
Transfers and withdrawals are paid pro-rata from each Vintage.
* grandfathered amounts are not subject to RMD before age 75, but any withdrawals in excess of your RMD comes from your grandfathered amounts. If your RMD this year is zero because you are 45, all your withdrawal will come from your grandfathered amounts. Then again, you may not have any grandfathered amounts.
On the grounds that I really have zero comprehension of this stuff. Is there therefore an advantage/ disadvantage to making withdrawals from the one v. the other?
If you just have one account, you have no choice. IRS regulations (which I found once, it's a long piece on 403(b)s) spell it out. If you have $1000 of old money and $20,000 of new money, and you take out $500 pre-RMD, it comes out of the old money, leaving you with $500 old and $20,000 new. On the other hand, if you are 72 and need to take an RMD of $1000, all of it will come from the new money and you will still have $1000 old plus $19,000 new. If your RMD is $1000 but you take out $1500, you end up with $500 old, $19,000 new.
Since most people would like their money to grow tax-sheltered as long as possible, they would prefer to have no RMDs. Given that they have RMDs, they would prefer they start at 75 rather than 70.5. The way it works is that TIAA will compute your RMD for you excluding the old amounts until you hit 75. You can also ask TIAA to tell you how much you have in each vintage.
Now if you have two accounts and one has more old money than the other and you want to take a distribution in excess of your RMD, then you should take it from the 403(b) that has less old money (once you have computed your RMDs from your 403(b)s, you can take it all from just one, as you can with IRAs).
http://www.irs.gov/retirement/article/0 ... ,00.html#5
Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts.
Now here is where I might have made a mistake, but maybe not. I had two 403(b)s, one an RA (paying the higher rate) and one an SRA. I knew the RA paid more, so I converted my Stock in the RA to Traditional and converted my Traditional in the SRA to Stock. I picked up another 0.5% to 0.75% in interest rates (since reduced to 0%), but lost all my old money (of any vintage) in the SRA which was replaced with the vintage as of the day I made the switch in my RA. At the time, I wasn't thinking clearly about vintages, let alone about grandfathered amounts. If the separation in interest rates opens up again, I might have made the right call. If not, that's life.