TIAA-CREF tax issue and contact issue

[I've run a search and found some TIAA threads, but none that match this one.]

Brief background: I'm a UK citizen living in the UK since 2006, after living, studying and working in the US. I held (past tense) various funds in a TIAA-CREF retirement account, to which I contributed from 1996 to 2006. Between early 2017 and late 2018, I withdrew everything except from the "TIAA Traditional" account, because vagaries of the specific institution contract meant I can't withdraw capital from that account until I am 70, at which time I MUST make periodic withdrawals over 10 years until it's all gone.

So far, so good, other than dealing with major US tax issues when I transferred the money from the funds.

From mid-2017, I have been receiving small monthly payments from the TIAA-Trad account. It's essentially an annuity and the payments are essentially like interest. I have completed W-8BEN forms in the past (most recently in December 2016 and December 2021) to avoid paying US taxes. So far, so good - until this March.

In 8th March, I was electronically sent another W-8BEN form, with no cover letter, but I duly filled it in on 16th March using the EXACT same wording as I have in the past, and submitted it electronically. Now I have two problems:

Problem 1: My March 28th payment was taxed. I'm hoping this is a one-off due to not processing the W-8BEN form in time. I guess I'll find out at the end of March. [However, I note that TIAA didn't send it to me until early March and I returned it in one week]

Problem 2: I can not contact TIAA-CREF to discuss this. It looks like they no longer provide a "Secure Message" function for people who do not have a TIAA "advisor" The "Secure Message" button pops up but quickly disappears, to be replaced with a test saying, "Customers with an advisor can send a secure email message, all other customers are encouraged to use Ask TIAA to connect with us" If I click on Ask TIAA, it suggests I use a Toll-Free number for overseas customers - but doesn't provide the number!

If someone could offer any advice or experience I'd be very grateful. Specifically:

Is there any reason (new IRS development, etc.) that you can see why TIAA would, after 7 years, start taxing my monthly payment?

Are there any TIAA customers who can provide insight why I can no longer use the Secure Message centre?

If you need me to provide any additional information, I'd be glad to. I'm currently also dealing with WEP, and FBU London no longer answer their phone lines, so this just adds to the confusion and stress!

[Edited to add: 10 minutes after posting this, I received a letter from TIAA-CREF, containing Form 1042-S (actually, two letters - they seem to send me two of everything!) Any clues why I should fill this in, after 7 years of not having to do this?]
[Second edit: Doh, just realised that 1042-S isn't a form I need to fill in, it's a bit like a P60 - a statement of tax I have paid via TIAA-CREF over 2023 (none)]

Firstly, you'll want to double check that the periodic payments have been declared by you to HMRC each year.

Assuming you are a non-resident alien (which we don't know from the question), the distributions are treaty exempt from US tax. W-8BENs expire and require refreshing every so often. If you have not done so already, you'd send a new W-8BEN to TIAA-CREF.

Firstly, you'll want to double check that the periodic payments have been declared by you to HMRC each year.

Assuming you are a non-resident alien (which we don't know from the question), the distributions are treaty exempt from US tax. W-8BENs expire and require refreshing every so often. If you have not done so already, you'd send a new W-8BEN to TIAA-CREF.

Thanks for your response. As far as HMRC, yes I have been filing self-assessed taxes with HMRC every year, declaring all US income.

Re: being NRA, I stated up front that I'm a UK citizen living in the UK since 2006. I didn't realise I could still be an NRA for tax purposes. Maybe you could help me understand how that might happen? I understand that these periodic payments are exempt from US tax, and every W-8BEN I've filled in has included an explanation of the section of the dual taxation treaty that exempts me - which is why I am confused that out of the blue they have deducted taxes after not doing so since 2017.

I've come to the conclusion that, as you stated at the end, I should have submitted a W-8BEN earlier. It looks like they are only valid for 3 years. I'll have to set myself a reminder, because TIAA didn't send to me until after the old one had "expired". However, I did submit it to TIAA two weeks before they made the payment that they have taxed, as I explained in my OP.

Oddly, before the last W-8BEN was submitted, it was 5 years earlier that the previous one was submitted! Maybe the period of validity has been changed.

I thought I'd post an update, in case anyone with similar problems comes across this thread.

I managed to get a toll-free way to call TIAA-CREF, by direct messaging them via their Facebook page. The woman at TIAA-CREF confirmed that they have discontinued the Secure Message facility.

The answer to my primary problem was that they messed up. They had received my W-8BEN and had processed it, but whoever processed my monthly payment didn't put 2 + 2 together.

The lesson I learned is that I need to keep track of when a new W-8BEN is needed (they currently expire after 3 years). Other institutions I receive payment from have always reminded me when they needed a new W-8BEN, but clearly TIAA does not keep track of this.

They are going to refund the federal taxes they subtracted from my payment. At least that's what they said.

I concur with discly. There may also be a 10% penalty in the US, depending on age.

I concur with discly. There may also be a 10% penalty in the US, depending on age.

10% penalty does not apply in my case.

If all you have in TIAA Traditional you usually have a number of options for withdrawal and I've never heard of having to wait to age 70 as 59 1/2 is usually the age for  penalty free access. Have you started something like "Interest Only Payments"? if so that will be small amounts based on your annual rate of return; maybe 5% or 6% right now and I would probably either start a 10 year transfer payout annuity right or buy a lifetime annuity.

Even if you dutifully fill W-8BEN and claim the US exemption from tax TIAA might just withhold 30% on this foreign payment as it's better to annoy you and ensure they don't make a mistake that would annoy the IRS. So look out for that so you can file a 1040-NR to claim it back.

If all you have in TIAA Traditional you usually have a number of options for withdrawal and I've never heard of having to wait to age 70 as 59 1/2 is usually the age for  penalty free access. Have you started something like "Interest Only Payments"? if so that will be small amounts based on your annual rate of return; maybe 5% or 6% right now and I would probably either start a 10 year transfer payout annuity right or buy a lifetime annuity.

Even if you dutifully fill W-8BEN and claim the US exemption from tax TIAA might just withhold 30% on this foreign payment as it's better to annoy you and ensure they don't make a mistake that would annoy the IRS. So look out for that so you can file a 1040-NR to claim it back.

Sorry, Nun, missed your response as I was a way on a cycling trip. Re: TIAA Traditional, I believe the restriction is linked to the specific contract with the state I was working in at the time. It's a bit of a nuisance, as (a) I really wanted to divest all of my retirement investments from the US to UK, and (b) I believe even at age 70, I have to phase the withdrawals over 10 years - I can't just pull it all in a lump sum. If I live to age 80, it will be a miracle.

Yes, I receive "interest" payments every month. And Yes, TIAA seem to randomly deduct tax simply because it's supposedly easier for them to annoy me than annoy the IRS.

Sorry, Nun, missed your response as I was a way on a cycling trip. Re: TIAA Traditional, I believe the restriction is linked to the specific contract with the state I was working in at the time. It's a bit of a nuisance, as (a) I really wanted to divest all of my retirement investments from the US to UK, and (b) I believe even at age 70, I have to phase the withdrawals over 10 years - I can't just pull it all in a lump sum. If I live to age 80, it will be a miracle.

Yes, I receive "interest" payments every month. And Yes, TIAA seem to randomly deduct tax simply because it's supposedly easier for them to annoy me than annoy the IRS.

TIAA Traditional is an annuity with various withdrawal options. The 10 year payout annuity is the only way to get at the principal and close out the account. Many people will buy a lifetime annuity because TIAA often offers payout rates a couple of percent higher than the rest of the industry if you are a long term client and have an older contract. If you stick with the interest only payments then your principal will pass to your beneficiaries and they will have to deal with the US/UK tax implications of that. The whole withholding tax issue is an ongoing annoyance for many people taking cross border payments as the default is to withhold 30% for NRAs...and even for US citizens overseas. So keep filing the W-8BENs to claim tax treaty exemption from US tax and declaring this foreign "pension" to HMRC and paying the tax to them, but be prepared to file a 1040-NR to claim back any tax TIAA withholds in error.

FYI If you are a US citizen resident in the UK and without a US address US financial companies will often withhold 30% from all payments even from ROTHs, so in a sense you are better off being an NRA.

TIAA Traditional is an annuity with various withdrawal options. The 10 year payout annuity is the only way to get at the principal and close out the account. Many people will buy a lifetime annuity because TIAA often offers payout rates a couple of percent higher than the rest of the industry if you are a long term client and have an older contract. If you stick with the interest only payments then your principal will pass to your beneficiaries and they will have to deal with the US/UK tax implications of that. The whole withholding tax issue is an ongoing annoyance for many people taking cross border payments as the default is to withhold 30% for NRAs...and even for US citizens overseas. So keep filing the W-8BENs to claim tax treaty exemption from US tax and declaring this foreign "pension" to HMRC and paying the tax to them, but be prepared to file a 1040-NR to claim back any tax TIAA withholds in error.

FYI If you are a US citizen resident in the UK and without a US address US financial companies will often withhold 30% from all payments even from ROTHs, so in a sense you are better off being an NRA.

Thanks, Nun. I've checked my messages and TIAA said I couldn't use the 10 year payout until age 72, because of the TN-specific contract. It wouldn't be the first time they have incorrectly advised me, though!

I'll get back in touch and ask the question again - also will enquire about an annuity.

My beneficiary is actually a colleague in the US, so UK/US tax issues shouldn't be an issue in terms of remaining capital, but if I can use either of the options you have suggested, I'll go with that.

Thanks, Nun. I've checked my messages and TIAA said I couldn't use the 10 year payout until age 72, because of the TN-specific contract. It wouldn't be the first time they have incorrectly advised me, though!

I'll get back in touch and ask the question again - also will enquire about an annuity.

My beneficiary is actually a colleague in the US, so UK/US tax issues shouldn't be an issue in terms of remaining capital, but if I can use either of the options you have suggested, I'll go with that.

Yes there are definitely differences in the contracts between employers, but having to wait to age 72 to start the payout annuity seems strange. It might be helpful to check with your old employer's benefits department. I'm currently trying to decide between the 10 year payout annuity and a lifetime annuity. Most people will be better off with the payout annuity if they invest it sensibly, but TIAA quoted me a 9.5% payout rate on a lifetime annuity and I'm only in my early 60s so that's tempting.

Yes there are definitely differences in the contracts between employers, but having to wait to age 72 to start the payout annuity seems strange. It might be helpful to check with your old employer's benefits department. I'm currently trying to decide between the 10 year payout annuity and a lifetime annuity. Most people will be better off with the payout annuity if they invest it sensibly, but TIAA quoted me a 9.5% payout rate on a lifetime annuity and I'm only in my early 60s so that's tempting.

Very helpful, thank you! I'll post back whenever I've learned more.

A 9.5% lifetime annuity is pretty damn good (even though I assume this doesn't not include annual COLA increases). I'm 67, and contributed to TIAA from 1996 to 2006 (although all the TIAA Trad contributions were made from 1996-1999).

The capital I have in TIAA Trad isn't huge, but enough that it makes sense to look into these options. I'd really like to tie a bow around this and not have it hanging there while I continue to receive interest-only payments.