Bailing Out of TIAA CREF with 10 years to retirement?

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Bailing Out of TIAA CREF with 10 years to retirement?

Postby binskins » Fri Jul 02, 2010 9:56 am

I am seriously considering rolling over my TIAA portfolio (approx $150K) into a self-directed Traditional IRA. I have not been happy with the performance of my portfolio at TIAA, which (I admit) is in some part because I moved the money around rather than just picking a balanced allottment and sticking with it. I do have other retirement funds (Roth, Brokerage) with Schwab, and my self-directed investments have done much better that the money invested with TIAA.

Rolling the funds over will increase my household aggregate balance with Schwab (always good) and give me more choice as to where to invest them. I am hoping to retire in about 10 years, and feel the need to make up some of the losses I suffered with TIAA before putting everything into income-producing or capital preserving investments.

Any advice?
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Postby livesoft » Fri Jul 02, 2010 10:08 am

Go ahead, but I would not choose Schwab since it is so expensive compared to other places.

I still have about 10% of our assets at TIAA-CREF. I like their TIAA traditional annuity and their TIAA Real Estate account. These two investments have been discussed quite a bit, so you can read up on them.

As for their other funds, I told them last month (when they asked me how they could improve themselves) that they needed to lower the expense ratios for me to consider investing in them.

BTW, if you are not happy with TIAA-CREF performance, then you won't be happy with your own performance. But be sure to keep us informed on that angle. Thanks!
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Postby binskins » Fri Jul 02, 2010 10:20 am

So livesoft, does that mean you think TIAA's performance is likely to be better than what I could expect elsewhere? I have no money in the Real Estate fund. If I converted to Traditional now, with 10 years to retirement, instead of rolling over, do you think that would be preferable to just putting the funds directly into a diversified Vanguard portfolio?
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby bobinberea » Fri Jul 02, 2010 12:02 pm

binskins wrote:I am seriously considering rolling over my TIAA portfolio (approx $150K) into a self-directed Traditional IRA. I have not been happy with the performance of my portfolio at TIAA, which (I admit) is in some part because I moved the money around rather than just picking a balanced allottment and sticking with it. I do have other retirement funds (Roth, Brokerage) with Schwab, and my self-directed investments have done much better that the money invested with TIAA.


I have both a traditional TIAA-CREF Retirement Annuity and a T-C Supplemental Retirement Annuity at the college where I am employed. I can't touch the RA until I retire, change jobs, etc., but the SRA is all my own voluntary contributions, and I just learned recently that I am free to rollover all the money in the SRA to an IRA. So I am in the process of rolling that over to a traditional IRA at Vanguard. Although T-C's expenses are fairly low, compared to the rest of the world of mutual funds, Vanguard's expenses are much lower. And of the 22 T-C investment options available to me at my college, only one of them is an index fund (CREF Equity Index). [I've complained, politely, to my HR Dept about this, but no action.] So I'll be moving about $35K into Vanguard's Total Stock Market Index (48%), Total International Stock Index (12%), Total Bond Market Index (20%), and Inflation Protected Securities (20%). I'm fairly knowledgeable about my retirement savings, but I must admit that the rollover possibility for the SRA completely escaped me. But I'll remedy that now. [I'm projecting about seven years until retirement.]
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Postby the intruder » Fri Jul 02, 2010 12:10 pm

livesoft wrote:Go ahead, but I would not choose Schwab since it is so expensive compared to other places.

I still have about 10% of our assets at TIAA-CREF. I like their TIAA traditional annuity and their TIAA Real Estate account. These two investments have been discussed quite a bit, so you can read up on them.

As for their other funds, I told them last month (when they asked me how they could improve themselves) that they needed to lower the expense ratios for me to consider investing in them.

BTW, if you are not happy with TIAA-CREF performance, then you won't be happy with your own performance. But be sure to keep us informed on that angle. Thanks!


What is so expensive about Schwab?
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Postby House Blend » Fri Jul 02, 2010 1:09 pm

binskins,

What is it about TIAA-CREF that enhances your ability to make regretable investment decisions? I'm quite good at second-guessing my decisions no matter where I invest, and wouldn't assume that moving money elsewhere would fix that.

That said, the main reasons I see for keeping some of your retirement savings at T-C are:

* you like Traditional and/or the Real Estate Account.
* you plan on annuitizing some of your savings eventually.

Most of their other offerings can be acquired more cheaply elsewhere.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby retiredjg » Fri Jul 02, 2010 1:22 pm

binskins wrote:I am seriously considering rolling over my TIAA portfolio (approx $150K) into a self-directed Traditional IRA.

This does not seem like a good idea to me. The expenses at TIAA are not high for a 403 plan. And they have excellent choices for an index fund portfolio.

What are you hoping to buy in the self-directed plan that you think will be cheaper outside? Have you checked into the administrative costs of using the self directed plan? I'm sure they are going to charge you something. At least, I think I'm sure. :?

It sounds to me like you are chasing "the best funds" rather than making a plan and filling that plan with low cost funds. Please see Bogleheads Investment Philosophy on the Bogleheads Wiki for more information.

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Postby livesoft » Fri Jul 02, 2010 1:26 pm

the intruder wrote:What is so expensive about Schwab?

They do not have free trades on all stocks and ETFs.

They charge a commission to purchase many mutual funds including the mutual funds that I wish to own.
Last edited by livesoft on Fri Jul 02, 2010 1:32 pm, edited 1 time in total.
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Postby livesoft » Fri Jul 02, 2010 1:28 pm

binskins wrote:So livesoft, does that mean you think TIAA's performance is likely to be better than what I could expect elsewhere? I have no money in the Real Estate fund. If I converted to Traditional now, with 10 years to retirement, instead of rolling over, do you think that would be preferable to just putting the funds directly into a diversified Vanguard portfolio?

TIAA index funds should perform the same as everyone else's index funds except for one thing: Expense ratio. Thus, the lower expense ratios at Vanguard or Fidelity should be better than using TIAA-CREF index funds in the same asset classes.

Vanguard does not have any funds equivalent to TIAA traditional annuity nor TIAA real estate account. You will need to do your own research to see if either of these funds is something you want to own.
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Postby retiredjg » Fri Jul 02, 2010 1:32 pm

livesoft wrote:
binskins wrote:So livesoft, does that mean you think TIAA's performance is likely to be better than what I could expect elsewhere? I have no money in the Real Estate fund. If I converted to Traditional now, with 10 years to retirement, instead of rolling over, do you think that would be preferable to just putting the funds directly into a diversified Vanguard portfolio?

TIAA index funds should perform the same as everyone else's index funds except for one thing: Expense ratio. Thus, the lower expense ratios at Vanguard or Fidelity should be better than using TIAA-CREF index funds in the same asset classes.

Yes. But I think the question is.... stay in TIAA vs use self directed option offered by TIAA? I'm not seeing that the self directed option is going to have a lower cost. Could be wrong though.
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Postby ourbrooks » Fri Jul 02, 2010 1:46 pm

If any part of your asset allocation includes fixed income investments, you might want to consider staying in TIAA to invest in the TIAA Traditional Annuity. Despite the name, it really is a stable value fund and over long periods of times it has performed very well. For money contributed today, it's paying 3.5%

An advantage/drawback of the Traditional Annuity is that you can only take money out spread over a ten year period. This does tend to correct the tendency to switch things around a lot.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby 555 » Fri Jul 02, 2010 2:25 pm

bobinberea wrote:I have both a traditional TIAA-CREF Retirement Annuity and a T-C Supplemental Retirement Annuity at the college where I am employed. I can't touch the RA until I retire, change jobs, etc., but the SRA is all my own voluntary contributions, and I just learned recently that I am free to rollover all the money in the SRA to an IRA. So I am in the process of rolling that over to a traditional IRA at Vanguard. Although T-C's expenses are fairly low, compared to the rest of the world of mutual funds, Vanguard's expenses are much lower. And of the 22 T-C investment options available to me at my college, only one of them is an index fund (CREF Equity Index). [I've complained, politely, to my HR Dept about this, but no action.] So I'll be moving about $35K into Vanguard's Total Stock Market Index (48%), Total International Stock Index (12%), Total Bond Market Index (20%), and Inflation Protected Securities (20%). I'm fairly knowledgeable about my retirement savings, but I must admit that the rollover possibility for the SRA completely escaped me. But I'll remedy that now. [I'm projecting about seven years until retirement.]


Wow, I didn't know you could do this! It may be a feature that of your particular plan, maybe not universally for all (G)SRA plans, but I definitely want to look in this. I have a GSRA and it is a 403b plan.

Is your SRA a 403b plan?

You're actually doing the rollover now, so you know for sure you can do this, right?

Do you know if a GSRA can be rolled over to an IRA, just like your SRA?

Are you still going to keep your SRA and continue contributing to it? (Are you doing a partial rollover?) I wouldn't want to give up all that tax deferred space that can take a lot of annual contributions ($16.5k or $22k per year) in addition to your RA and IRA!
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Postby the intruder » Fri Jul 02, 2010 2:39 pm

livesoft wrote:
the intruder wrote:What is so expensive about Schwab?

They do not have free trades on all stocks and ETFs.

They charge a commission to purchase many mutual funds including the mutual funds that I wish to own.


Free trades are not as important to me as the level of service provided. I really dont care if my trading costs are 2bp. Also there are no fee/charges for qualified plan accounts.

Institutional discounts are also available.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby the intruder » Fri Jul 02, 2010 2:53 pm

555 wrote:
bobinberea wrote:I have both a traditional TIAA-CREF Retirement Annuity and a T-C Supplemental Retirement Annuity at the college where I am employed. I can't touch the RA until I retire, change jobs, etc., but the SRA is all my own voluntary contributions, and I just learned recently that I am free to rollover all the money in the SRA to an IRA. So I am in the process of rolling that over to a traditional IRA at Vanguard. Although T-C's expenses are fairly low, compared to the rest of the world of mutual funds, Vanguard's expenses are much lower. And of the 22 T-C investment options available to me at my college, only one of them is an index fund (CREF Equity Index). [I've complained, politely, to my HR Dept about this, but no action.] So I'll be moving about $35K into Vanguard's Total Stock Market Index (48%), Total International Stock Index (12%), Total Bond Market Index (20%), and Inflation Protected Securities (20%). I'm fairly knowledgeable about my retirement savings, but I must admit that the rollover possibility for the SRA completely escaped me. But I'll remedy that now. [I'm projecting about seven years until retirement.]


Wow, I didn't know you could do this! It may be a feature that of your particular plan, maybe not universally for all (G)SRA plans, but I definitely want to look in this. I have a GSRA and it is a 403b plan.

Is your SRA a 403b plan?

You're actually doing the rollover now, so you know for sure you can do this, right?

Do you know if a GSRA can be rolled over to an IRA, just like your SRA?

Are you still going to keep your SRA and continue contributing to it? (Are you doing a partial rollover?) I wouldn't want to give up all that tax deferred space that can take a lot of annual contributions ($16.5k or $22k per year) in addition to your RA and IRA!


You can rollover SRA funds to an IRA if you have attained age 59 1/2 or after termination from your employer. Inservice withdrawals are permited at 59 1/2 from a GSRA (although some plans may restrict this option). In TIAA SRA/GSRA contracts the interest rate is lower than the interest rate available under an RA or GRA contract to reflect costs associated with cashable contracts

VGs fees are lower because CREFs fees include about .36% to pay for the cost of administering the 403b plan. For example, the CREF stock fund management fee is only .12% of the total .48% fee charged. 75% of the fee is used to pay for administration of the 403b plan which is non existant in an IRA.

There are no fees in TIAA because it is an annuity contract.
Last edited by the intruder on Fri Jul 02, 2010 3:25 pm, edited 1 time in total.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby House Blend » Fri Jul 02, 2010 3:14 pm

555 wrote:
bobinberea wrote:I have both a traditional TIAA-CREF Retirement Annuity and a T-C Supplemental Retirement Annuity at the college where I am employed. I can't touch the RA until I retire, change jobs, etc., but the SRA is all my own voluntary contributions, and I just learned recently that I am free to rollover all the money in the SRA to an IRA. So I am in the process of rolling that over to a traditional IRA at Vanguard. Although T-C's expenses are fairly low, compared to the rest of the world of mutual funds, Vanguard's expenses are much lower. And of the 22 T-C investment options available to me at my college, only one of them is an index fund (CREF Equity Index). [I've complained, politely, to my HR Dept about this, but no action.] So I'll be moving about $35K into Vanguard's Total Stock Market Index (48%), Total International Stock Index (12%), Total Bond Market Index (20%), and Inflation Protected Securities (20%). I'm fairly knowledgeable about my retirement savings, but I must admit that the rollover possibility for the SRA completely escaped me. But I'll remedy that now. [I'm projecting about seven years until retirement.]


Wow, I didn't know you could do this! It may be a feature that of your particular plan, maybe not universally for all (G)SRA plans, but I definitely want to look in this. I have a GSRA and it is a 403b plan.

Is your SRA a 403b plan?

You're actually doing the rollover now, so you know for sure you can do this, right?

Do you know if a GSRA can be rolled over to an IRA, just like your SRA?

Are you still going to keep your SRA and continue contributing to it? (Are you doing a partial rollover?) I wouldn't want to give up all that tax deferred space that can take a lot of annual contributions ($16.5k or $22k per year) in addition to your RA and IRA!


I'm not bobinberea, but this definitely depends on what your employer's plan allows. Look for or ask about "in-service rollovers".

In my case, contributions above the amounts required to get the employer match go into a separate 403b/SRA, and these amounts can be rolled over to an IRA. But if I am still an employee at rollover time, I have to be at least age 59.5. A similar deal is offered with a 457(b).

Once you've rolled money over, there's nothing stopping you from keeping the 403b open and deferring more wages into it. You could do a 403b->IRA rollover every year, if you like.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby bobinberea » Fri Jul 02, 2010 5:56 pm

555 wrote:
bobinberea wrote:I have both a traditional TIAA-CREF Retirement Annuity and a T-C Supplemental Retirement Annuity at the college where I am employed. I can't touch the RA until I retire, change jobs, etc., but the SRA is all my own voluntary contributions, and I just learned recently that I am free to rollover all the money in the SRA to an IRA. So I am in the process of rolling that over to a traditional IRA at Vanguard. Although T-C's expenses are fairly low, compared to the rest of the world of mutual funds, Vanguard's expenses are much lower. And of the 22 T-C investment options available to me at my college, only one of them is an index fund (CREF Equity Index). [I've complained, politely, to my HR Dept about this, but no action.] So I'll be moving about $35K into Vanguard's Total Stock Market Index (48%), Total International Stock Index (12%), Total Bond Market Index (20%), and Inflation Protected Securities (20%). I'm fairly knowledgeable about my retirement savings, but I must admit that the rollover possibility for the SRA completely escaped me. But I'll remedy that now. [I'm projecting about seven years until retirement.]


Wow, I didn't know you could do this! It may be a feature that of your particular plan, maybe not universally for all (G)SRA plans, but I definitely want to look in this. I have a GSRA and it is a 403b plan.

Is your SRA a 403b plan?


Both my RA and SRA are under the umbrella of my college's 403b plan.

555 wrote:You're actually doing the rollover now, so you know for sure you can do this, right?


Yes. I engaged in a lengthy email conversation with an adviser at TC, and I was assured that I could do this. Of course, as soon as I started to ask about rolling over to an IRA, the adviser urged me to consider TC's wonderful mutual funds. When I said I was more interested in rolling it over to another company, I was told I could certainly do that, but I also got a little lecture on the importance of low costs. I quickly assured the adviser that costs would be no problem at Vanguard.

Oh, to answer other questions, the adviser did stress that I could do what I was asking about because my college's 403b plan allowed it, and it was stated that I needed to be 59 1/2 to be able to do this.

555 wrote:Do you know if a GSRA can be rolled over to an IRA, just like your SRA?


Sorry, I don't know what GSRA refers to, so I can't answer.

555 wrote:Are you still going to keep your SRA and continue contributing to it? (Are you doing a partial rollover?) I wouldn't want to give up all that tax deferred space that can take a lot of annual contributions ($16.5k or $22k per year) in addition to your RA and IRA!


Yes! I was careful to ask about this. I can zero out the holdings in the SRA, but at the next payday, money will go into it as usual. I did not consider the angle raised by another poster that I can put a lot more into a 403b than I can a traditional IRA, and that's certainly true. Very important! I put 11% of every paycheck into the SRA, so it's a significant chunk of change. I was really thinking more in terms of the ease and convenience of having pre-tax money taken off the top of my paycheck every pay day. It looks to me like every year or so I can empty the SRA by rolling over the accumulated funds into my new Vanguard IRA.
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Postby Doc » Fri Jul 02, 2010 6:57 pm

livesoft wrote:
the intruder wrote:What is so expensive about Schwab?

They do not have free trades on all stocks and ETFs.

They charge a commission to purchase many mutual funds including the mutual funds that I wish to own.


I guess it depends on your portfolio. I find that Schwab's costs are usually lower than Vanguard's except for their in-house funds and then there is often a good ETF alternative that would have lower trading costs at Schwab. The one big advantage at Vanguard is that institutional shares of some funds are more available but the transaction costs are higher.
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Postby livesoft » Fri Jul 02, 2010 7:01 pm

Vanguard is too expensive. WellsFargo is less expensive for me. And the service is superb.
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Postby the intruder » Fri Jul 02, 2010 7:09 pm

livesoft wrote:Vanguard is too expensive. WellsFargo is less expensive for me. And the service is superb.


how expensive is too expensive? How about some quantitative anlaysis
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Postby tibbitts » Fri Jul 02, 2010 7:19 pm

For money contributed today, it's paying 3.5%

It pays only 3.0% for new money contributed to most plans. That's not competitive with the other stable annuity accounts that many people seem to have available in their retirement plans, which seem to pay about 4.0%. Even the TIAA product with the 9+yr withdrawal restrictions is paying only 3.5%.

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Postby livesoft » Fri Jul 02, 2010 7:23 pm

OT: I guess it has been awhile since anyone touted WellsFargo, the one of the first major free trades on ETFs and mutual funds brokerage.

Vanguard has something called VBS. Apparently there is a $20 fee per account, so for us we have 2 Roths, 2 rollover IRAs, a traditional joint brokerage account and a checking account. (Fee waived for folks with status.)

Vanguard possibly: $100. WF $0 (OK, I have Voyager status, so Vanguard fee would be $0)

I use Vanguard funds and ETFs:
Vanguard $0. WF $0.

I use other ETFs such as SCZ, DGS:
Vanguard per transaction: $7. WF $0.

I use non-Vanguard funds such as Fidelity Spartan funds:
Vanguard per transaction: $20 or more. WF $0.

1099 tax info: Better tax lot and specific share identification at WF than at Vanguard. WF 1099 download into TurboTax has always been correct and complete. Vanguard 1099 download is missing cost basis and date acquired.

Transfers from checking to brokerage are practically instantaneous at WF. Not at Vanguard. The VBS/Vanguard connection is not seamless. Why do I need a VBS brokerage sweep and a second MMF account at Vanguard mutual funds? Why do I need to wait to buy a mutual fund after selling an ETF or vice versa at Vanguard? I'm sure one wouldn't have to wait at Schwab, WF, and other brokers.

We have IRAs and taxable account at Vanguard. We know what the service and costs are. I prefer WellsFargo if you made me choose one firm.
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Postby the intruder » Fri Jul 02, 2010 8:28 pm

livesoft wrote:Go ahead, but I would not choose Schwab since it is so expensive compared to other places.

I still have about 10% of our assets at TIAA-CREF. I like their TIAA traditional annuity and their TIAA Real Estate account. These two investments have been discussed quite a bit, so you can read up on them.

As for their other funds, I told them last month (when they asked me how they could improve themselves) that they needed to lower the expense ratios for me to consider investing in them.

BTW, if you are not happy with TIAA-CREF performance, then you won't be happy with your own performance. But be sure to keep us informed on that angle. Thanks!


All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?
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Postby brick-house » Fri Jul 02, 2010 9:30 pm

tiddbits wrote:

It pays only 3.0% for new money contributed to most plans. That's not competitive with the other stable annuity accounts that many people seem to have available in their retirement plans, which seem to pay about 4.0%. Even the TIAA product with the 9+yr withdrawal restrictions is paying only 3.5%


What Stable Value/Annuity funds are paying 4.0%? I am interested in the particular offering for my own knowledge base. For example, Vanguard's Retirement Savings Trust II is paying 2.99% and the yield is falling. TIAA offers 3.0% guaranteed in SRA, GSRA, and IRA contracts with no liquidity restrictions. 3.5% in RA, GRA, and ATRA contracts (with the ten year restriction in RA, five year in GRA).

https://personal.vanguard.com/us/funds/ ... rue&Wl=nul[/quote]
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Postby tibbitts » Fri Jul 02, 2010 9:59 pm

brick-house wrote:tiddbits wrote:

It pays only 3.0% for new money contributed to most plans. That's not competitive with the other stable annuity accounts that many people seem to have available in their retirement plans, which seem to pay about 4.0%. Even the TIAA product with the 9+yr withdrawal restrictions is paying only 3.5%


What Stable Value/Annuity funds are paying 4.0%? I am interested in the particular offering for my own knowledge base. For example, Vanguard's Retirement Savings Trust II is paying 2.99% and the yield is falling. TIAA offers 3.0% guaranteed in SRA, GSRA, and IRA contracts with no liquidity restrictions. 3.5% in RA, GRA, and ATRA contracts (with the ten year restriction in RA, five year in GRA).

https://personal.vanguard.com/us/funds/ ... rue&Wl=nul
[/quote]
The state employee 457 plan here (OK) has a stable value fund, operated/backed by an insurance company, paying 4.05%. I don't think that's particularly unusual but don't have other specific examples.

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Postby brick-house » Fri Jul 02, 2010 10:06 pm

tiddbits wrote:

The state employee 457 plan here (OK) has a stable value fund, operated/backed by an insurance company, paying 4.05%. I don't think that's particularly unusual but don't have other specific examples.


Wow! Wish I had that option.

How do they pay 4.05% guaranteed with no liquidity restrictions?
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Postby Avo » Fri Jul 02, 2010 10:39 pm

The University of California retirement plan has a stable value fund that has paid 1.85% through 5/31 (=4.44% annualized).
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Postby livesoft » Fri Jul 02, 2010 10:47 pm

If we borrow $50k from our 401(k) plans, we must pay back at a 4.25% interest rate. Guaranteed.
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Postby brick-house » Sat Jul 03, 2010 6:01 am

livesoft wrote:
If we borrow $50k from our 401(k) plans, we must pay back at a 4.25% interest rate. Guaranteed.


Not if you quit or get downsized! :P
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby Call_Me_Op » Sat Jul 03, 2010 9:44 am

binskins wrote: I have not been happy with the performance of my portfolio at TIAA, which (I admit) is in some part because I moved the money around rather than just picking a balanced allottment and sticking with it.
Any advice?


I wonder how much of the poor performance you cite is simply due to the fact that the stock market has been lousy for the past decade.
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Postby ourbrooks » Sat Jul 03, 2010 12:43 pm

So far, the only suggestions for higher paying stable value funds than the TIAA Traditional Annuity have been for funds in California and Oklahoma government retirement plans. The Vanguard Stable Value Funds are institutional products, not available to retail investors. Stable value funds for retail investing are a pretty rare thing, probably because low turnover is part of what enables the stable value funds to achieve high returns.

If the OP has any interest in stable value funds, the TIAA Traditional Annuity may be his/her best bet (unless, of course, he/she is a California teacher and/or an Oklahoma state employee). Given the typical interest rates in bond funds and the performance of stocks over the past decade, a stable value fund may be the best thing available.
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Postby 555 » Sun Jul 04, 2010 4:00 am

the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?


0.36% is too much. Yes, there is a cost but it is not that high.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby 555 » Sun Jul 04, 2010 4:04 am

bobinberea wrote:Oh, to answer other questions, the adviser did stress that I could do what I was asking about because my college's 403b plan allowed it, and it was stated that I needed to be 59 1/2 to be able to do this.


Are you >59.5? If so then that would be an easy explanation of why you can move funds out of your 403b.
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Postby the intruder » Sun Jul 04, 2010 9:10 am

555 wrote:
the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?


0.36% is too much. Yes, there is a cost but it is not that high.


How do you know its too high?

Do you have a comparison?
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Postby tibbitts » Sun Jul 04, 2010 9:50 am

brick-house wrote:tiddbits wrote:

The state employee 457 plan here (OK) has a stable value fund, operated/backed by an insurance company, paying 4.05%. I don't think that's particularly unusual but don't have other specific examples.


Wow! Wish I had that option.

How do they pay 4.05% guaranteed with no liquidity restrictions?

For one thing, the insurance company isn't as strong as TIAA. Depending on the rating agency, it's generally in either the same grade level as TIAA or one level down (generally the ratings agencies have 9 or 10 grades), so it's not completely a free lunch. But, very few insurance companies are rated as high as TIAA for safety. The question is whether one level of ratings is worth 100 basis points (25% less yield, as in this case.)

There may be a restriction of one transaction a month or similar, so it's not like a checking account or something you can day trade with, but it's nothing like the 9+ year restriction on TIAA's 3.5% account.

My point in citing the Oklahoma example wasn't that everybody can access it. I thought not everybody could access TIAA's fixed account, either. I know anybody can open an account with TIAA-CREF now, but I thought access to the fixed account was still limited.

Paul
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Postby raywax » Sun Jul 04, 2010 10:45 am

tibbitts wrote:
My point in citing the Oklahoma example wasn't that everybody can access it. I thought not everybody could access TIAA's fixed account, either. I know anybody can open an account with TIAA-CREF now, but I thought access to the fixed account was still limited.

Paul



I believe Paul is correct. The TIAA Traditional Account, like all it Variable Annuity products, are only available when one is a participant in a retirement plan with a non-profit institution which has an established plan with TIAA-CREF. There are subsidiaries of TIAA that offer various investment options but I do not believe they included the TIAA Traditional Account.

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Postby retiredjg » Sun Jul 04, 2010 10:54 am

so, binskins, are you still around? This conversation has wandered far afield from your original question. Have you been able to find an answer?
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Postby tibbitts » Sun Jul 04, 2010 11:12 am

retiredjg wrote:so, binskins, are you still around? This conversation has wandered far afield from your original question. Have you been able to find an answer?

We have wandered a bit, but I think the general opinion is that there is that the limited investment returns experienced by the OP weren't due to being invested at TIAA-CREF. We can argue the fine points of expense ratio or complain that TIAA has no option for investing in emerging market micro cap value stocks or something, but the bottom line is that investor behavior and general market returns (or lack thereof) were a much bigger factor here.

Paul
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Postby William Million » Sun Jul 04, 2010 11:28 am

I don't think many informed investors leave their money with TIAA-CREF if they have an opportunity to move their money to any other company. There must be hundreds of firms with the same offerings and lower, often signficantly lower, expense ratios.

Biggest exception to what I said above is real estate fund. It's somewhat unique and an interesting tool.
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Postby 555 » Sun Jul 04, 2010 11:52 am

the intruder wrote:
555 wrote:
the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?

0.36% is too much. Yes, there is a cost but it is not that high.

How do you know its too high?
Do you have a comparison?

Yes. And you know as well as I do that it's too high.
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Postby retiredjg » Sun Jul 04, 2010 12:05 pm

tibbitts wrote:
retiredjg wrote:so, binskins, are you still around? This conversation has wandered far afield from your original question. Have you been able to find an answer?

We have wandered a bit, but I think the general opinion is that there is that the limited investment returns experienced by the OP weren't due to being invested at TIAA-CREF.

Agreed. I'm not sure our original poster is still here though. I was just wondering if we scared him/her off. Or perhaps it is just the holiday weekend. :wink:
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Postby sscritic » Sun Jul 04, 2010 12:09 pm

William Million wrote:I don't think many informed investors leave their money with TIAA-CREF if they have an opportunity to move their money to any other company.

How informed are you about how well I slept from 2000 to 2002 with my money at TIAA-CREF? How informed are you about how informed I am about investing? How informed are you about my retirement built on 40 years of putting money into TIAA-CREF? How informed are you about the value of loyalty?

If you have reasons why someone might want to move money from TIAA-CREF, present them, but please don't insult those who choose to leave some of their money there.

Is an expense ratio of .20% significantly lower than an expense ratio of .40% when the level of service offered is different? Will the extra .20% expense ratio result in a retirement diet of dog food? I can go visit a local TIAA-CREF office and talk to someone face to face. Where do you go for your face to face visits with Vanguard?
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Postby retiredjg » Sun Jul 04, 2010 12:21 pm

William Million wrote:I don't think many informed investors leave their money with TIAA-CREF if they have an opportunity to move their money to any other company. There must be hundreds of firms with the same offerings and lower, often signficantly lower, expense ratios.

It is true that some companies have lower expense ratios on some of the funds offered in a TIAA-CREF 403 account.

As I understand it, however, the poster is asking about using a self-directed brokerage account under the umbrella of his/her TIAA-CREF 403. This is not the same as rolling over into a Vanguard or Fidelity IRA. I can't imagine that using the self-directed brokerage account is going to result in significantly cheaper expenses for the basic funds like total stock index, total bond index, etc. Not being able to see/run the numbers, though, I could have this all wrong.

It's also the first time I've heard of TIAA-CFEF offering a self-directed brokerage option in their 403s. I'm not even sure that is what the original poster means by using the term "self directed Traditional IRA". That's why I was hoping the OP would come back and give us more info. If it is an old 403 and the poster has moved to a new job, rolling over might be a good idea. But we don't really have enough information to know.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby bobinberea » Sun Jul 04, 2010 12:54 pm

555 wrote:
bobinberea wrote:Oh, to answer other questions, the adviser did stress that I could do what I was asking about because my college's 403b plan allowed it, and it was stated that I needed to be 59 1/2 to be able to do this.


Are you >59.5? If so then that would be an easy explanation of why you can move funds out of your 403b.


Yes, I recently turned 59 1/2, and yes, that's a crucial factor in my being allowed to rollover money that is now in my SRA.
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Postby the intruder » Sun Jul 04, 2010 1:02 pm

555 wrote:
the intruder wrote:
555 wrote:
the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?

0.36% is too much. Yes, there is a cost but it is not that high.

How do you know its too high?
Do you have a comparison?

Yes. And you know as well as I do that it's too high.


Since you cant come with any comparison I will provide it to you.
Many 401k plans use actively managed mutual funds that charge 12b-1 fees of .25% -1.% over the management fee. The 12b-1 fees are used to defray the cost of plan administration. In addition many plans add an admin charge of $3-4 per month to the participant's account. These fees can be avoided by rolling the 401k funds to an IRA.
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Postby the intruder » Sun Jul 04, 2010 1:16 pm

William Million wrote:I don't think many informed investors leave their money with TIAA-CREF if they have an opportunity to move their money to any other company. There must be hundreds of firms with the same offerings and lower, often signficantly lower, expense ratios.

Biggest exception to what I said above is real estate fund. It's somewhat unique and an interesting tool.


Lower fees ae not the sole creiteria for selecting investments. Many other firms with lower mgt fees add hidden charges. There are no additional charges with TIAA. Unlike mutual funds CREFs VAs promise a payout for life for a small fee of .005%. TIAA is one of only 7 companies with an AAA credit rating (which GE no longer has) which means a lot to those investors who are approaching retirement.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby livesoft » Sun Jul 04, 2010 1:32 pm

FWIW, I thought the OP was quite clear about their intentions:
binskins wrote:I am seriously considering rolling over my TIAA portfolio (approx $150K) into a self-directed Traditional IRA.

I just assumed that they had a 403(b) that they were considering moving money out of to another financial institution. I just assumed they were either (a) over 59.5 or (b) no longer working for the employer that sponsored the 403(b). In some sense, all traditional IRAs are self-directed. That's from the Department of Redundancy Department.

Of course, TIAA-CREF has traditional IRAs, so binskins does not need to move to Vanguard, Schwab, or any other place. He can keep the money in a traditional IRA at TIAA-CREF and pay higher fees.

For myself, I've never withdrawn any money from TIAA-CREF. They have all the money I ever contributed there and all the money my former employer ever contributed. Everyone has a certain amount of inertia that keeps money from moving to other places. I would not call it loyalty. What was that study found in a Bernstein or Swedroe book? Most TIAA-CREF participants hadn't changed their asset allocation since they started the account?

A few years ago (after joining this forum), I did switch out of TIAA-CREF equity funds and only use TIAA-traditional and TIAA real-estate accounts.
Last edited by livesoft on Sun Jul 04, 2010 1:39 pm, edited 1 time in total.
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Re: Bailing Out of TIAA CREF with 10 years to retirement?

Postby retiredjg » Sun Jul 04, 2010 1:38 pm

livesoft wrote:I just assumed that they had a 403(b) that they were considering moving money out of to another financial institution. I just assumed they were either (a) over 59.5 or (b) no longer working for the employer that sponsored the 403(b). In some sense, all traditional IRAs are self-directed.

You could very well be right. It was the thread title and the words "self-directed" that made me think the other way...at first. Now, I don't really know.

I'm sure we both agree that it was the moving money around (market timing) rather than the TIAA-CFEFness that made the investments do bad things.... :wink:
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Postby 555 » Sun Jul 04, 2010 1:47 pm

the intruder wrote:
555 wrote:
the intruder wrote:
555 wrote:
the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?

0.36% is too much. Yes, there is a cost but it is not that high.

How do you know its too high?
Do you have a comparison?

Yes. And you know as well as I do that it's too high.

Since you cant come with any comparison I will provide it to you.
Many 401k plans use actively managed mutual funds that charge 12b-1 fees of .25% -1.% over the management fee. The 12b-1 fees are used to defray the cost of plan administration. In addition many plans add an admin charge of $3-4 per month to the participant's account. These fees can be avoided by rolling the 401k funds to an IRA.

The 457 plan I am in starts at 0.25% on small balances and the percentage decreases on higher balances, and the max payable is $120. On a $100,000 balance that's 0.12%. On a $1,000,000 balance that's 0.012%.
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Postby House Blend » Sun Jul 04, 2010 1:50 pm

retiredjg wrote:As I understand it, however, the poster is asking about using a self-directed brokerage account under the umbrella of his/her TIAA-CREF 403. This is not the same as rolling over into a Vanguard or Fidelity IRA. I can't imagine that using the self-directed brokerage account is going to result in significantly cheaper expenses for the basic funds like total stock index, total bond index, etc. Not being able to see/run the numbers, though, I could have this all wrong.

It's also the first time I've heard of TIAA-CFEF offering a self-directed brokerage option in their 403s. I'm not even sure that is what the original poster means by using the term "self directed Traditional IRA". That's why I was hoping the OP would come back and give us more info. If it is an old 403 and the poster has moved to a new job, rolling over might be a good idea. But we don't really have enough information to know.


RJG,

FWIW, I think you misread the original post. (Look at first sentence of second paragraph.) Seemed pretty clear to me that (s)he has a brokerage account at Schwab, and is contemplating rolling over some T-C money to an IRA at Schwab.

That said, T-C does offer brokerage accounts, but only for IRA or after-tax investments. You can't use them inside standard RA/SRA/... retirement accounts as far as I know. So theoretically, the OP could roll some T-C 403b money to an IRA at T-C Brokerage Services. But their fees are pretty high.

Link: http://www.tiaa-cref.org/public/products-services/brokerage-services/index.html

Also, amplifying tibbits' comments about eligibility to open a non-brokerage IRA at T-C: Roughly speaking you or your spouse need to be current or former employees of an institution that either offers T-C retirement plans, or could.

Link: http://www.tiaa-cref.org/public/products-services/ira/what-is/eligibility/index.html

This would get you access to the "liquid" form of Traditional, currently paying the guaranteed minimum of 3%/yr.

On the other hand, as the above link explains, the non-eligible riff-raff can open an IRA only through T-C's brokerage service. This doesn't give you access to the variable annuities or Traditional.

One thing that has always struck me as peculiar about costs at T-C is that their retirement class bond mutual funds have higher ER's than their two bond variable annuities. My best guess is that it is a combination of economies of scale, and captive customers--they can get away with it. (For the equity index VA and equity index mutual fund it is the other way around.)
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Postby the intruder » Sun Jul 04, 2010 2:01 pm

555 wrote:
the intruder wrote:
555 wrote:
the intruder wrote:
555 wrote:
the intruder wrote:All CREF funds (Variable annuity) carry expense ratios of .36% to pay for the cost of administration and operation of the 403b or 401k plan in which the employee participates which are in addition to modest management fees. How can admin and operational expenses be reduced since they are related to the cost of compliance with government regulations?

0.36% is too much. Yes, there is a cost but it is not that high.

How do you know its too high?
Do you have a comparison?

Yes. And you know as well as I do that it's too high.

Since you cant come with any comparison I will provide it to you.
Many 401k plans use actively managed mutual funds that charge 12b-1 fees of .25% -1.% over the management fee. The 12b-1 fees are used to defray the cost of plan administration. In addition many plans add an admin charge of $3-4 per month to the participant's account. These fees can be avoided by rolling the 401k funds to an IRA.

The 457 plan I am in starts at 0.25% on small balances and the percentage decreases on higher balances, and the max payable is $120. On a $100,000 balance that's 0.12%. On a $1,000,000 balance that's 0.012%.


Ah You are awake and aware.

Is this a govt 457 plan?

Is it established for union employees?
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