Considering Transfer of TIAA-CREF Funds to Vanguard

[Jackie]

I am a 71 year-old retiree who will need to take out minimum required distributions for the first time this year. Most of my retirement savings (about 500k) are with TIAA-CREF in several different accounts, each account with a different mix of equities and bonds. I am considering moving all of these retirement funds over to a Vanguard IRA. My reasons are 1) lower vanguard fees, 2) better organization of all assets, 3) improved communication and ease of asset management and 4) a wider selection of investment options.

Does anyone on this site have any experience and/or advice to offer regarding the TIAA-CREF to Vanguard transfer process? Vanguard has indicated to me that the transfer of funds from TIAA-CREF involves sending a paper check to me for each fund in my account and the entire transfer process may take as long as 45 days…a rather long time at risk being out of the market.

My options seem to be either work within the cumbersome TIAA-CREF system, or struggle through an inefficient transfer process to gain the previously mentioned advantages offered by Vanguard. Can anyone offer advice on whether the transfer being considered is worth the one-time effort and possibly how to streamline the transfer process?

[retiredjg]

Hi Jackie, welcome to the forum!

I can't speak for the TIAA to Vanguard transfer specifically. It has been said here that it works better for the new company to "pull" from the old company rather than have the old company "push" toward the new company. Makes sense to me since the new company has a financial interest in getting in right and getting it done.

You are concerned about time out of the market, possibly up to 45 days. Unless there is something specifically slow about TIAA-CREF, we hear it usually takes closer to 21 days. But again, that is in general, not your company in specific.

In order not to have everything out of the market at the same time, do one fund or account at a time. It will take longer, but if something significant were to happen, it would not affect everything you have.

It would be worth the effort for me if I were not happy with my custodian. I think your points listed above are an accurate summary of reasons to transfer.

[Callalily]

I just did a Roth IRA rollover from TIAA-CREF to Vanguard. I started with Vanguard, but TIAA-CREF wanted me to fill out paperwork from them rather than from Vanguard. So I had to refill out the paperwork. It did take a while. Took 40 days from start to finish. But it might be faster if I had filled out the TIAA-CREF paperwork from the beginning.

[montesquieu]

I have direct-transferred from TIAA-CREF to Vanguard a few times, and have one transfer pending now. In the past, I was pleased with both sides. T-C mailed out checks immediately the day after my phone call, charged no fees, sent me confirmation with the check numbers, and Vanguard got the check within four or five business days.

With my currently pending transfer, T-C mailed out the check a month ago, and Vanguard still has not invested it, though I find it hard to believe that they have not received it.

Some things to consider:

I wouldn't recommend transferring just because Vanguard has a wider selection of options. They have to be options that you need. There isn't anything at Vanguard quite like the TIAA Traditional Annuity or the TIAA Real Estate Account (maybe with good reason in the latter case!)

It's possible to consolidate to a TIAA-CREF IRA too, which may have more investment options than the plan(s) you have now.

Fees at Vanguard are lower, but only by a few basis points. It's not as if you're transferring from Merrill Lynch or AXA Equitable!

You might consider transferring assets in-kind, if you're worried about being out of the market. Not sure if Vanguard would accept this.

[raywax]

When transferring funds out of TIAA-CREF one MUST complete form obtained from them. Do NOT try to by-pass this as it will not work. If you phone into the T-C counseling center the consultant/WMA should partially pre-fill part of the form if you provide her/him the necessary information. If you are doing a roll-over do not have the check sent to you but have it sent to Vanguard. I have not done a transfer to Vanguard from T-C but I have done a number of roll-overs from T-C to other financial institutions (and vice versa). In my experience it works reasonably well IF you start with a phone call to the T-C counseling center or to (if you have one) your T-C WMA.

Ray

[DickBenson]

I am a 71 year-old retiree who will need to take out minimum required distributions for the first time this year. Most of my retirement savings (about 500k) are with TIAA-CREF in several different accounts, each account with a different mix of equities and bonds.

Am assuming that all these savings are in a SRA or IRA, and not in a RA, since if they are in the latter the transfer would have to be spread out over a 10 year period.

Not sure what your asset allocation is, but assume that you will have a majority invested in fixed income. In the present environment, the 3% guaranteed minimum return of the SRA/IRA traditional account would be hard to beat at Vanguard. So I would consider keeping your fixed income at TIAA in that account (and maybe some in the inflation indexed bond fund).

If you have traditional in more than one of your accounts, then your returns could be greater than 3% in one or more of them. If so, then the best strategy might be to not transfer the one with the higher return.

It appears that so far you have not needed any distributions from your retirement account for living expenses. If so, you may want to consider a conversion of some or all of your account to Roth status. Among many other advantages, instead of investing a RMD in a taxable investment, you could keep that amount generating tax free returns in the Roth.

Dick

[555]

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[CaveatEmptor]

the transfer of funds from TIAA-CREF involves sending a paper check to me for each fund in my account and the entire transfer process may take as long as 45 days…a rather long time at risk being out of the market.

You do not have to be out of the market if you do the transfer in separate rounds of X dollars each, where X is your allocation to a low-volatility investment (let's say money market fund, for the sake of the example). You would repeatedly do the following (note that it maintains your target exposure to risk assets throughout the process):
(i) Transfer X dollars from TIAA-CREF money-market to Vanguard money-market fund (however long it takes -- 45 days is OK because your allocation to risk assets is on target during the process). Wait until all the dust has settled and the X dollars are "really at Vanguard".
(ii) On a day of your choice, move the just-arrived X dollars at Vanguard to Vanguard equity funds and, on that same day, move at TIAA-CREF X dollars from equity into money-market.
Repeat (i)--(ii) until all is moved into Vanguard.

I got out of all TIAA-CREF funds a while ago (without paper checks because done through my employer, when employer made Vanguard funds available). Vanguard's lower ERs saved me around 0.5% of my portfolio each year.

[DickBenson]

Am assuming that all these savings are in a SRA or IRA, and not in a RA, since if they are in the latter the transfer would have to be spread out over a 10 year period.

Are you sure? I thought that only applied to TIAA Traditional (in RA).

Yes, it only applies to a Traditional RA. Meant "the latter" to be the RA.

Dick