Placement of TIAA Traditional and S&P 500

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anonenigma
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Placement of TIAA Traditional and S&P 500

Postby anonenigma » Mon Jun 19, 2017 6:45 am

I have a chunk of money in a 403(b) with USAA invested in their S&P 500 fund with an ER of 25 bp. Most of my 403(b) is with TIAA invested in a liquid version of the TIAA Traditional with a 3% guarantee. I also have taxable funds in money market funds and CDs.

Would I be better advised to transfer the money from USAA to TIAA, where I would purchase more of the TIAA Traditional, and purchase either the S&P 500 or Total Stock Market with taxable funds at Vanguard? I believe that the answer is yes, but I wanted to check.

The Wizard
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Re: Placement of TIAA Traditional and S&P 500

Postby The Wizard » Mon Jun 19, 2017 7:33 am

Answer depends considerably on the complete mix of funds available to you in your TIAA tax deferred plan.
For instance, I have some $$ in their institutional S&P 500 index fund, TISPX, with an ER of just 0.05%.

Answer also depends on available funds to invest. If you are maxing out tax deferred 403(b) and have additional to invest, then yes, putting the additional in stock index funds is the usual recommendation...
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aristotelian
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Re: Placement of TIAA Traditional and S&P 500

Postby aristotelian » Mon Jun 19, 2017 8:07 am

If you like TIAA Traditional @ 3%, I would say yes, it would be more tax efficient to have fixed income in the 403b with all of the S&P in taxable.

What is your tax bracket? Another approach might be tax exempt muni bonds in your taxable account. Vanguard has good offerings that probably yield better than CD's after taxes, but you would be taking some principal risk.

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House Blend
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Re: Placement of TIAA Traditional and S&P 500

Postby House Blend » Mon Jun 19, 2017 9:29 am

Are you already making maximum contributions to your tax-advantaged space?
(In particular, that means you are maxing out a Roth IRA every year.)

Do you have cash outside of tax-advantaged space available for long term investing?

If the answers to both are yes, then yes, using the taxable space for cheap stock index funds and using liquid Traditional to hit your targets for fixed income is better.

Certainly it makes no sense to use CDs or MMFs for long term investing while liquid Traditional is paying 3.25%.

The Wizard
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Re: Placement of TIAA Traditional and S&P 500

Postby The Wizard » Mon Jun 19, 2017 10:30 am

House Blend wrote:...Certainly it makes no sense to use CDs or MMFs for long term investing while liquid Traditional is paying 3.25%.

For benefit of others, we should be clear that TIAA Traditional is only available in tax deferred accounts.
So if you're saving on an after-tax basis for whatever reason, CDs may be a decent option...
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anonenigma
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Re: Placement of TIAA Traditional and S&P 500

Postby anonenigma » Mon Jun 19, 2017 1:52 pm

Thanks for the responses, which validate what I'd been thinking. Just retired. Have DB pension and have been maxing both DC and Roth.

I'll check what TIAA offers in mutual funds, but I love the security of the Traditional and could lower fees by investing taxable at Vanguard.

dh
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Re: Placement of TIAA Traditional and S&P 500

Postby dh » Mon Jun 19, 2017 3:30 pm

anonenigma wrote:I love the security of the Traditional and could lower fees by investing taxable at Vanguard.

Agree :sharebeer

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John151
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Re: Placement of TIAA Traditional and S&P 500

Postby John151 » Mon Jun 19, 2017 3:44 pm

My 403(b) is entirely in TIAA Traditional. I’d love to add to it, but I’ve recently turned seventy and have to take required minimum distributions.

My advice would be to put as much as possible into TIAA Traditional and then invest in Vanguard stock index funds in your taxable accounts. Another possibility for your taxable accounts would be a tax-exempt bond fund, depending on your tax bracket.


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