Questions about TIAA-CREF

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Mr. Meow
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Questions about TIAA-CREF

Post by Mr. Meow » Thu Jun 20, 2013 4:56 pm

My wife (37 years old) has three accounts with TIAA-CREF from a previous job. Having not dealt with TIAA-CREF before, I'm struggling a bit to understand her holdings and how they work, so I was hoping the smart folks could help clarify.

My wife has three separate accounts -- one is RA, one is GRA, and one is GSRA -- that total approximately $50K together. All three accounts are invested in the same seven choices in roughly the same proportions:
CREF Global Equities (18-20%)
CREF Growth (16-17%)
CREF Equity Index (22%)
CREF Bond Market (6-7%)
CREF Inflation-Linked Bond (5-6%)
CREF Stock (20-21%)
TIAA Real Estate (9-12%)

My understanding is that -- even though these choices do not have a symbol I can look up -- these are essentially mutual funds? Or at least from her/our perspective, we should be viewing them that way? Is that right?

What are the advantages/disadvantages to leaving these investments here as opposed to rolling them over into a Vanguard IRA? My understanding is that if we leave the money at TIAA-CREF, when my wife reaches retirement age, the invested funds can be annuitized. But how is that different than just getting an annuity at that point? Above all else, I'm just confused by the TIAA-CREF world and how it's different from what I'm used to dealing with (Fidelity 401K, Vanguard IRA, typical brokerage accounts).

Thanks in advance.
Last edited by Mr. Meow on Mon Sep 29, 2014 12:15 pm, edited 1 time in total.

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ofcmetz
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Re: Questions about TIAA-CREF

Post by ofcmetz » Thu Jun 20, 2013 6:13 pm

I'm not an expert on TIAA, but I have a 403B with them that I still contribute to. IMO, Vanguard has better stock index funds that are lower cost. TIAA is still low cost compared to most fund companies and it's equity funds are not bad.

The two really special TIAA funds are the Real Estate Fund and the Traditional Fund. The real estate fund is unique in that it directly owns and manages real estate unlike the Vanguard REIT fund which owns the more volatile and leveraged REIT stocks. It's a more pure play on commercial real estate. The Traditional Fund is very similar to a stable value fund in that there is a floor on interest rates at 3% with many accounts. Each of the accounts GA through GSRA has different restrictions on the Traditional Fund and you should investigate these if that is what you are using.

All of my TIAA money is these two funds, and I use my Vanguard accounts and my 457B for my equities.
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Re: Questions about TIAA-CREF

Post by ourbrooks » Thu Jun 20, 2013 6:42 pm

A bit of TIAA-CREF history might help. TIAA-CREF was established long before there were mutual funds to provide retirement plans for professors at private colleges, who often needed to change jobs during their careers. Originally, it was like an insurance company that made its own investments in things like office buildings. Later, a stock fund was established. The legal structure in which TIAA operates is through contracts with the individual academic and non-profit institutions. You can't invest with TIAA-CREF retirement fund unless you are or were covered by one of those contracts.

For a long period of time, the only stock portfolio was the CREF Stock portfolio. More recently, other portfolios have become available, but these are still under the basic legal framework; they aren't separate funds but are just subdivisions of the money being managed under the terms of the contract. It's hard to tell the costs of these funds since they are sometimes paid by the institution offering the retirement plan.

Even more recently, TIAA-CREF has started offering separate, retail mutual funds, like Vanguard. These do have ticker symbols, etc. and they do publish costs.

Whether or not you can roll over the funds into an investment outside of TIAA depends on the terms of the particular contract. For many of the contracts, the only way to get money out is to take it as an annuity. This is consistent with the original mission of TIAA to provide pensions.

That's the bad news. The good news is, since most people can't take their money out at moment's notice, TIAA can take advantage of some long term investment opportunities. As the previous poster mentioned, the Real Estate Fund and the Traditional fund, in particular, offer opportunities that Vanguard or any other retail investment company can't match.

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Re: Questions about TIAA-CREF

Post by LadyGeek » Thu Jun 20, 2013 7:34 pm

Welcome! The wiki can help with some background info: TIAA-CREF
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Re: Questions about TIAA-CREF

Post by DickBenson » Thu Jun 20, 2013 8:10 pm

Mr. Meow wrote:My wife (40 years old) has three accounts with TIAA-CREF from a previous job.....

-- one is RA, one is GRA, ....
Curious as to how she has both a RA and a GRA from the same institution. Did they freeze future contributions to the RA and add a GRA contract? The latter would have less restrictive withdrawal restrictions from Traditional accounts (which I gather she does not have).

Dick

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Mr. Meow
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Re: Questions about TIAA-CREF

Post by Mr. Meow » Fri Jun 21, 2013 6:45 am

Thanks for all your responses. They were helpful (though I am still a bit confused -- see my questions below).

DickBenson: She had several different positions in several different departments while at the institution. During her time there, the RA contract expired and was replaced with GRA.

OK, I think it would help me to think about how TIAA-CREF differs by splitting into accumulation phase and retirement phase:

Accumulation
The different holdings essentially operate similarly to mutual funds, except for TIAA Traditional and TIAA Real Estate. Is that right? Given Vanguard's lower expenses for comparable funds, setting aside TIAA Traditional and TIAA Real Estate, is there any advantage to keeping the TIAA-CREF funds?

Retirement
What happens at retirement with a 403b at TIAA-CREF? How is it different than taking distributions from a rollover IRA?

Sorry if I seem like I'm asking the same questions. My inclination is to rollover all her holdings into an IRA at Vanguard (assuming we can -- I understand there many be limitations), and I'm just trying to figure out what the disadvantages are. She currently doesn't have any holdings in TIAA Traditional, but it makes sense to me to put a small portion of her holdings into that. I would also consider holding onto a bit of TIAA Real Estate. But beyond that, is there any reason not to draw down most of what she has at TIAA-CREF in all the other holdings?

Again, thanks in advance for your replies.

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Re: Questions about TIAA-CREF

Post by Aptenodytes » Fri Jun 21, 2013 8:07 am

Mr. Meow wrote:Accumulation
Given Vanguard's lower expenses for comparable funds, setting aside TIAA Traditional and TIAA Real Estate, is there any advantage to keeping the TIAA-CREF funds?
No. I went through a similar exercise when my employer added Vanguard to the mix, and I transferred everything to Vanguard except the traditional and the real estate.
Mr. Meow wrote: Retirement
What happens at retirement with a 403b at TIAA-CREF? How is it different than taking distributions from a rollover IRA?
Tax implications are the same in a 403b and an IRA. The TIAA traditional annuity has additional constraints regarding the rate of payout.
Mr. Meow wrote: Sorry if I seem like I'm asking the same questions. My inclination is to rollover all her holdings into an IRA at Vanguard (assuming we can -- I understand there many be limitations), and I'm just trying to figure out what the disadvantages are. She currently doesn't have any holdings in TIAA Traditional, but it makes sense to me to put a small portion of her holdings into that. I would also consider holding onto a bit of TIAA Real Estate. But beyond that, is there any reason not to draw down most of what she has at TIAA-CREF in all the other holdings?
Before you make the whole move, I would take a look at how her holdings fit into your combined overall portfolio and where you see the portfolio 5-10 years from now. For many people, the TIAA traditional is a very attractive vehicle. An alternative to moving her TIAA money to Vanguard is to move it all into the traditional annuity, and reduce your bond holdings in your other accounts. In retrospect, this is what I wish I had done.

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Re: Questions about TIAA-CREF

Post by ourbrooks » Fri Jun 21, 2013 8:59 am

Check your plan; the rollover may not even be possible.

Also, double check on the expense front. First, the expenses on the TIAA web site for their retail funds are not the expenses for their retirement funds. I'd expect the expenses for the retirement funds to be much lower; they don't do advertising and the money comes in in a few big checks and mostly goes out once a month, as versus thousands of daily transactions. Second, in some cases, the sponsoring institution pays the expenses; Vanguard is low but it's not zero. TIAA is a non-profit so there's not a whole lot of reason for them to charge high fees.

I second the suggestion of putting all of the money into TIAA Traditional. TIAA Traditional behaves much like a stable value fund. Vanguard doesn't offer any stable value funds (although some people argue that the Managed Payout funds are close to the same thing) and they probably never will. Stable value funds aren't compatible with a retail investing retirement. If you're unfamiliar with stable value funds, I'd suggest Larry Swedroe's book on alternate investments.

On what happens at retirement, again, check your plan. TIAA Traditional offers lifetime payouts with the expense/complexitiy of a GLWB rider.

Let's see, I think I've said "check your plan" at least three times now. If you happen to live near a big university, there may be a TIAA office near you and you could schedule an appointment and talk to a real live person. That failing, they do answer the phone.

I know the mantra about simplicity and it's probably nice to have everything in one place, but if doing that causes to take on more risky investments for the same return, the benefits are lost.

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Re: Questions about TIAA-CREF

Post by House Blend » Fri Jun 21, 2013 9:40 am

Mr. Meow wrote:Accumulation
The different holdings essentially operate similarly to mutual funds, except for TIAA Traditional and TIAA Real Estate. Is that right? Given Vanguard's lower expenses for comparable funds, setting aside TIAA Traditional and TIAA Real Estate, is there any advantage to keeping the TIAA-CREF funds?
Yes, you can treat everything except Traditional and REA as more or less equivalent to mutual funds. All except the Equity Index VA are actively managed; the ERs are all higher than comparable index funds from VG (or Fidelity Spartan).

So yes, nothing special about them.
Retirement
What happens at retirement with a 403b at TIAA-CREF? How is it different than taking distributions from a rollover IRA?
No major differences. RMDs from 403b and IRA are accounted for separately. (You can't take proportionately more from the IRA and less from the 403b.) If you retire at age 55 or later, most 403b plans will allow penalty free withdrawals, whereas for IRAs the magic age is 59.5

A big exception to this would be if you forsee a Backdoor Roth in your future. In that case, you'd want to keep accumulations in 403b/401k/etc and avoid rollovers of tax-deferred accounts to IRAs.
Sorry if I seem like I'm asking the same questions. My inclination is to rollover all her holdings into an IRA at Vanguard (assuming we can -- I understand there many be limitations), and I'm just trying to figure out what the disadvantages are. She currently doesn't have any holdings in TIAA Traditional, but it makes sense to me to put a small portion of her holdings into that. I would also consider holding onto a bit of TIAA Real Estate. But beyond that, is there any reason not to draw down most of what she has at TIAA-CREF in all the other holdings?
I don't see this as a big mistake. Some of us like to use Traditional and the REA, but beyond that and the Backdoor Roth there's no compelling reason to keep money there.

Before putting money into Traditional in an RA or GRA, make sure you understand the restrictions on transfers.

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Re: Questions about TIAA-CREF

Post by ourbrooks » Fri Jun 21, 2013 11:01 am

House Blend wrote:Yes, you can treat everything except Traditional and REA as more or less equivalent to mutual funds. All except the Equity Index VA are actively managed; the ERs are all higher than comparable index funds from VG (or Fidelity Spartan).
Don't confuse the ERs on TIAA retail funds with the ERs on retirement funds; the quoted ERs on the TIAA home page are for their variable annuity offerings and they're actually some what lower (.40% versus .47% for Equity Index) than the comparable Vanguard variable annuity offerings.

Why don't they quote the ERs for their retirement funds on the web site? Answer: Because they've got 1,000s of contracts, all slightly different, all with potentially different ERs. It's worth finding out for a particular contract.

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Re: Questions about TIAA-CREF

Post by House Blend » Fri Jun 21, 2013 11:49 am

ourbrooks wrote:
House Blend wrote:Yes, you can treat everything except Traditional and REA as more or less equivalent to mutual funds. All except the Equity Index VA are actively managed; the ERs are all higher than comparable index funds from VG (or Fidelity Spartan).
Don't confuse the ERs on TIAA retail funds with the ERs on retirement funds; the quoted ERs on the TIAA home page are for their variable annuity offerings and they're actually some what lower (.40% versus .47% for Equity Index) than the comparable Vanguard variable annuity offerings.

Why don't they quote the ERs for their retirement funds on the web site? Answer: Because they've got 1,000s of contracts, all slightly different, all with potentially different ERs. It's worth finding out for a particular contract.
First, the OP is *only* talking about the T-C variable annuities. Not sure why you think anyone is confusing them with the ERs on T-Cs mutual funds, which come in Retail, Retirement, Premier, and Institutional share classes. The ERs on all of the above are not hard to find, and don't vary by contract.

For example, here are pages that list the ERs for the Premier share class of the Equity Index mutual fund, and the Equity Index VA:
https://www.tiaa-cref.org/public/tcfpi/ ... l=41082540
https://www.tiaa-cref.org/public/tcfpi/ ... l=21066530
There's a drop down menu for "Fees and Expenses" here that will give you the whole enchilada:
https://www.tiaa-cref.org/public/tcfpi/InvestResearch

Second, the context for the question I was answering was the accumulation phase. No one is recommending replacing an investment in one of T-Cs variable annuity accounts with a deferred variable annuity at Vanguard. And in any case, the OP plainly states that he is contemplating rolling the accumulations to a Vanguard IRA. On that basis, comparing the ERs on T-C VAs with (say) Admiral shares of VG funds is quite relevant.

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Re: Questions about TIAA-CREF

Post by DickBenson » Fri Jun 21, 2013 1:10 pm

House Blend wrote:Before putting money into Traditional in an RA or GRA, make sure you understand the restrictions on transfers.
I suspect that you do not have the option of putting money into Traditional in the RA anymore. If the choice is between either the GRA or GSRA then I believe both are now giving the minimum 3% on new money going into Traditional. But there would be no restrictions on withdrawals from the GSRA, while withdrawals from the GRA would have to be distributed over a 5 year period.

Dick

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Mr. Meow
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Re: Questions about TIAA-CREF

Post by Mr. Meow » Sat Jun 22, 2013 1:40 pm

Thanks again for all your responses. I've reviewed her institution's most recent plan summary, and done some digging around both the TIAA-CREF "website" for her institution and the materials at her online account.

As it turns out, I think there's little benefit to moving her assets out of TIAA-CREF: while she has been invested exclusively in the seven variable annuities I listed in my original post, she also has available to her institutional shares of a number of TIAA-CREF mutual funds, including several index funds:
Equity Index: ER 0.07%
International Equity Index: ER 0.08%
Large-Cap Growth Index: ER 0.07%
Large-Cap Value Index: ER 0.08%
S&P 500 Index: ER 0.07%
Small-Cap Blend Index: 0.15%

Given that (a) the expenses of these funds are comparable (and in a few cases, slightly cheaper) than the analogous funds at Vanguard, and (b) the availability of the unique T-C investments (Traditional and Real Estate), I think it makes sense to leave this be, and simply re-allocate her investments in line with her global asset allocation (which I'll probably return with more questions about).

Last TIAA-CREF specific question (for now): As I mentioned in my original post, she has investments in three separate accounts: GRA (~$33K), RA (~$13K), and GSRA (~$4K). Does it make sense to consolidate her investments into one account? I spoke with someone at TIAA-CREF who said it can be done (essentially as a rollover). Aside from the withdrawal limitations involved with TIAA Traditional (which she's currently not invested in, but likely will be after we re-allocate), is there any reason not to consolidate her accounts? Also, if we consolidate, which account should we use: GRA, RA, or GSRA?

Thanks so much for all your help.

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Re: Questions about TIAA-CREF

Post by jjustice » Sat Jun 22, 2013 2:11 pm

I don't think that there is any important difference for the investor between an RA and a GRA. I have the former and my wife has the latter--because the college changed plans between our hirings. There may be a difference in the availability of loans, but we've never seen a difference.

The real difference is between the GSRA and the other two. Here the difference has to do with the Traditional annuity account. The account is completely liquid (tradable) in the GSRA, but you don't get the illiquidity premium of .75% that is paid when interest rates are higher than they are now. I would say that you should keep as much as you intend to annuitize in the GRA. That's what I did, except mine was an RA. What you want to rebalance with, or possibly exchange, put in the GSRA.

John

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Re: Questions about TIAA-CREF

Post by Timoneer » Sat Jun 22, 2013 4:45 pm

Mr. Meow wrote: Retirement
What happens at retirement with a 403b at TIAA-CREF? How is it different than taking distributions from a rollover IRA?
This raises a slightly related point that I have wondered about. Does a 403b account have somewhat stronger protection against creditors than if the funds had been rolled over into an IRA?

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Re: Questions about TIAA-CREF

Post by neurosphere » Sat Jun 22, 2013 4:58 pm

jjustice wrote:The account is completely liquid (tradable) in the GSRA, but you don't get the illiquidity premium of .75% that is paid when interest rates are higher than they are now. I would say that you should keep as much as you intend to annuitize in the GRA. That's what I did, except mine was an RA.
Can someone elaborate on this illiquidity premium, or help with a link? Are you saying that the traditional in a GSA might pay more than the traditional in a GSRA, because the GSRA is liquid? I have the option of investing in GSRA, or allowing for employer contributions to into the GSA (if I am understanding the accounts correctly).
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Re: Questions about TIAA-CREF

Post by MN Finance » Sat Jun 22, 2013 5:24 pm

neurosphere wrote:
jjustice wrote:The account is completely liquid (tradable) in the GSRA, but you don't get the illiquidity premium of .75% that is paid when interest rates are higher than they are now. I would say that you should keep as much as you intend to annuitize in the GRA. That's what I did, except mine was an RA.
Can someone elaborate on this illiquidity premium, or help with a link? Are you saying that the traditional in a GSA might pay more than the traditional in a GSRA, because the GSRA is liquid? I have the option of investing in GSRA, or allowing for employer contributions to into the GSA (if I am understanding the accounts correctly).
Historically the rate in the RA and GRA are higher. But thats historically and if rates continue to stay low or even rise modestly I wouldnt bank on money put in today to rise much

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Re: Questions about TIAA-CREF

Post by jjustice » Sat Jun 22, 2013 6:55 pm

Yes, MN Finance is right. Money going in at today's rates earns the guaranteed 3% minimum in both the GRA and GSRA accounts, and today's money will later earn a "vintage rate" that will be basically unchanged. It is only when rates are higher than the current low rates that the GRA pays a premium. So for now, you'd do better to contribute to the liquid GSRA.

John

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Re: Questions about TIAA-CREF

Post by House Blend » Sat Jun 22, 2013 7:27 pm

^Compare these pages side by side to see the higher rates earned by various vintages in GRA compared to GSRA:
https://www.tiaa-cref.org/public/perfor ... /4025.html
https://www.tiaa-cref.org/public/perfor ... /4026.html
Typical advantage is 0.75%. My recollection is that 10 years ago it was typically more like 0.5%.

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Re: Questions about TIAA-CREF

Post by House Blend » Sat Jun 22, 2013 7:39 pm

Mr. Meow wrote:Last TIAA-CREF specific question (for now): As I mentioned in my original post, she has investments in three separate accounts: GRA (~$33K), RA (~$13K), and GSRA (~$4K). Does it make sense to consolidate her investments into one account? I spoke with someone at TIAA-CREF who said it can be done (essentially as a rollover). Aside from the withdrawal limitations involved with TIAA Traditional (which she's currently not invested in, but likely will be after we re-allocate), is there any reason not to consolidate her accounts? Also, if we consolidate, which account should we use: GRA, RA, or GSRA?
Danger Will Robinson!

My understanding is that you generally can't rollover money from a qualified plan into the qualified plan of a former employer. What you can typically do is roll into an IRA, and of course T-C would be happy to do that for you and keep the money in house.

And in so doing, you would lose access to
(a) the useful forms of Traditional,
(b) the institutional share classes of their mutual funds.
All you'd get would be Retirement share classes and 1% Traditional (and the variable annuities).

I suggest leaving the money in the accounts you have. Carve out some Traditional or REA if you like and leave the rest in the "best" fund that fits well into your overall asset allocation, such as the Equity Index or S&P500 index funds. It also still makes sense to roll one or more of the accounts to a VG IRA.

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Re: Questions about TIAA-CREF

Post by MN Finance » Sun Jun 23, 2013 8:39 am

House Blend wrote:
Mr. Meow wrote:Last TIAA-CREF specific question (for now): As I mentioned in my original post, she has investments in three separate accounts: GRA (~$33K), RA (~$13K), and GSRA (~$4K). Does it make sense to consolidate her investments into one account? I spoke with someone at TIAA-CREF who said it can be done (essentially as a rollover). Aside from the withdrawal limitations involved with TIAA Traditional (which she's currently not invested in, but likely will be after we re-allocate), is there any reason not to consolidate her accounts? Also, if we consolidate, which account should we use: GRA, RA, or GSRA?
Danger Will Robinson!

My understanding is that you generally can't rollover money from a qualified plan into the qualified plan of a former employer. What you can typically do is roll into an IRA, and of course T-C would be happy to do that for you and keep the money in house.

And in so doing, you would lose access to
(a) the useful forms of Traditional,
(b) the institutional share classes of their mutual funds.
All you'd get would be Retirement share classes and 1% Traditional (and the variable annuities).

I suggest leaving the money in the accounts you have. Carve out some Traditional or REA if you like and leave the rest in the "best" fund that fits well into your overall asset allocation, such as the Equity Index or S&P500 index funds. It also still makes sense to roll one or more of the accounts to a VG IRA.

I know you post a lot of good info but this is just not accurate at all. There are virtually no tiaa retirement plans that do not allow rollovers unless theyre old or phased out.

I would certainly consolidate to the GSRA for simplicity and access to tiaa traditional with liquidity.

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Re: Questions about TIAA-CREF

Post by neurosphere » Sun Jun 23, 2013 8:56 am

MN Finance wrote: There are virtually no tiaa retirement plans that do not allow rollovers unless theyre old or phased out.
My current TIAA plan, with my current employer does not allow me to roll IN any money from another plan, even while I am currently enrolled in it, and certainly not after I am no longer employed with this employer.

But I think that's an employer restriction, and not a TIAA restriction. But that brings up an interesting point. I also did not think it was possible to add assets by way of rollover to the plan of a former employer. But are you saying that TIAA might be an exception?
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Re: Questions about TIAA-CREF

Post by MN Finance » Sun Jun 23, 2013 9:21 am

Tiaa or not plan rules determine the ability to roll money in. I probably overstated the odds but I would venture a guess that as many plans allow it as dont (I just did it last month with a former tiaa ret account). Either way it irrelevant bc the op can consolidate his contracts per his phone call

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Re: Questions about TIAA-CREF

Post by House Blend » Sun Jun 23, 2013 12:17 pm

^By all means if I've written something wrong, I appreciate corrections.

Either way, I think the OP needs to be very careful that there is no misunderstanding about what the T-C phone rep said. I've had more than one conversation with them in which there was a "failyuh to communicate" or flat out mistakes.

Given that "During her time there, the RA contract expired and was replaced with GRA", I think it's highly unlikely that her plan will allow transfers in to the
RA, whether from current or former employees.

If as you say, that rollovers into T-C administered employer plans from former employees are typically allowed, that would seem to be an easy solution to all of the angst we've been hearing from participants displeased about the new 1% guarantee for Traditional in IRA contracts. Simply roll that money back in to the
old plan.

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neurosphere
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Re: Questions about TIAA-CREF

Post by neurosphere » Wed Jul 10, 2013 8:20 am

So my employer made a mistake. EMPLOYEE contributions were to go to my GRSA account (to be invested in the Traditional), which as I understand it is portable and does not have restrictions for transfers, etc.

My EMPLOYER contributions were to continue to go to Vanguard.

Instead, today I find that BOTH contributions went to TIAA. My employER funds got invested into a lifecycle fund, because I had not specify how that was to be invested (funds were not supposed to have gone there).

While the TIAA Traditional option for the employEE contribution defines it as a "GRSA", the Traditional in the EMPLOYER segment is called "RC" for "Retirement Choice". It seems that it is paying 3.75% (vs. 3.00% for the GRSA). However, the MINIMUM guaranteed for 10 years in the RC option seems to be 1% (vs. 3% for the GRSA). Am I understanding this correctly?

It seems the RC is not portable. It looks like it has a surrender charge, and if I want to get my money back I have to take it in installments over several years. Is that why it pays higher interest? The liquidity premium mentioned up-thread?

I may only be with this employer 1 more year. So I'm limited in terms of the employer amounts which can possibly end up in the Traditional. I don't think I'm going to want a small balance vestigial account in the TIAA traditional I have to keep for 7 years or whatever.

On the other hand, it wouldn't be THAT big a deal to hold onto it, and I MIGHT return to this employer after a year off, so will have opportunities for additional contributions.

I assume there are no real liquidity issues with the Real Estate option? Which is where I could direct my employER contributions? Either that, or I have to investigate getting HR to undo the transaction and send those funds to Vanguard. I confirmed just now that my instructions (both on a signed form and in an email to HR) were correct: My contributions to TIAA and employer contributions to Vanguard, which obviously did not happen.

Hmm. I guess no one can answer for me if 3.75% now with a 1% floor for 10 years is better than 3% now with a 3% guarantee. :)
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Re: Questions about TIAA-CREF

Post by raywax » Wed Jul 10, 2013 11:02 am

[quote="neurosphere"]

I assume there are no real liquidity issues with the Real Estate option?

Your assumption is incorrect. You are limited to 1) a maximum amount invested in the account = $150,000 (though you can get around this limit by various loopholes T-C provides and 2) you are limited to ONE withdrawal from the REA per quarter; to get a withdrawal you have to phone a specified (and provided) phone number.

Ray

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Re: Questions about TIAA-CREF

Post by DickBenson » Wed Jul 10, 2013 1:32 pm

neurosphere wrote:So my employer made a mistake. EMPLOYEE contributions were to go to my GRSA account (to be invested in the Traditional), which as I understand it is portable and does not have restrictions for transfers, etc.
There is no such account as a GRSA. There is a GRA to which both employee and employer make contributions, and a GSRA which is an optional additional account which an employee can establish to which only the employee can make contributions.

Also, there is a new program called Retirement Choice (with a Retirement Choice Plus optional account), started about 7 years ago, which is an alternative (substitute) for the GRA/GSRA program. Did your employer replace the GRA/GSRA program with the RC/RCP program? Don't believe both can be active.

Dick

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Re: Questions about TIAA-CREF

Post by MN Finance » Wed Jul 10, 2013 1:51 pm

The Retirement Choice TIAA Traditional is a 7 year payout in exchange for a 3.75% rate. I wouldn't worry about the rate floor on this. The GSRA (or more likely the RCP contract) is liquid. I don't know about the RC contract but balances in the old contracts (RA and GRA) are immediately liquid if you have $2,000 or less (I have to assume RC is similar), so if you end up with a little money there, you're ok. As mentioned RE is liquid, though with some nuances.

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Re: Questions about TIAA-CREF

Post by House Blend » Wed Jul 10, 2013 2:14 pm

neurosphere wrote:While the TIAA Traditional option for the employEE contribution defines it as a "GRSA", the Traditional in the EMPLOYER segment is called "RC" for "Retirement Choice". It seems that it is paying 3.75% (vs. 3.00% for the GRSA). However, the MINIMUM guaranteed for 10 years in the RC option seems to be 1% (vs. 3% for the GRSA). Am I understanding this correctly?

It seems the RC is not portable. It looks like it has a surrender charge, and if I want to get my money back I have to take it in installments over several years. Is that why it pays higher interest? The liquidity premium mentioned up-thread?

I may only be with this employer 1 more year. So I'm limited in terms of the employer amounts which can possibly end up in the Traditional. I don't think I'm going to want a small balance vestigial account in the TIAA traditional I have to keep for 7 years or whatever.

On the other hand, it wouldn't be THAT big a deal to hold onto it, and I MIGHT return to this employer after a year off, so will have opportunities for additional contributions.
Not sure where you get the 1% for 10 years thing. I'm pretty sure that the guaranteed minimum is 1%, period.

In your shoes, I would pass on the Traditional/RC option, unless you think the odds of continuing with this employer are good.

You'll have one small contract that won't be getting new money. How much retirement income could it buy at age 65? How much diversification benefit can you enjoy from having 1% of your assets in the account?

BTW: with an RC contract, you can take it out in one lump at separation for a 2.5% charge, OR, do a TPA in 84 monthly payments(!).

I have a small Trad/RA contract from an old employer (maybe $7500?), and two big ones with my current one. A few years ago, I decided that it was pointless to have this small contract, so I set up a TPA to get rid of it. (For RA contracts, this means 10 annual payments.)

Setting this up to send the payments to my VG IRA sounds simple, yes? Good thing I understood the process pretty well going in. The first two phone reps I spoke to were incompetent, and I could see that they sent me the wrong paperwork. Finally, the third rep had a clue and sent me the right forms.

In retrospect, it was a great decision as it exposed me to just how much can go wrong, and how much paperwork is involved. (No, you can't do this online or even by FAX.)

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Re: Questions about TIAA-CREF

Post by neurosphere » Wed Jul 10, 2013 2:38 pm

raywax wrote:
neurosphere wrote:
I assume there are no real liquidity issues with the Real Estate option?
Your assumption is incorrect. You are limited to 1) a maximum amount invested in the account = $150,000 (though you can get around this limit by various loopholes T-C provides and 2) you are limited to ONE withdrawal from the REA per quarter; to get a withdrawal you have to phone a specified (and provided) phone number.

Ray
Oh, ok, I'm aware of those restrictions. I was thinking of a more global restriction where I could not sell out entirely and move my funds, say to an IRA.
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Re: Questions about TIAA-CREF

Post by raywax » Wed Jul 10, 2013 2:40 pm

[quote="DickBenson"]\

There is no such account as a GRSA.

There most definitely is! Here is the title from one of my kids' T-C Account: GSRA. Plus I had one a decade or two ago.

Ray
Last edited by raywax on Wed Jul 10, 2013 3:09 pm, edited 1 time in total.

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Re: Questions about TIAA-CREF

Post by raywax » Wed Jul 10, 2013 2:43 pm

neurosphere wrote:[

Oh, ok, I'm aware of those restrictions. I was thinking of a more global restriction where I could not sell out entirely and move my funds, say to an IRA.
The only account you cannot sell out of directly, except upon retirement in a GRA where you can, is the Traditional Account.

Ray

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Re: Questions about TIAA-CREF

Post by neurosphere » Wed Jul 10, 2013 2:57 pm

DickBenson wrote:
neurosphere wrote:So my employer made a mistake. EMPLOYEE contributions were to go to my GRSA account (to be invested in the Traditional), which as I understand it is portable and does not have restrictions for transfers, etc.
There is no such account as a GRSA. There is a GRA to which both employee and employer make contributions, and a GSRA which is an optional additional account which an employee can establish to which only the employee can make contributions.

Also, there is a new program called Retirement Choice (with a Retirement Choice Plus optional account), started about 7 years ago, which is an alternative (substitute) for the GRA/GSRA program. Did your employer replace the GRA/GSRA program with the RC/RCP program? Don't believe both can be active.

Dick
Hmm. Ok, I login TIAA-Cref.org, and I see two accounts. 1) "Faculty and Exempt Retirement Plan" and 2) Medical College Tax Deferred Annuity Plan.

I go into to #1, and I see that my employer contribution, only, has been deposited. I know this because the employer contribution is a fixed amount each month, regardless if I contribute or not. This amount is currently invested in a Lifecycle fund (I assume it was a default). When I click on "change allocation" I get to "Choose your funds". One option is the TIAA Traditional. I click on this and a summary sheet pdf pops up. Among other things I see the following:

Code: Select all

Interest Rates for the TIAA Traditional Annuity
Accumulating Stage Interest Rates
 	From 03/01/13 to 02/28/14
For Premiums Applied	RC  <----- (see?)
07/01/13 - 07/31/13	3.75%
03/01/13 - 06/30/13	3.35%
01/01/13 - 02/28/13	3.30%
In addition, at the bottom is the following text:
The minimum guaranteed rate applicable to contributions and transfers into the TIAA Traditional Annuity account under RC contracts during 2013 is 1.00%. This rate will continue to be guaranteed to these 2013 contributions and transfers for 10 calendar years. [Emphasis mine]

For Retirement Choice Annuity (RC) contracts, subject to the terms of your employer's plan, within 120 days after termination of employment, withdrawals from the TIAA Traditional Annuity may be made available in a lump sum. Such withdrawals are subject to a 2.5% surrender charge. At all other times, withdrawals and transfers from TIAA Traditional must be spread over an 84-month period (7 years) in monthly systematic payments.
Now in account "#2" I go through the same motions, but at the pop up window I see this info:

Code: Select all

Interest Rates for the TIAA Traditional Annuity
Accumulating Stage Interest Rates
 	From 03/01/13 to 02/28/14
For Premiums Applied	GSRA <-----(see?)
07/01/13 - 07/31/13	3.00%
10/01/11 - 06/30/13	3.00%
03/01/11 - 09/30/11	3.25%
Also there is this:
Group Supplemental Retirement Annuity contract form series G1250.1 (GSRA’s are not available in all states.)
So it seems like I do indeed have a GRSA and an RC both, doesn't it?

Also, for House Blend, look at the underlined text further up. Aren't I reading it correctly that the 1% floor is guaranteed for 10 years only? Although help us all if 10 years from now conditions are such that the 1% floor gets lowered, and we talk about the good old days of 2013 when interest rates were so high. :shock:

In any case, I still have to decide if I want to leave the employer contribution at TIAA. I was pretty sure my HR rep said I could have voluntary contributions go to TIAA and the employer contributions continue to go to Vanguard. I'll have to put in a call to HR soon.

NS
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Re: Questions about TIAA-CREF

Post by DickBenson » Wed Jul 10, 2013 3:13 pm

House Blend wrote:Not sure where you get the 1% for 10 years thing. I'm pretty sure that the guaranteed minimum is 1%, period.
The following is a quote from a description of Retirement Choice contracts.
For Retirement Choice Annuity the guaranteed rate is between 1% and 3%, as specified in the contract. The minimum guaranteed rate applicable to contributions and transfers into the TIAA Traditional Annuity account under RC contracts during 2013 is 1.00%. This rate will continue to be guaranteed to these 2013 contributions and transfers for 10 calendar years.
It leaves some confusion as to what can happen after 10 years for 2013 contributions, what the situation is for contributions made in prior years, and what the situation is for those contracts with a guaranteed rate higher that 1% (if any).

Dick

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Re: Questions about TIAA-CREF

Post by House Blend » Wed Jul 10, 2013 3:40 pm

More details from the "Fund Facts":
http://enroll.tiaa-cref.org/resources/f ... 101-RC.pdf
Account Features
For Retirement Choice (RC) Contracts, a guaranteed rate is set each calendar year for amounts remitted in that calendar year. The floating guaranteed rate will be between 1%-3%, inclusive (based on the 5-year Constant Maturity Treasury Rate less 125 bps). The guaranteed rate for each calendar year remittance will be maintained for at least 10 years. The current guaranteed rate is 1.00% for amounts remitted effective January 1, 2013. The account also offers the opportunity for additional amounts in excess of the guaranteed rate. When declared, additional amounts remain in effect for the twelve-month period that begins each March 1.
Interesting.

Traditional returns are split into guaranteed amounts and "additional amounts".

In contracts I am used to, the guaranteed amounts are constant, and the additional amounts vary by vintage and are adjusted once/year.

So the way I interpret this is that the guaranteed amount is variable. (Nice little oxymoron there.) And will always be between 1% and 3%. And that the guaranteed amount that goes with any given vintage will stay constant for 10 years. But I agree it still looks ambiguous about what can happen after 10 years.

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Re: Questions about TIAA-CREF

Post by DickBenson » Wed Jul 10, 2013 3:52 pm

neurosphere wrote:So it seems like I do indeed have a GRSA and an RC both, doesn't it?
Not sure whether it is a typo or not, but what I believe you are saying is that you have a GSRA (not a GRSA) and a RC both.

This could be the case if your employer originally had a GRA/GSRA contract with TIAA, and latter a RC/RCP contract was initiated.

Although I am fairly sure that a GRA and a RC contract cannot both be active (contributions made to both) at the same time, perhaps they allow you to still contribute to the older GRA rather than convert to the RCP component of the new RC/RCP contract.

Dick

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Re: Questions about TIAA-CREF

Post by neurosphere » Wed Jul 10, 2013 3:58 pm

DickBenson wrote:
neurosphere wrote:So it seems like I do indeed have a GRSA and an RC both, doesn't it?
Not sure whether it is a typo or not, but what I believe you are saying is that you have a GSRA (not a GRSA) and a RC both.

This could be the case if your employer originally had a GRA/GSRA contract with TIAA, and latter a RC/RCP contract was initiated.

Although I am fairly sure that a GRA and a RC contract cannot both be active (contributions made to both) at the same time, perhaps they allow you to still contribute to the older GRA rather than convert to the RCP component of the new RC/RCP contract.

Dick
Whoops, yes, typo. GSRA. Is there such a thing as a GRSA? I hope not. That would make things even more confusing. It's already bad enough with GRA, GRSA, RC, RCP, etc. :confused
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Re: Questions about TIAA-CREF

Post by jasg » Thu Jul 11, 2013 4:04 pm

neurosphere wrote:
MN Finance wrote: There are virtually no tiaa retirement plans that do not allow rollovers unless theyre old or phased out.
My current TIAA plan, with my current employer does not allow me to roll IN any money from another plan, even while I am currently enrolled in it, and certainly not after I am no longer employed with this employer.

But I think that's an employer restriction, and not a TIAA restriction. But that brings up an interesting point. I also did not think it was possible to add assets by way of rollover to the plan of a former employer. But are you saying that TIAA might be an exception?
Interesting to see this topic come up. I just made an inquiry on Monday about doing a T-IRA and 401K rollover INTO a small TIAA-CREF account I have had since a job I started in 1975 and left in 1980. (I like their business model and at first glance, the Institutional Class shares I can use have very low fees - as noted by Mr Meow.)

The answer was that more research was needed and I will get an answer next week. (It does vary by contract, and mine goes way back with Stanford University.) If the answer is NO, I'll use VG but if yes, I will consider TIAA-CREF very seriously.

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