401a 's: TIAA-CREF vs Vanguard vs Fidelity

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Cambo13
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401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by Cambo13 » Sun Oct 19, 2014 12:26 pm

Hello everyone. This is my first post, and I am fairly new to the site as well as investing, so thank you if you are reading this.

I have started a new job at [a college], and they will be matching my 5% contribution into a 401a with 10%. I have read many good things about Vanguard (low fees), Fidelity (user friendly and great customer care) and TIAA-CREF (great options such as their Real Estate Fund(s) & strong annuities). I am 34 years old, and I have $50,000 in a Roth IRA at a separate, smaller investment firm.

I'm here now because I need advice and guidance in picking one of these vendors or any combination of the 3. As it stands I am leaning more towards TIAA-CREF for their annuities and Real Estate Funds and/or Vanguard for their LOW fees. Your time and thoughts are truly appreciated.

Thank you very much. [Name of employer (personally identifiable information) removed by admin LadyGeek]

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wjo
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by wjo » Sun Oct 19, 2014 3:08 pm

It would be helpful to list the specific funds available to you in each of the plans. The composition of the funds available will change the advice.

Also, be sure to tell us the rates available to you in the TIAA traditional plan. For the 401a, I believe that is the Retirement Annuity (RA) contract which has 3.5% rate (but restrictions on distributions).

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ruralavalon
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by ruralavalon » Sun Oct 19, 2014 3:40 pm

In very general terms, I would personally prefer Vanguard because they have by far the largest menu of low-expense funds available anywhere, which includes a good REIT Index Fund. Fidelity has only about a dozen low-expense funds, their Spartan funds. TIAA-CREF also has fewer choices coupled with higher expenses. I believe you can buy an annuity through all three.

You do need to check the fund choices and expense ratios offered through your particular 401a plan.
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HikerNC
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by HikerNC » Sun Oct 19, 2014 3:55 pm

As the following link shows, the [college's] Vanguard funds offered are in the "Investor class" shares with annual expense ratios higher than those available from Fidelity's Spartan funds. For example, the Vanguard 500 Index fund has an annual expense ratio of 0.17%

https://retirementplans.vanguard.com/pe/pdfs/FS40.pdf

[The college's] 401a's link to Fidelity shows that participants can invest in the Fidelity Spartan Advantage 500 Index fund with a minimum investment of $10,000 with an annual expense ratio of 0.05%. You could use their investor class to accumulate a position and upon building a $10,000 position, convert it to the Spartan Advantage class and qualify for the 0.05% expense ratio.

https://fundresearch.fidelity.com/mutual-funds/summary/315911701

I used the S&P 500 index fund as an example of the opportunity to reduce expenses. With your choices, you're in the catbird's seat. Congratulations and good luck.

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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by LadyGeek » Sun Oct 19, 2014 4:04 pm

FYI - I removed the college's name, as it is personally identifiable information. This forum is heavily indexed by google. Information posted here can be linked with information found elsewhere. We don't usually need to the name of the employer to answer the question. HikerNC has provided some insight. The available funds are:

INVESTMENT NAME SHARE TICKER
TIAA Traditional Annuity N/A N/A

EQUITIES
Mutual Fund
TIAA-CREF Emerging Markets Equity Fund Institutional TEMLX
TIAA-CREF Emerging Markets Equity Index Fund Institutional TEQLX
TIAA-CREF Global Natural Resources Fund Institutional TNRIX
TIAA-CREF International Equity Fund Institutional TIIEX
TIAA-CREF Large-Cap Value Fund Institutional TRLIX
TIAA-CREF Mid-Cap Growth Fund Institutional TRPWX
TIAA-CREF Mid-Cap Value Fund Institutional TIMVX
TIAA-CREF Small-Cap Equity Fund Institutional TISEX
TIAA-CREF Social Choice Equity Fund Institutional TISCX

Variable Annuity
CREF Equity Index Account N/A N/A
CREF Global Equities Account N/A N/A
CREF Growth Account N/A N/A
CREF Stock Account N/A N/A

REAL ESTATE
Variable Annuity
TIAA Real Estate Account N/A N/A

FIXED INCOME
TIAA-CREF High-Yield Fund Institutional TIHYX
TIAA-CREF Social Choice Bond Fund Institutional TSBIX
Variable Annuity
CREF Bond Market Account N/A N/A
CREF Inflation-Linked Bond Account N/A N/A

MONEY MARKET
Variable Annuity
CREF Money Market Account N/A N/A

MULTI-ASSET
TIAA-CREF Lifecycle 2010 Fund Institutional TCTIX
TIAA-CREF Lifecycle 2015 Fund Institutional TCNIX
TIAA-CREF Lifecycle 2020 Fund Institutional TCWIX
TIAA-CREF Lifecycle 2025 Fund Institutional TCYIX
TIAA-CREF Lifecycle 2030 Fund Institutional TCRIX
TIAA-CREF Lifecycle 2035 Fund Institutional TCIIX
TIAA-CREF Lifecycle 2040 Fund Institutional TCOIX
TIAA-CREF Lifecycle 2045 Fund Institutional TTFIX
TIAA-CREF Lifecycle 2050 Fund Institutional TFTIX
TIAA-CREF Lifecycle 2055 Fund Institutional TTRIX
TIAA-CREF Lifecycle Retirement Income Fund Institutional TLRIX
Variable Annuity

CREF Social Choice Account N/A N/A
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Cambo13
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by Cambo13 » Tue Oct 21, 2014 11:27 pm

Thank you all for your respones. I will post more of the details and specific funds that each vendor offers tomorrow.

ResearchMed
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by ResearchMed » Wed Oct 22, 2014 11:33 am

ruralavalon wrote:In very general terms, I would personally prefer Vanguard because they have by far the largest menu of low-expense funds available anywhere, which includes a good REIT Index Fund. Fidelity has only about a dozen low-expense funds, their Spartan funds. TIAA-CREF also has fewer choices coupled with higher expenses. I believe you can buy an annuity through all three.

You do need to check the fund choices and expense ratios offered through your particular 401a plan.


Also double check whether there is any special "administrative fee" for having an account with each of these financial institutions.

By the way, is this a 401a or a 403b? (I'm thinking most higher educational institutions have 403b's, but that might not be correct, AND... I have no idea what the difference would be anyway!)

We found out, to our surprise, that having some of the 403b money at an account at Fidelity incurred a modest annual fee (billed monthly). Obviously, we (er, that would be *me*) hadn't read the fine print about that, having known that similar accounts at Vanguard or TIAA-CREF had no such admin fee.
We may move that money back to Vanguard, but for now, there were a few Fidelity mutual funds we wanted, and each purchase or sale of those (no matter what amount) would incur a fee at Vanguard.
Otherwise, thus far any mutual fund of any family that we wanted, we could get at Vanguard anyway.

As for TIAA-CREF, although they have quite a few funds, the choices available within the 403b account is now extremely limited (Traditional annuity, TREA, and a handful of core bond or equity funds). CREF funds were grandfathered in when Employer restricted the choices, as was any amount already already in TREA (which now has an maximum initial contribution in many cases).

We keep some core funds at both Vanguard and TIAA-CREF, in part for diversification, should there ever be serious system problems at one or the other, "just in case".

RM
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Cambo13
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by Cambo13 » Thu Oct 23, 2014 11:53 am

Thanks again everyone.

I spent a good while on the phone with each vendor yesterday. Interestingly enough, the Vanguard rep couldn't give me ANY information on funds offered, fees, expense ratios, etc. unless I gave them my information and opened a "shell" account with them. I thought that was peculiar since Fidelity said they would immediately send me out my university plan, starter pack. The TIAA CREF rep spent over an hour on the phone with me!!! He went through each available fund in my plan with us both online, including the expense ratios, ROI, prospectus, etc for each of the 401a asset classes. Night and day compared to Vanguard and Fidelity.

To be honest I was blown away with the service from TIAA CREF compared to Vanguard, which was pretty awful. That said, I think I will go with TIAA CREF, at least for the first year.

Oh and this is a 401a that is mandatory through my employer. There is a supplemental 403b that we can also contribute to, however there is no match. One option is to use TIAA CREF for my 401a and Vanguard for my supplemental 403b for their low expense ratios.

ResearchMed
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by ResearchMed » Thu Oct 23, 2014 12:11 pm

Cambo13 wrote:Thanks again everyone.

I spent a good while on the phone with each vendor yesterday. Interestingly enough, the Vanguard rep couldn't give me ANY information on funds offered, fees, expense ratios, etc. unless I gave them my information and opened a "shell" account with them. I thought that was peculiar since Fidelity said they would immediately send me out my university plan, starter pack. The TIAA CREF rep spent over an hour on the phone with me!!! He went through each available fund in my plan with us both online, including the expense ratios, ROI, prospectus, etc for each of the 401a asset classes. Night and day compared to Vanguard and Fidelity.

To be honest I was blown away with the service from TIAA CREF compared to Vanguard, which was pretty awful. That said, I think I will go with TIAA CREF, at least for the first year.

Oh and this is a 401a that is mandatory through my employer. There is a supplemental 403b that we can also contribute to, however there is no match. One option is to use TIAA CREF for my 401a and Vanguard for my supplemental 403b for their low expense ratios.


That's interesting, about the 401a/403b.

We've got identical choices for two separate 403b accounts: one "mandatory" with EmployER-contributed money (no match; just free money!), and the other with EmployEE-contributed money IF the Employee joined.

Nowadays, "joining" might be the default now for the EmployEE contribution, but "back in the day", it wasn't, and the default for the EmployER-contributed money was just put it in a money-market fund and leave it there forever, if the Employee didn't manage to notice or know what to do, or whatever.
I suspect there are now better defaults for both situations, but don't know.

RM
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nwffdiver
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by nwffdiver » Thu Oct 23, 2014 1:46 pm

We have a similar 401a at the Fire district I work for. I make my contributions to a 457b plan (instead of a 401k) schools and hospitals usually use 403b for employee contributions. Public. Employers have different rules on retirement matching. The 401a is employer contributions only.

I don't know the actual IRS rule, but that's a simplification of why there are 2 seperate accounts

ResearchMed
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Re: 401a 's: TIAA-CREF vs Vanguard vs Fidelity

Post by ResearchMed » Thu Oct 23, 2014 1:57 pm

nwffdiver wrote:We have a similar 401a at the Fire district I work for. I make my contributions to a 457b plan (instead of a 401k) schools and hospitals usually use 403b for employee contributions. Public. Employers have different rules on retirement matching. The 401a is employer contributions only.

I don't know the actual IRS rule, but that's a simplification of why there are 2 seperate accounts


Interesting.

I've only heard about (and experienced) both Employee and Employer accounts as being 403b.
Not only are they completely segregated, but the EmployEE-contributed money can be removed at any time, either to move to another of the 403b plan vendors, roll over to an IRA, or to withdraw/pay taxes.
The EmployER-contributed money can only be moved to another vendor participating in the 403b plan, until separating from Employer (or maybe changing to half time or less, etc.)

I just never heard of each part of the plan not being a "403b".

Are there any differences between a 403b and a 401k when used for EmployER contributions?

RM
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