Rolling Over out of Employer-Sponsored Plans

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ndm502
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Joined: Sat Mar 03, 2018 10:44 pm

Rolling Over out of Employer-Sponsored Plans

Post by ndm502 » Sat Mar 03, 2018 11:03 pm

I currently work in higher education and have done so for the past 15 years, at 3 different institutions. I've used TIAA-CREF for my institutional retirement plans at each of them, and as a result I have money invested in 6 different plans within my TIAA-CREF account (2 from each institution).

Four of these plans won't be contributed to any longer, since I no longer work at those institutions. These plans have ~$150,000 invested in them, in a fairly wide range of specific funds, given what each institution make available in the plan. So the investing options are limited, and the expense ratios are all fairly high, typically ~.35-.45%.

At the same time, I have a personal Vanguard account that I've regularly contributed additional money to. This account uses one of the target retirement funds, with a .15% expense ratio.

I'm wondering whether I can, and should, rollover the money from these 4, basically fixed TIAA-CREF plans into my personal Vanguard account. Would I be allowed to rollover 4 of the plans I have with TIAA-CREF, while maintaining just the 2 that are being actively contributed to? And if so, is there a reason to not do so?

Thanks!

retiredjg
Posts: 39058
Joined: Thu Jan 10, 2008 12:56 pm

Re: Rolling Over out of Employer-Sponsored Plans

Post by retiredjg » Sun Mar 04, 2018 9:42 am

Welcome to the forum.

By "personal account", do you mean an IRA?

Yes, if you rolled the plans into an IRA, you could lower your costs if that is what you have in mind. The other possibility is to roll them into your current 403b which would simplify your portfolio but might not lower your expenses.

There are two possible cons to doing such a transfer. It is possible neither will affect you.
  • In some states, an IRA may have less protection from creditors than a 403b account. I don't consider this much of an issue, but some people, especially those in lawsuit prone careers, are concerned about this.

    Having an IRA would interfere with using the "back door" to contribute to Roth IRA. Since you are new here, this may be a new concept to you - it is a way for people who make too much money to contribute directly to Roth IRA to get money in there each year through a "back door" route.
I've never had a TIAA-CREF plan, but my understanding is that some of the Traditional Annuities have a 10 year withdrawal period. If you have any of those, that might be best to transfer into your current plan.

If you have not seen it yet, here is some information from the Wiki.

https://www.bogleheads.org/wiki/TIAA

Dominic
Posts: 211
Joined: Sat Jul 02, 2016 11:36 am

Re: Rolling Over out of Employer-Sponsored Plans

Post by Dominic » Sun Mar 04, 2018 9:49 am

Here's Vanguard's rollover IRA page. Click around and it'll go through the advantages and disadvantages of rolling your account over, and it explains the whole process.

As far as I can tell, rolling over is almost always the better option. You get a better selection of low-expense funds and condense your investments into fewer accounts. All you give up is the ability to take out loans against the account, which is hopefully something you don't use or need. If your plan offers really good fund options (DFA, G-Fund, etc.), you'd lose those as well, but I don't think that's a concern in your case.

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Earl Lemongrab
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Re: Rolling Over out of Employer-Sponsored Plans

Post by Earl Lemongrab » Sun Mar 04, 2018 11:47 am

Depends a lot on what choices are in the plans. If you have TIAA Traditional with good rates, that's probably worth keeping. If the fees are bad then might be worth leaving. There's not enough information.

If you do roll out, I always like to get someone to pay me for the privilege of getting my money by issuing me a cash bonus:

The Final, Definitive Thread on Brokerage Transfer Bonuses

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