TIAA Traditional - unexpected "contributions" as new vintages

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GreendaleCC
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TIAA Traditional - unexpected "contributions" as new vintages

Post by GreendaleCC »

I struggled with the more descriptive title for this post - sorry!

I made an original rollover into a TIAA Traditional contract, and have not contributed or rolled over any additional money in the years since. However, several amounts have been added since then as new vintages (see below). I'm sure someone here can provide some insights into how/why this happens.

Assuming these "contributions" are some form of interest (?) from the original vintage, why create these new vintages in the same contract?

Original rollover
09/01/2013 - 12/31/2019 $XX,XXX.XX

Addition amounts - with their vintages' respective crediting rates
01/01/2020 - 12/31/2021 $XX.XX
03/01/2022 - 04/30/2022 $XX.XX
05/01/2022 - 05/31/2022 $X.XX
student
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by student »

This is because TIAA Traditional pays different interest rates based on vintages.
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GreendaleCC
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by GreendaleCC »

student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
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neurosphere
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by neurosphere »

GreendaleCC wrote: Fri May 13, 2022 12:04 pm
student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
I actually have the same question. I have not contributed new money in months, but find i have a couple dollars credited for May.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
JS-Elcano
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by JS-Elcano »

neurosphere wrote: Fri May 13, 2022 12:24 pm
GreendaleCC wrote: Fri May 13, 2022 12:04 pm
student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
I actually have the same question. I have not contributed new money in months, but find i have a couple dollars credited for May.
I have almost all of my fixed allocation (40%) in TIAA Trad and have always assumed that these additional vintages are added in when interest is paid and they are credited with the prevailing interest rate at that time, not the interest date that applied to the original contribution. TIAA reviews the interest rates of 'all' vintages every March and decides if they want to change them. So, the interest rate for a vintage from 2009 can change over time. I have plenty of vintages sicne I started contributing around 2006 and once in a while they lump them together into larger sums. For example, I have one from 2006-2012, which includes all the interest applied during this period whereas for 2022 I have at least 3 different tiny vintages of a few $.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by ResearchMed »

neurosphere wrote: Fri May 13, 2022 12:24 pm
GreendaleCC wrote: Fri May 13, 2022 12:04 pm
student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
I actually have the same question. I have not contributed new money in months, but find i have a couple dollars credited for May.
Wow.
I've been struggling with TIAA about this for several weeks now, and finally asked Employer, who gave an answer that is totally at odds with reality (which wasn't a big surprise given recent turnover in the Benefits group, alas). But we still don't understand the supposed "reality", or the "why".

At first, I thought that somehow, after a couple of decades, I hadn't understood how the "interest" was posted. (Duh, that wouldn't have explained what I noticed anyway. :oops: )

I asked shortly after seeing that sudden March money. And sure enough, I just looked, and there is a tiny amount now showing up for May. Nothing for April, and there was nothing for February, either.

Now that I know "it isn't just us", I'll call again.
TIAA was supposedly "looking into this" for us about that March amount, but that was some time ago, now. (Usually, our WMA is pretty prompt, so either he forgot/etc., or the back office is still "looking into it"...?)

RM
This signature is a placebo. You are in the control group.
student
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by student »

GreendaleCC wrote: Fri May 13, 2022 12:04 pm
student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
I guess I did not read your OP carefully. Is the 2020-2021 amount large or small? Could it be the interests that you have earned during that time? I did not look close enough https://www.tiaa.org/public/pdf/TT_FAQ.pdf to find an answer.

I checked my account and I have the same things and the amount does not seem to match the interests either. Hmm. Maybe we need crefwatch to see this thread.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by student »

ResearchMed wrote: Fri May 13, 2022 12:43 pm
neurosphere wrote: Fri May 13, 2022 12:24 pm
GreendaleCC wrote: Fri May 13, 2022 12:04 pm
student wrote: Fri May 13, 2022 10:23 am This is because TIAA Traditional pays different interest rates based on vintages.
Yes, thanks. The question, is why did they create these follow-on vintages when I only moved funds in once. These three newer, smaller vintages come nowhere close to the overall interest accrued in the contract.
I actually have the same question. I have not contributed new money in months, but find i have a couple dollars credited for May.
Wow.
I've been struggling with TIAA about this for several weeks now, and finally asked Employer, who gave an answer that is totally at odds with reality (which wasn't a big surprise given recent turnover in the Benefits group, alas). But we still don't understand the supposed "reality", or the "why".

At first, I thought that somehow, after a couple of decades, I hadn't understood how the "interest" was posted. (Duh, that wouldn't have explained what I noticed anyway. :oops: )

I asked shortly after seeing that sudden March money. And sure enough, I just looked, and there is a tiny amount now showing up for May. Nothing for April, and there was nothing for February, either.

Now that I know "it isn't just us", I'll call again.
TIAA was supposedly "looking into this" for us about that March amount, but that was some time ago, now. (Usually, our WMA is pretty prompt, so either he forgot/etc., or the back office is still "looking into it"...?)

RM
Is the overall interests credited correct in the 1st quarter?
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by neurosphere »

Ok, I've been educated by sscritic that ADDITIONAL amounts go to buy NEW vintages. That of course implies there is a crediting distinction between guaranteed amounts and additional amounts of course, where guaranteed amounts go "back" into the original vintage but new amounts go into the current/new vintage.

For me, this is the first I've ever had an "additional" amount so this is the first I've had this experience. I strongly suspect that somewhere along the way in my readings my eyeballs saw letters which explained that this is the case, but the mind did not process/understand/remember what the eyes had seen. :mrgreen:

Now I'm curious to find some text from an official source that explains and confirms this newly found phenomenon, lol.
Last edited by neurosphere on Fri May 13, 2022 1:20 pm, edited 2 times in total.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by neurosphere »

Here my actual data from today. I have no other vintages with additional amounts (sorry for the formatting):

Vintage / Total Amount / Crediting Rate / Guaranteed Rate / Additional Amount
03/01/2022 - 04/30/2022 $17,450.88 3.500 % 3.000 % 0.500 %
05/01/2022 - 05/31/2022 $2.78 4.000 % 3.000 % 1.000 %

I do not recall when I contributed that $17k-ish amount, but if it was around the end of april or 1st of may, it would roughly equal 12 or so days of the principal times the 0.5% additional amount to arrive at the $2.78 that's in the May vintage so far.

Edit: I admit that I cannot find in this FAQ (https://www.tiaa.org/public/pdf/TT_FAQ.pdf) where this concept is explained or made explicit, except for perhaps the following:
TIAA uses the interest bucket system to group TIAA Traditional accumulations. An “interest bucket” consists of
all TIAA Traditional accumulations that were contributed or transferred in during the same time frame and are, therefore, receiving the same interest rate. A typical time frame is one or more consecutive calendar months.
Perhaps interest received as part of "additional" amounts is considered or defined as a "contribution" elsewhere. Alternately, the FAQ simply does not address this issue?
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by neurosphere »

See this post for additional discussion: viewtopic.php?p=6498795#p6498795
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by neurosphere »

I tried to find a prospectus or other such literature which specifically explains how additional amounts are credited and so far have failed. I can't even find a "prospectus" in general and wonder whether Traditional may not have such a thing, at least in the way I understand prospectus. Certainly there is a contract or some other similar 300 page document? :D

But sscritic provides this quote from TIAA...
This is from a 2005 publication:

"WHAT DOES “ROLL FORWARD” MEAN?
This means that interest — above the guaranteed amount (usually 3%) — credited to an accumulation in a certain vintage is “rolled forward” and treated like a new contribution. Thus, the additional amounts credited are applied to the newest or “current” vintage, rather than the vintage containing the accumulation on which the additional amounts were earned.”
I've now spent over an hour on the TIAA site and googling and cannot find any similar confirmatory language and I'm giving up.
student
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by student »

neurosphere wrote: Fri May 13, 2022 1:20 pm Here my actual data from today. I have no other vintages with additional amounts (sorry for the formatting):

Vintage / Total Amount / Crediting Rate / Guaranteed Rate / Additional Amount
03/01/2022 - 04/30/2022 $17,450.88 3.500 % 3.000 % 0.500 %
05/01/2022 - 05/31/2022 $2.78 4.000 % 3.000 % 1.000 %

I do not recall when I contributed that $17k-ish amount, but if it was around the end of april or 1st of may, it would roughly equal 12 or so days of the principal times the 0.5% additional amount to arrive at the $2.78 that's in the May vintage so far.

Edit: I admit that I cannot find in this FAQ (https://www.tiaa.org/public/pdf/TT_FAQ.pdf) where this concept is explained or made explicit, except for perhaps the following:
TIAA uses the interest bucket system to group TIAA Traditional accumulations. An “interest bucket” consists of
all TIAA Traditional accumulations that were contributed or transferred in during the same time frame and are, therefore, receiving the same interest rate. A typical time frame is one or more consecutive calendar months.
Perhaps interest received as part of "additional" amounts is considered or defined as a "contribution" elsewhere. Alternately, the FAQ simply does not address this issue?
That's a nice explanation but it doesn't quite fit my data. In one of the accounts, I only have about $4,000. I see the following.

01/01/2022 - 02/28/2022 $2.97 4.000 % 3.000 % 1.000 %
03/01/2022 - 04/30/2022 $6.96 4.250 % 3.000 % 1.250 %
05/01/2022 - 05/31/2022 $1.37 4.750 % 3.000 % 1.750 %

So I am not fully understanding the magic formula.
Last edited by student on Fri May 13, 2022 2:55 pm, edited 1 time in total.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by student »

neurosphere wrote: Fri May 13, 2022 2:50 pm I tried to find a prospectus or other such literature which specifically explains how additional amounts are credited and so far have failed. I can't even find a "prospectus" in general and wonder whether Traditional may not have such a thing, at least in the way I understand prospectus. Certainly there is a contract or some other similar 300 page document? :D

But sscritic provides this quote from TIAA...
This is from a 2005 publication:

"WHAT DOES “ROLL FORWARD” MEAN?
This means that interest — above the guaranteed amount (usually 3%) — credited to an accumulation in a certain vintage is “rolled forward” and treated like a new contribution. Thus, the additional amounts credited are applied to the newest or “current” vintage, rather than the vintage containing the accumulation on which the additional amounts were earned.”
I've now spent over an hour on the TIAA site and googling and cannot find any similar confirmatory language and I'm giving up.
I guess as long they put money into my account, that's ok. lol. I do check to see the TIAA interests they credited each quarter is in the same ball park as my expectation.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by talzara »

neurosphere wrote: Fri May 13, 2022 2:03 pm See this post for additional discussion: viewtopic.php?p=6498795#p6498795
neurosphere wrote: Fri May 13, 2022 2:50 pm I tried to find a prospectus or other such literature which specifically explains how additional amounts are credited and so far have failed. I can't even find a "prospectus" in general and wonder whether Traditional may not have such a thing, at least in the way I understand prospectus. Certainly there is a contract or some other similar 300 page document? :D
The contract is only about 30 pages long. There are dozens of different contracts because the RA, GRA, SRA, GSRA, RC, and RCP contracts are all different, some of them have different versions, and insurance is regulated at the state level. The contract covers the entire 403(b) annuity, including Traditional.

The crediting of Additional Amounts appears to be the same in all contracts. The money is treated as a contribution to the current vintage, although the word "vintage" does not appear in the contract:
Any additional amounts credited to your Traditional Annuity accumulation will buy benefits for you based on the rate schedule in effect on the day the additional amounts are credited.
In the thread that you cited, there was also a quote from a TIAA announcement from 1986:
crefwatch wrote: Sat Feb 05, 2022 4:16 pm In the past, the annual TIAA Traditional interest rate announcements were more verbal and less tabular. A typical line (this is from 1986, I added boldface) would say, "9.5% on that portion of accumulations resulting from premiums paid and Additional Amounts credited prior to 1979."

That explicitly says where the Additional Amounts (formerly called, unfortunately, "dividends") go, but only implies that the 3% guaranteed rate goes into the vintage it came from.

viewtopic.php?p=6498942#p6498942
"Dividends" is actually clearer. Since you're reinvesting dividends, it's easy to understand why it is a new contribution to a new vintage.

"Additional amounts" hides the dividend reinvestment. It makes people think that there's one interest rate that changes. When only the additional amounts go into new vintages, they get confused.

The TIAA Traditional annuity is not a variable annuity. It is a fixed annuity with a fixed interest rate, plus reinvested dividends. Each year, TIAA looks at its actual investment performance and declares dividends that are different for each vintage.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by GreendaleCC »

neurosphere wrote: Fri May 13, 2022 2:50 pm I tried to find a prospectus or other such literature which specifically explains how additional amounts are credited and so far have failed. I can't even find a "prospectus" in general and wonder whether Traditional may not have such a thing, at least in the way I understand prospectus. Certainly there is a contract or some other similar 300 page document? :D

But sscritic provides this quote from TIAA...
This is from a 2005 publication:

"WHAT DOES “ROLL FORWARD” MEAN?
This means that interest — above the guaranteed amount (usually 3%) — credited to an accumulation in a certain vintage is “rolled forward” and treated like a new contribution. Thus, the additional amounts credited are applied to the newest or “current” vintage, rather than the vintage containing the accumulation on which the additional amounts were earned.”
I've now spent over an hour on the TIAA site and googling and cannot find any similar confirmatory language and I'm giving up.
This explanation sounds about right to me. Thanks for helping to solve the mystery - it's been bugging me for a few years, but I felt calling TIAA to ask might not be worth the time required.
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by Mountain Doc »

GreendaleCC wrote: Fri May 13, 2022 5:40 pm
neurosphere wrote: Fri May 13, 2022 2:50 pm I tried to find a prospectus or other such literature which specifically explains how additional amounts are credited and so far have failed. I can't even find a "prospectus" in general and wonder whether Traditional may not have such a thing, at least in the way I understand prospectus. Certainly there is a contract or some other similar 300 page document? :D

But sscritic provides this quote from TIAA...
This is from a 2005 publication:

"WHAT DOES “ROLL FORWARD” MEAN?
This means that interest — above the guaranteed amount (usually 3%) — credited to an accumulation in a certain vintage is “rolled forward” and treated like a new contribution. Thus, the additional amounts credited are applied to the newest or “current” vintage, rather than the vintage containing the accumulation on which the additional amounts were earned.”
I've now spent over an hour on the TIAA site and googling and cannot find any similar confirmatory language and I'm giving up.
This explanation sounds about right to me. Thanks for helping to solve the mystery - it's been bugging me for a few years, but I felt calling TIAA to ask might not be worth the time required.
I also have a very small amount of money in the newer vintages without having made any contributions since last year. However, the amount seems to correlate with the "Plan Servicing Credits" I received, which I think are kind of like the "Revenue Credits" that show up in some employer 401 plans. If you look through your account activity, do you see Plan Servicing Credits that are a few pennies less than the amount shown in the new vintages? In my case, it seems like those credits are the "new contributions"
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by crefwatch »

Going back to 1918 (inception of TIAA Traditional), there have only been Plan Servicing Credits for a microscopic length of time. But I had not thought about them as a source of "new money" investments in TIAA Traditional. So this comment is welcome. I would point out that (unlike many other investments in the average TIAA retirement plan) TIAA Traditional does not have a formal ER stated. So the percent-savings value of Plan Servicing Credits is impossible to quantify or compare, with any degree of precision.

Others have disputed my statement, but I believe that every single investment in TIAA Traditional has a specific calendar date associated with it, forever. That's why it is entirely practical (especially since the advent of computers .... [ironica typeface]) for TIAA to re-jigger the dates, width, and interest rates of every single "Vintage" when they want to. This re-jiggering is why it is not productive to view your vintage structure, today, as anything remotely "static."

I guess the OP and similar comments in this thread are mostly a desire to know "how the machine works". At first I thought there was a feeling that there was something bad or undesirable about having a "new" vintage added to your list. To me, it's a neutral fact of the product, not good or bad. It actually seems (in my lifetime, anyway-talking about prevailing interest rates and actual Vintage rates) to usually work out in our favor that the Guaranteed interest can be put back in the same investment pool, for a time slot that is now in the past.

I'm not talking about an actual rule of TIAA Traditional, I'm simply referring to the very frequent condition that the oldest vintages have the highest rates. No, not eternal, just very frequent, in my lifetime.

Personal Opinion Warning:
The opaqueness of TIAA Traditional vintage-setting is one of the reasons why keeping TIAA honest is so important. That's a big factor in my presenting a Proxy Proposal at the 2022 CREF Annual Meeting. ("TIAA" is now a sort of marketing-DBA that includes the separate company, CREF .... )
https://sites.google.com/view/tncb/home/crefwatch
Topic Author
GreendaleCC
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by GreendaleCC »

crefwatch wrote: Sat May 14, 2022 9:21 amAt first I thought there was a feeling that there was something bad or undesirable about having a "new" vintage added to your list.
Two of the three "new" vintages have a higher rate than my original (lump sum rollover) vintage, so I don't find it undesirable. If TIAA wants to pay me 4% instead of 3.35% on an amount of $9, more power to them.

It just seems they are presenting the customer with unnecessary complexity without explanation. That may be par for the course for an organization primarily serving academia, though. :happy
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GreendaleCC
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Re: TIAA Traditional - unexpected "contributions" as new vintages

Post by GreendaleCC »

As an update, my newest vintage that had ~$9 several days ago now has ~$11. It is definitely accumulating the excess crediting rate above and beyond the original investment's guaranteed rate.
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