TIAA traditional tradeoff between higher current rate and higher minimum rate

[PerfectName]

I currently has TIAA traditional GSRA paying 3.74% with a minimum guaranteed rate of 3.0%. But while that was great until the interest rates went up, now it is unimpressive. One thing I could do immediately is change to a TIAA traditional RCP paying 5.75%, but in the GSRA the guaranteed minimum would only be 2.4%. I have been told that moving from GSRA to RCP is unidirectional, so I can NOT move to RCP now for higher current rates and then move back to GSRA if rates plummet. Another option would be to move funds out of TIAA traditional for 120 days, if I want to move them back and capture the higher "new money rate". TBD if when I went back it would be into GSRA vs RCP. Another option arises because I also have retirement accounts elsewhere, so I could do something like move the TIAA traditional funds into an index fund, and then maintain my portfolio ratios by purchasing a money market in the other account.

So I would appreciate thoughts on how to decide whether it is worth moving from GSRA to RCP. I could say the move would gain me 2% today, at a cost of a possible loss of 0.6% in the future. That seems to point strongly at shifting to the RCP.On the other hand, I could look at it in the context of what happens if rates go up vs down vs stay the same. If rates go up, or stay the same, then presumably I am better off in the RCP. BUT, I could also use a money market fund instead since rates there would still be pretty good. If interest rates plummet, then the3% min would be significantly nicer than the 2.4% min rate. Something else that would affect the calculations would be an understanding of how quickly the GSRA and/or RDP rates will move over time. Rates will be revisited by TIAA every March, and if their new RCP rates are "a loss-leader short-term promotion, then there is a risk that my higher RCP rate will only be in place for 9 months before it starts matching the GSRA rate., I which case I reduced my future floor for very limited gain.

By the way, I am within a year of retirement, and thinking about how to shift my portfolio into income generation mode.

Thanks for your insights.

[crefwatch]

It's clear that you know quite a bit about your retirement plan, so I don't have to respond at the most basic level. I'd point out that the "higher minimum rate" made a difference in years like 2021 and 2022. You didn't mention liquidity restrictions in RC and RCP plans, I think. Do you understand that TIAA can CHANGE the RC or RCP MINIMUM rate that you quoted?

https://www.tiaa.org/public/pdf/underst ... choice.pdf

Rather than "loss leader", I'd like to think (as much as one can say about a "Black Box" of a product) that the real issue for TIAA is the immense importance of being able to change the Guaranteed interest rate. It's not part of your OP, but some RC/RCP plans currently offer scandalously low R4 Expense Ratios for CREF Variable Annuity products, as well as Plan Servicing Credits.

Normally, I say that TIAA Traditional is a long-term retirement product that will eventually drift towards the 10-Year Treasury rate. But you have only about one year to retirement. So I can't accuse you of being a hair-trigger day-trader who wants to arbitrage his interest rates! But I've seen so many TIAA Traditional rates in 50 years (including double-digit rates) that I'm not as sure I can "beat the dealer." Because you're about to retire, the question of whether you might know if you will EVER annuitize any part of your TIAA Traditional is a factor. If you look at the GSRA sheet, you'll see that annuitization rates are substantially better for really "old money" in a TIAA plan. If you churn your account, you'll lose that benefit.

https://www.tiaa.org/public/investment- ... r=47933633

I am currently annoyed with the low interest rate on Sweep/Cash in my TIAA Brokerage platform within my IRA. But that's a different issue from TIAA Traditional interest rates. I (I mean, as a dinosaur) have never had the option of moving money between plans like you propose. So it seems "extreme" to me. OTOH, moving GSRA TIAA Trad to, say, CREF Money Market is more garden-variety "churning". If it's your investing style, go ahead, if you are satisfied with the rate you'll get in the meantime. After all, you don't have Vanguard money market funds available to you.

No one can predict where prevailing, or TIAA Traditional "new money" interest rates are going in three, six, or twelve months. Since you mention income generation in retirement (Digression: spending appreciated investments is not an invasion of capital sin; you don't have to live off dividends to be a "prudent" retiree.), I'd point out that you may love the idea of 5.5% today. But what if it's 2.5% eight years from now? Are you really prepared to retire on a budget of short-term (well, one year at a time in TIAA Trad) interest rates?

[student]

Personally, I would transfer to MM (ranging from 4.76% to 5.20% annual effective yield from R4 to R1) and wait 120 days. This is what I did earlier. You may be interesting in viewtopic.php?t=382118

[colejr]

Except for the recent periods of very low interest rates, RCP crediting rates have, as far as I remember, always been 25 basis points above SRA/GSRA rates. I consider this TIAA's cost of insuring against extended low-rate periods. But even with this insurance and the recent low rates, SRA accounts have underperformed RCP accounts over the past 1, 3, 5 and 10 years.

I recently transferred one of my SRA accounts to an RCP in order to capture the current better rates. This SRA was in a recent, very low paying vintage (moved to traditional in anticipation of my retirement) so I had much to gain and little "loyalty bonus" to loose. Also the account amounts to only about a third of my Traditional holdings. I don't feel it's necessary to pay for low interest-rate insurance on all of my Traditional; I can always spend this account first if rates drop below the 3% boundary.

For younger people the 3% guarantee may turn out to be quite valuable and something unlikely to be available on their future contributions, at least for long.

[GreendaleCC]

I’m keeping my 3% min GRSA money in place, but doing a 120-day swap out/in for RCP money.

[PerfectName]

Thanks for all the helpful thoughts and pointers...and for graciously ignoring my plethora of typos. I did lots of reading of the links provided. While I knew that my guaranteed min if I moved to RCP was 2.4%, you folks helped me realize that TIAA could reset it annually to anything in the 1-3% range. So if interest rates plummet, my guaranteed 3% min in the GSRA could conceivably drop to 1%. Not appetizing. I am now going to check with my rep to see whether moving from TIAA to CREF for 120 days, and then back to TIAA would let me remain in the GSRA but start accumulating the new money rate. I should mention that I have been keeping things in the liquid options of TIAA traditional, although that may be obvious at this point.

In response to some questions, and at the risk of expanding into an additional interesting set of topics: I don't know if we will ever annuitize these funds. Many years back I had thought about annuitizing 20% of our portfolio in order to have a guaranteed minimum income, but I wasn't paying enough attention to inflation. Since TIAA annuities do not seem to be inflation/COLA adjusted, I find that idea less appealing. The only reason we are delaying SS is because it's sort of like a inflation-adjusted longevity insurance. If there is a product out there that will get me a guaranteed 5% (or Bengen's 4%) that is also guaranteed to be inflation-adjusted, I would love to hear about it!

In terms of losing old vintages of monies, while I have a bit from 1990's, over 95% of our current balance was moved there in 2019 and 2020. I don't know if loyalty bonuses are based on when you put your first dollar into TIAA traditional, or just the age of each dollar, but would suspect the latter.

We do have some extra flexibility since the bigger portion of our retirement funds are at Fidelity. While moving things between TIAA (I almost wrote Thai...thinking about dinner) and Fidelity is slow and painful, we could even do something like move traditional to a CREF stock fund (although there only seems to be one broad index fund) and then balance things out with money market funds on the Fidelity side.

crefwatch, you did accurately notice that I am thinking about dividend, etc. income instead of total return. While I previously thought in terms of total return, as it comes time to actually retire, the thought of selling off capital is making me squeamish. Psychology is rough. Usually I can use data to help me overcome irrationality. Does anybody have a good article or thread to help me understand the cost of going for income instead of total return? In particular, during a market downturn, selling low will be painful. I intend to keep a few years of expenses in some kind of low volatility cash-like account, but don't know how effectively that will protect me from having to ever sell low.

[Katietsu]

While I knew that my guaranteed min if I moved to RCP was 2.4%, you folks helped me realize that TIAA could reset it annually to anything in the 1-3% range. So if interest rates plummet, my guaranteed 3% min in the GSRA could conceivably drop to 1%. Not appetizing.

I am not sure if I am interpreting this correctly. TIAA can rest the minimum on the RCP as you indicate. But, as far as I know, the minimum on the GSRA is fixed at 3%.

I can relate all too well with your dilemma. I looked back at some of your previous posts and it looks like we have a lot in common. We have about 15% in TIAA, mostly in GSRA. I moved a tiny bit to RCP a few months ago and then just stopped. I was hoping the GSRA rates for recent vintages might get bumped and merged a little more.I do need to go back and check the personal rate and vintages again. Annuitization is appealing with no pensions. What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith. So maybe something to do when older with less cognitive ability to manage finances and less time for unexpected changes in the pay out?

[student]

What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith. So maybe something to do when older with less cognitive ability to manage finances and less time for unexpected changes in the pay out?

I think the question regarding "how much of the typical monthly payment is not guaranteed" is whether the guaranteed part is competitive with an SPIA from other companies. (I don't know the answer to this.)

[crefwatch]

Annuitization is appealing with no pensions. What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith.

This is a very useful way of thinking about it, and quite accurate. Since TIAA Traditional is such an opaque product, I am not willing to make "promises" to you, despite the 105-year record of this product. Certainly, sharp increases in the non-guaranteed portions of payouts suggest that it is not completely reckless to rely on continued efforts to protect the income of annuitized accounts. It is very hard to argue for a "leap of faith" today, especially among Bogleheads. I personally still "have the faith", despite changes in TIAA and CREF.

Regarding COLAs, I would reply that it is unreasonable to expect a COLA to be provided without ... paying for it. I suspect that most people who lament their absence at TIAA are not willing to accept a drastically lower starting payout in exchange for a sturdy COLA.

Indeed, the whole reason CREF was created in 1952 was to provide an annuity that had the potential to increase with postwar prosperity, inflation, and corporate profits. Many conservative academics countered that it was reckless to create such a VOLATILE product, for use in place of the very conservative TIAA Traditional. When I was in grad school and teaching (1972-1979), every faculty member I knew who retired was astonished to report, "I'm getting more per month than when I was working."

(During the 1930's, TIAA came under considerable financial pressure because they had initially set the Guaranteed Interest rate at 4%. In effect, they were bailed out by the charity that had created the product to relieve, literally, poverty among retired college faculty. TIAA kept it's promises to all living annuitants, but chose a new, lower rate for newly issued policies. This story has more to do with the Depression than with poor management, but it also involves a lack of good actuarial data at the start of the 20th Century.)

I shy away from repeating posts of my mother's payout history, because she was one of the rare cases I know of with a decrease in her TIAA Traditional payout. But because she had a 50-50 allocation (TIAA Trad/CREF Stock), she expressed to me that "I did a lot better than the other old ladies from the teacher's lounge." (They were so conservative that they took 100% TIAA Traditional annuitizations.)

DIsclosure: We do not expect to annuitize any of our personal retirement holdings.

[PerfectName]

While I knew that my guaranteed min if I moved to RCP was 2.4%, you folks helped me realize that TIAA could reset it annually to anything in the 1-3% range. So if interest rates plummet, my guaranteed 3% min in the GSRA could conceivably drop to 1%. Not appetizing.

I am not sure if I am interpreting this correctly. TIAA can rest the minimum on the RCP as you indicate. But, as far as I know, the minimum on the GSRA is fixed at 3%.

@Katietsu: I concur. My sentence structure was ambiguous. Please read it as "So if interest rates plummet, my guaranteed 3% min in the GSRA could conceivably drop to 1% IF I HAD TRANSFERRED THE GSRA TO AN RCP"

I can relate all too well with your dilemma. I looked back at some of your previous posts and it looks like we have a lot in common. We have about 15% in TIAA, mostly in GSRA. I moved a tiny bit to RCP a few months ago and then just stopped. I was hoping the GSRA rates for recent vintages might get bumped and merged a little more.I do need to go back and check the personal rate and vintages again. Annuitization is appealing with no pensions. What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith. So maybe something to do when older with less cognitive ability to manage finances and less time for unexpected changes in the pay out?

I suspect you have thought about annuitization more deeply than I have to date. I would think that comparing what is guaranteed from a TIAA annuity to a similar product from another organization with similar safety/credit ratings, would be informative. If the guaranteed portions are similar, then the non-guaranteed portion is just an extra bonus you might get. If the guaranteed portions are not identical, depending on which is higher, the comparison could be trickier.

I do like the idea of simplifying things prior to cognitive decline, although figuring out that timing could be tricky, Perhaps something like written instructions to a trusted family member who has power of attorney would be one solution.

[PerfectName]

Annuitization is appealing with no pensions. What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith.

Regarding COLAs, I would reply that it is unreasonable to expect a COLA to be provided without ... paying for it. I suspect that most people who lament their absence at TIAA are not willing to accept a drastically lower starting payout in exchange for a sturdy COLA.

...

DIsclosure: We do not expect to annuitize any of our personal retirement holdings.

crefwatch: I think it would be nice if there were a COLA option and then we could compare the payouts with and without COLA. Of course, if the COLA is just a fixed % per annum, then I would be wishing for an option that always matched inflation (e.g., like SS)

I am curious as to why you have chosen to not annuitize, if you are comfortable with sharing that reasoning.

[crefwatch]

crefwatch: I think it would be nice if there were a COLA option and then we could compare the payouts with and without COLA. Of course, if the COLA is just a fixed % per annum, then I would be wishing for an option that always matched inflation (e.g., like SS)

I am curious as to why you have chosen to not annuitize, if you are comfortable with sharing that reasoning.

Sorry, I didn't mean to be cryptic or secretive. I just wanted to admit that I don't think a lot about annuitization. I'm not prejudiced against it for people who cannot achieve a sufficient retirement income without going that route. My mother annuitized, although she had decent taxable assets too.

My wife and I both had good (non-law, non-finance) careers, which include (... uncommon today) modest pensions, and we do not need to annuitize. Our RMDs will be huge tax costs and income that is not all needed. We have no children, but hope to divide a large second-to-die estate among 14 nieces and nephews.

It needs to be recognized that the internet does not provide all necessary information for a major decision like annuity purchase. I'm referring to the thought that "Not everyone should be able to open a Mortgage on their cellphone." But in this case, two customers of TIAA with precisely the same dollar accumulation and calendar age will NOT have the same annuity payment from TIAA. It is very hard to collect "apples" and "apples" for comparison.

It is very hard to create a retirement with zero uncertainty, regardless of asset level.

[PerfectName]

crefwatch: thanks for the info. Understanding the reasoning of others will help inform my annuitization decision. So far, my decision is "not yet"...

[Scubadude]

crefwatch: I think it would be nice if there were a COLA option and then we could compare the payouts with and without COLA. Of course, if the COLA is just a fixed % per annum, then I would be wishing for an option that always matched inflation (e.g., like SS)

I am curious as to why you have chosen to not annuitize, if you are comfortable with sharing that reasoning.

Sorry, I didn't mean to be cryptic or secretive. I just wanted to admit that I don't think a lot about annuitization. I'm not prejudiced against it for people who cannot achieve a sufficient retirement income without going that route. My mother annuitized, although she had decent taxable assets too.

My wife and I both had good (non-law, non-finance) careers, which include (... uncommon today) modest pensions, and we do not need to annuitize. Our RMDs will be huge tax costs and income that is not all needed. We have no children, but hope to divide a large second-to-die estate among 14 nieces and nephews.

It needs to be recognized that the internet does not provide all necessary information for a major decision like annuity purchase. I'm referring to the thought that "Not everyone should be able to open a Mortgage on their cellphone." But in this case, two customers of TIAA with precisely the same dollar accumulation and calendar age will NOT have the same annuity payment from TIAA. It is very hard to collect "apples" and "apples" for comparison.

It is very hard to create a retirement with zero uncertainty, regardless of asset level.

It’s crazy actually- the TIAA Traditional Lifetime annuity payout estimates- wild fluctuations from online, to calling in and having an account adviser do it. Bottom line TIAA is going to payout better than historically anyone else I’ve seen - yeah after 105 years; if they fail the whole financial system will be collapsed and it’s moot.

[Scubadude]

crefwatch: thanks for the info. Understanding the reasoning of others will help inform my annuitization decision. So far, my decision is "not yet"...

Look at your estimated yearly payouts, then evaluate the multipliers from 60,65 and 70. Very interesting, I’m in the process of several payout staggered points with my Traditional Lifetime annuity.

[PerfectName]

crefwatch: thanks for the info. Understanding the reasoning of others will help inform my annuitization decision. So far, my decision is "not yet"...

Look at your estimated yearly payouts, then evaluate the multipliers from 60,65 and 70. Very interesting, I’m in the process of several payout staggered points with my Traditional Lifetime annuity.

Scubadude: I haven't looked at any payouts yet, and perhaps that is why I am having trouble understanding your information. Are you basically comparing the annuity returns for SPIA that you purchase at different ages, and looking to see how much it goes up ("multipliers") if you wait an extra 5 or 10 years? I would think that mortality tables would have a significant affect on those numbers.

[Scubadude]

crefwatch: thanks for the info. Understanding the reasoning of others will help inform my annuitization decision. So far, my decision is "not yet"...

Look at your estimated yearly payouts, then evaluate the multipliers from 60,65 and 70. Very interesting, I’m in the process of several payout staggered points with my Traditional Lifetime annuity.

Scubadude: I haven't looked at any payouts yet, and perhaps that is why I am having trouble understanding your information. Are you basically comparing the annuity returns for SPIA that you purchase at different ages, and looking to see how much it goes up ("multipliers") if you wait an extra 5 or 10 years? I would think that mortality tables would have a significant affect on those numbers.

Correct- unfortunately it is not real straightforward online - you need to login to your account to access the “best” calculators I found. Or, just call TIAA and ask for 60,65 and 70 payout rates. ( on your account plan). You’ll need to specify “fixed” or “variable” for the lifetime annuity. Additionally, my experience is only with the RA plan, other plans other options. Navigating this is not easy, but still the Best Buy in town I’ve ever seen. Many people comment on “annuity’s”, but few actually understand how TIAA annuities work . I’m in the “kinda know” category lol !

[dknightd]

What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith. So maybe something to do when older with less cognitive ability to manage finances and less time for unexpected changes in the pay out?

I think the question regarding "how much of the typical monthly payment is not guaranteed" is whether the guaranteed part is competitive with an SPIA from other companies. (I don't know the answer to this.)

When I looked a few years ago, the "guaranteed" part of an SPIA based on the traditional account was less than what was available commercially. But the total payout was higher. I took a "leap of faith" and went with the TIAA annuity. Historically it seems tiaa tries to keep the "additional amounts" constant or slowly increasing. Who knows what the future will hold. For now I assume the payout will not decrease (although apparently it has in the past, but then traditional was paying over 10% and heading down). As it turns out the TIAA annuity amount has increased significantly since when I started it - not enough to keep up with inflation, but close. I assume 0% change in nominal dollars going forward.
I'm annuitizing TIAA traditional from RA and GRA accounts (the less flexible types). I'm not planning to annuitize traditional currently held in GSRA (the flexible type). My Traditional in GSRA I consider my tax deferred savings account that will be used to cover our expenses between now and claiming SS. To address COLA concerns, and to generally spread out risks, I annuitized 20% when I retired, another 5% this year (both using the "graded" method which no longer exists), and will probable do another 5% when I claim SS. That will leave us with guaranteed income for life, partially (about 2/3) from SS. I'm taking another "leap of faith" - I'm assuming the SS part will have COLA similar to what we actually experience. . .
I've noticed a trend at TIAA. RA accounts are being replaced with RC accounts. SRA accounts are being replaced by RCP accounts. I'm only guessing, but my guess is because RC and RCP accounts lets TIAA lower the guaranteed return on the Traditional account if they need to. I'm guessing they are doing this, in part, so they will not have to reduce "additional" amounts for those currently receiving annuities.
Recently I had an RCP account opened for me. Without me asking. Apparently the RCP account is taking the place of my old GSRA account. If I was still contributing the new money would go into the RCP account. But I can leave my existing money in the GSRA account. For now, I'm doing nothing - I'm trying to simplify accounts, not add another.

I think this was my long winded explanation of why not to make changes unless you need to, or there is a clear advantage. For me, the .25% additional I'd get from RCP does not balance the 2% I might loose if I moved out of GSRA.

People comment/complain about TIAA traditional being a "black box". And they are right, it is. My best guess is TIAA wants to keep happy customers. They have competition now from alternate vendors who were not in the 403b game when I signed up. The way they do that is to keep current retires happy, so they will recommend it to new contributors. I recommend people look at alternatives, but I do not regret my decision.

Edit: I do not have a pension, COLA adjusted or other. I'm essentially buying a pension piece by piece. I'm assuming the pension I'm buying will pay forever, but might be near worthless.

[Scubadude]

What bothers me is not the lack of a stated COLA specifically, but how much of the typical monthly payment is not guaranteed. I think of it as a leap of faith. So maybe something to do when older with less cognitive ability to manage finances and less time for unexpected changes in the pay out?

I think the question regarding "how much of the typical monthly payment is not guaranteed" is whether the guaranteed part is competitive with an SPIA from other companies. (I don't know the answer to this.)

When I looked a few years ago, the "guaranteed" part of an SPIA based on the traditional account was less than what was available commercially. But the total payout was higher. I took a "leap of faith" and went with the TIAA annuity. Historically it seems tiaa tries to keep the "additional amounts" constant or slowly increasing. Who knows what the future will hold. For now I assume the payout will not decrease (although apparently it has in the past, but then traditional was paying over 10% and heading down). As it turns out the TIAA annuity amount has increased significantly since when I started it - not enough to keep up with inflation, but close. I assume 0% change in nominal dollars going forward.
I'm annuitizing TIAA traditional from RA and GRA accounts (the less flexible types). I'm not planning to annuitize traditional currently held in GSRA (the flexible type). My Traditional in GSRA I consider my tax deferred savings account that will be used to cover our expenses between now and claiming SS. To address COLA concerns, and to generally spread out risks, I annuitized 20% when I retired, another 5% this year (both using the "graded" method which no longer exists), and will probable do another 5% when I claim SS. That will leave us with guaranteed income for life, partially (about 2/3) from SS. I'm taking another "leap of faith" - I'm assuming the SS part will have COLA similar to what we actually experience. . .
I've noticed a trend at TIAA. RA accounts are being replaced with RC accounts. SRA accounts are being replaced by RCP accounts. I'm only guessing, but my guess is because RC and RCP accounts lets TIAA lower the guaranteed return on the Traditional account if they need to. I'm guessing they are doing this, in part, so they will not have to reduce "additional" amounts for those currently receiving annuities.
Recently I had an RCP account opened for me. Without me asking. Apparently the RCP account is taking the place of my old GSRA account. If I was still contributing the new money would go into the RCP account. But I can leave my existing money in the GSRA account. For now, I'm doing nothing - I'm trying to simplify accounts, not add another.

I think this was my long winded explanation of why not to make changes unless you need to, or there is a clear advantage. For me, the .25% additional I'd get from RCP does not balance the 2% I might loose if I moved out of GSRA.

People comment/complain about TIAA traditional being a "black box". And they are right, it is. My best guess is TIAA wants to keep happy customers. They have competition now from alternate vendors who were not in the 403b game when I signed up. The way they do that is to keep current retires happy, so they will recommend it to new contributors. I recommend people look at alternatives, but I do not regret my decision.

Edit: I do not have a pension, COLA adjusted or other. I'm essentially buying a pension piece by piece. I'm assuming the pension I'm buying will pay forever, but might be near worthless.

Just to clarify- my RA guarantees a floor of 3% on the traditional side and 3% on the lifetime annuity side (lifetime is the only choice I have). They appear to be running in very close parallel to each other in Colas (adjustment occurs more frequently in the traditional). However, the “loyalty points” ($) are awarded upon annuntization. It would appear to an average of 5.5% cola is historically reflective. Again, this is from a public University plan - I believe anyone can use TIAA; but with far better benefits when from an employment side. The T&C of my RA plan was memorialized at my date of end of participation- I’m definitely not an expert on this ! Lol

[dknightd]

Just to clarify- my RA guarantees a floor of 3% on the traditional side and 3% on the lifetime annuity side (lifetime is the only choice I have).
. . .
I’m definitely not an expert on this ! Lol

Your RA probably guarantees a 3% during accumulation. It probably guarantees only 2.5% on decumulation. 2.5% is likely not enough, 3% is probably not enough. Luckily you might have additional amounts. I annualized at about 6%. But part of that was return on principle.
I'm pretty certain that nothing is certain.

[crefwatch]

Scubadude, why would you have lifetime only. Are you an expat or something unusual like that? Is this your employer's rule? You should have RMDs, TPAs, IPROs, and other RA options. You should also have the choice of multiple partial annuitizations.

[Scubadude]

Just to clarify- my RA guarantees a floor of 3% on the traditional side and 3% on the lifetime annuity side (lifetime is the only choice I have).
. . .
I’m definitely not an expert on this ! Lol

Your RA probably guarantees a 3% during accumulation. It probably guarantees only 2.5% on decumulation. 2.5% is likely not enough, 3% is probably not enough. Luckily you might have additional amounts. I annualized at about 6%. But part of that was return on principle.
I'm pretty certain that nothing is certain.

Color me impressed! If you have a TIAA lifetime annuity with a guaranteed 6% into perpetuity.

[Scubadude]

Scubadude, why would you have lifetime only. Are you an expat or something unusual like that? Is this your employer's rule? You should have RMDs, TPAs, IPROs, and other RA options. You should also have the choice of multiple partial annuitizations.

No, only in the scope of my affiliated TIAA contract; when participation started for me I could pick anything I wanted as long it was the traditional. The only annuity option I have is Lifetime- nothing else.

[crefwatch]

I am not a lawyer, but IRS rules override any prohibition (... and obligation!) for RMDs.

[ResearchMed]

I am not a lawyer, but IRS rules override any prohibition (... and obligation!) for RMDs.

Perhaps this is part of some confusion (?):

No, only in the scope of my affiliated TIAA contract; when participation started for me I could pick anything I wanted as long it was the traditional. The only annuity option I have is Lifetime- nothing else.

Scubadude,
Are you sure there aren't other NON-"annuity" choices?

That term "annuity" is the source of endless confusion. The "account name" has "annuity" in it. A specific payment choice has "annuity" in it....

And then there is my personal favorite, when one needs to "annuitize the annuity".
Or perhaps I should put it: The "unannuitized annuity"!
[If that isn't from Alice in Wonderland someplace...!?? ]

RM

[Laff]

I annuitized 20% when I retired, another 5% this year (both using the "graded" method which no longer exists), and will probable do another 5% when I claim SS.

When you annuitize part of your account balance, does TIAA withdraw proportionally from all vintages, or is it FIFO?

[Scubadude]

I am not a lawyer, but IRS rules override any prohibition (... and obligation!) for RMDs.

Think some wires got crossed; I’m only referring to what investment options I have under my vintage RA agreement, that are subject to all the usual requirements. Only people I know that operate in a special universe when it comes to IRS rules are railroad retirements -

[Scubadude]

I am not a lawyer, but IRS rules override any prohibition (... and obligation!) for RMDs.

Perhaps this is part of some confusion (?):

No, only in the scope of my affiliated TIAA contract; when participation started for me I could pick anything I wanted as long it was the traditional. The only annuity option I have is Lifetime- nothing else.

Scubadude,
Are you sure there aren't other NON-"annuity" choices?

That term "annuity" is the source of endless confusion. The "account name" has "annuity" in it. A specific payment choice has "annuity" in it....

And then there is my personal favorite, when one needs to "annuitize the annuity".
Or perhaps I should put it: The "unannuitized annuity"!
[If that isn't from Alice in Wonderland someplace...!?? ]

RM

Yes I do have other choices to choose from, today within TIAA. The “LifeTime” annuity is the only annuity choice available.

[crefwatch]

scubadude, I think I understand what happened. You are talking about the "marketing description" of TIAA Traditional. But we were talking about the payout period options, not the "universe" of accumulation options on the "menu" of your school's retirement plan. You are perfectly right to call TIAA Traditional an annuity or even a life-annuity. That's just not precise enough for a confusing company like TIAA (Ironica typeface!) Even what look like mutual funds at CREF are actually Variable Annuities. But there is no obligation to annuitize there, either.

This is the data sheet for RA. If you page down to the section (boldface) titled Income Payout Rates, you will see, conceptually, where that number 6% comes from. It is an annuitation-related figure, and it varies for someone who has been investing steadily for decades - because there are multiple rates for "new" and "old" money.

https://www.tiaa.org/public/investment- ... r=47933630

Edit: And, not to harp on the Guaranteed Amount/Additional Amounts issue, that number is used to compute your first payment. It does not do away with the fact that (gasp!) only the Guaranteed Amount is ... guaranteed.

(That Payout Rates table is part of the reason newsboards often tell big-"traders" that unless they know for sure that they will not need to annuitize to have enough income, they should not "churn" their TIAA Traditional (not in an RA, obviously ... ) to get a temporarily higher accumulation rate.)

[Scubadude]

scubadude, I think I understand what happened. You are talking about the "marketing description" of TIAA Traditional. But we were talking about the payout period options, not the "universe" of accumulation options on the "menu" of your school's retirement plan. You are perfectly right to call TIAA Traditional an annuity or even a life-annuity. That's just not precise enough for a confusing company like TIAA (Ironica typeface!) Even what look like mutual funds at CREF are actually Variable Annuities. But there is no obligation to annuitize there, either.

This is the data sheet for RA. If you page down to the section (boldface) titled Income Payout Rates, you will see, conceptually, where that number 6% comes from. It is an annuitation-related figure, and it varies for someone who has been investing steadily for decades - because there are multiple rates for "new" and "old" money.

https://www.tiaa.org/public/investment- ... r=47933630

That’s interesting.

[crefwatch]

When you annuitize part of your account balance, does TIAA withdraw proportionally from all vintages, or is it FIFO?

ANY withdrawal from TIAA Traditional, including RMDs, is proportionately from all vintages.

[dknightd]

I annuitized 20% when I retired, another 5% this year (both using the "graded" method which no longer exists), and will probable do another 5% when I claim SS.

When you annuitize part of your account balance, does TIAA withdraw proportionally from all vintages, or is it FIFO?

I believe it is done proportionally.

[headedwest]

I was mid-churn with a chunk of TIAA Traditional in what had been a GRSA account, but had a stealth change to RCP while my funds were in VMFXX (Vanguard Federal Money Market). It seemed like a no-brainer to churn when I did it because even the money market was earning considerably more than my Traditional funds. The switch to the new RCP plan occurred before my 120 days were up (July 1), so I moved $1000 back into Traditional yesterday to see if it would be credited at the former rate or the current. It's the latter, so current rate of 5.75% with guaranteed 2.4%, while previous rate averaged 4% (maybe less, I don't honestly recall) with guaranteed 3%. I don't plan to annuitize this account, so I'm hoping that the change will ultimately be a good thing. Regardless, it appears I can't do anything about it, so we'll see.

[Kimchi2]

I was mid-churn with a chunk of TIAA Traditional in what had been a GRSA account, but had a stealth change to RCP while my funds were in VMFXX (Vanguard Federal Money Market). It seemed like a no-brainer to churn when I did it because even the money market was earning considerably more than my Traditional funds. The switch to the new RCP plan occurred before my 120 days were up (July 1), so I moved $1000 back into Traditional yesterday to see if it would be credited at the former rate or the current. It's the latter, so current rate of 5.75% with guaranteed 2.4%, while previous rate averaged 4% (maybe less, I don't honestly recall) with guaranteed 3%. I don't plan to annuitize this account, so I'm hoping that the change will ultimately be a good thing. Regardless, it appears I can't do anything about it, so we'll see.

I wonder what you mean by "stealth change" to RCP. Was your account changed to RCP without your consent or knowledge after you made an investment change?

[headedwest]

I wonder what you mean by "stealth change" to RCP. Was your account changed to RCP without your consent or knowledge after you made an investment change?

We weren't notified that the change was coming, and it came after another major change to our plan, the addition of a Roth 403(b) option, which we had been told about beforehand. So, yes, the change came after I moved funds out of TIAA Traditional into the money market. I'm not saying those two events were linked, but my GRSA contract had indicated that if you pulled funds out of TIAA Traditional and shifted them back within 120 days, you'd have the previous interest rates. But when I moved the funds from the money market back to Traditional in under 120 days, now in the RCP contract, they were given the current rates not the original ones. Time will tell if that's good or bad in my case.

[Laff]

We weren't notified that the change was coming, and it came after another major change to our plan, the addition of a Roth 403(b) option, which we had been told about beforehand. So, yes, the change came after I moved funds out of TIAA Traditional into the money market. I'm not saying those two events were linked, but my GRSA contract had indicated that if you pulled funds out of TIAA Traditional and shifted them back within 120 days, you'd have the previous interest rates. But when I moved the funds from the money market back to Traditional in under 120 days, now in the RCP contract, they were given the current rates not the original ones. Time will tell if that's good or bad in my case.

When TIAA did the "upgrade" at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contracts to the new ones requires a transfer form.

[itsmeagain]

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form.

At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to understand the different possibilities.

Edited to add: I think a transfer form would be required if I wanted to move funds from an old plan to a new one after the transition date. And I think that would require selling any TIAA or CREF "annuities" ... of the unannuitized variety!

[spdoublebass]

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form.

At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to understand the different possibilities.

Edited to add: I think a transfer form would be required if I wanted to move funds from an old plan to a new one after the transition date. And I think that would require selling any TIAA or CREF "annuities" ... of the unannuitized variety!

Thank you for this comment. My new RC and RCP accounts were created on May 16th. I thought my old GRA and GSRA accounts would both just stay as is, but that is not the case. My GRA account will stay put, but and money not in a TRAD or Variable Annuity the GSRA will be transferred to the new RCP account.

I'm still 25+ years out from retirement. Right now I have about 7% of my portfolio in TRAD in my GRA account, which is all of my fixed income. I have about another 13% of my portfolio in the GSRA account. I don't want to just add more bonds for no reason, but the newer RC/RCP flavors of TRAD are not as appealing to me.

I could move that 13% into a variable annuity fund, like the global fund. That way I could always choose to move the money back into TRAD at a later date. But that would mean I would be upping my ER by about .20% by using the global funds.

I know this decision won't really matter that much, but it still annoys me that I have to make it. I'll probably be too scared to do anything and just let it transfer. But I'll kick myself later probably.

[student]

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form.

At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to understand the different possibilities.

Edited to add: I think a transfer form would be required if I wanted to move funds from an old plan to a new one after the transition date. And I think that would require selling any TIAA or CREF "annuities" ... of the unannuitized variety!

Thank you for this comment. My new RC and RCP accounts were created on May 16th. I thought my old GRA and GSRA accounts would both just stay as is, but that is not the case. My GRA account will stay put, but and money not in a TRAD or Variable Annuity the GSRA will be transferred to the new RCP account.

I'm still 25+ years out from retirement. Right now I have about 7% of my portfolio in TRAD in my GRA account, which is all of my fixed income. I have about another 13% of my portfolio in the GSRA account. I don't want to just add more bonds for no reason, but the newer RC/RCP flavors of TRAD are not as appealing to me.

I could move that 13% into a variable annuity fund, like the global fund. That way I could always choose to move the money back into TRAD at a later date. But that would mean I would be upping my ER by about .20% by using the global funds.

I know this decision won't really matter that much, but it still annoys me that I have to make it. I'll probably be too scared to do anything and just let it transfer. But I'll kick myself later probably.

My reading is you have the following.
1) RC and RCP accounts were created.
2) GRA account is closed to new contribution but you are free to transfer between funds within the account at a later date.
3) GSRA account is closed to new contribution and (i) non TRAD funds will be transferred to RCP and (ii) TRAD will stay in the GSRA.

I also find it very surprising that only your GRA and GSRA are following different paths.

Don't feel too bad about the RC and RCP versions of TRAD. They are not strictly worse than the corresponding versions in GRA and GSRA in practice. In terms of minimum guaranteed rate, they are worse but historically their crediting rates are higher than the old version. My conjecture is that the crediting rates for RC and RCP TRAD will beat the ones for GRA and GSRA TRAD unless we are in a prolonged super low rate environment. (However, I also prefer GRA and GSRA over RC and RCP. For TRAD, I want as stable and as guaranteed as possible, I will take risk o the equity side.)

[spdoublebass]

When TIAA did the update at my school, I got new RC & RCP contracts. Any funds in the old contracts (RA & SRA) remain there; I believe moving money from the old contract to the new one requires a transfer form.

At my institution, I also automatically got new RC and RCP contracts. However, funds in the old contracts only remained there after the announced transition date if they were in TIAA or CREF "funds" -- or more accurately, in TIAA or CREF "annuities" (which is what I think they are technically/legally, even before they've been converted to income streams by annuitizing them). That was explained in documents we received well in advance of the transition date, but one had to read things pretty closely to understand the different possibilities.

Edited to add: I think a transfer form would be required if I wanted to move funds from an old plan to a new one after the transition date. And I think that would require selling any TIAA or CREF "annuities" ... of the unannuitized variety!

Thank you for this comment. My new RC and RCP accounts were created on May 16th. I thought my old GRA and GSRA accounts would both just stay as is, but that is not the case. My GRA account will stay put, but and money not in a TRAD or Variable Annuity the GSRA will be transferred to the new RCP account.

I'm still 25+ years out from retirement. Right now I have about 7% of my portfolio in TRAD in my GRA account, which is all of my fixed income. I have about another 13% of my portfolio in the GSRA account. I don't want to just add more bonds for no reason, but the newer RC/RCP flavors of TRAD are not as appealing to me.

I could move that 13% into a variable annuity fund, like the global fund. That way I could always choose to move the money back into TRAD at a later date. But that would mean I would be upping my ER by about .20% by using the global funds.

I know this decision won't really matter that much, but it still annoys me that I have to make it. I'll probably be too scared to do anything and just let it transfer. But I'll kick myself later probably.

My reading is you have the following.
1) RC and RCP accounts were created.
2) GRA account is closed to new contribution but you are free to transfer between funds within the account at a later date.
3) GSRA account is closed to new contribution and (i) non TRAD funds will be transferred to RCP and (ii) TRAD will stay in the GSRA.

I also find it very surprising that only your GRA and GSRA are following different paths.

Don't feel too bad about the RC and RCP versions of TRAD. They are not strictly worse than the corresponding versions in GRA and GSRA in practice. In terms of minimum guaranteed rate, they are worse but historically their crediting rates are higher than the old version. My conjecture is that the crediting rates for RC and RCP TRAD will beat the ones for GRA and GSRA TRAD unless we are in a prolonged super low rate environment. (However, I also prefer GRA and GSRA over RC and RCP. For TRAD, I want as stable and as guaranteed as possible, I will take risk o the equity side.)

I think you are right. I cannot justify changing my IPS to add more fixed income just because of this change.

I also found it odd that the GSRA and GRA are not both doing the same thing.

On the other hand, the GSRA is the liquid kind. I could move it and always move it back to stock later.

[spdoublebass]

https://www.tiaa.org/public/pdf/underst ... choice.pdf

crefwatch,

Thanks for posting this link.

Am I reading it correctly that:
RCP plans, the minimum rate will be reset annually
RC plans the minimum rate will be set annually and be valid for 10 years???

So right now, it's saying RC Trad minimum rate is 2.8%, that would be good for ten years is what they are saying correct even if the minimum rate changes again next year?

[crefwatch]

Note that all flavors are currently paying much more than the Guarantee. Except for IRAs, earning only the Guarantee has been quite rare in my lifetime.

I don't have RC or RCP, but normally a Guarantee is stated for "new money". So a new rate would apply to subsequent contributions and reinvestments of the interest up to the Guaranteed amount. Additional Amounts are reinvested as if "new money."