TIAA Teachers Personal Annuity

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Irene
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TIAA Teachers Personal Annuity

Post by Irene »

I have a Teachers Personal Annuity (an after-tax product TIAA no longer sells) that I started in the mid nineties (when I had a job that had TIAA) and contributed to for a number of years. Currently it contains about $300K in the Stock Index Account and a little under $50K in the Fixed Account. I also still have some money in an RA TIAA Traditional Account, but that's under $10K, so it doesn't especially matter what I do with it. But frustratingly, the TIAA Retirement Income Illustrator tool will only look at the RA account, and not the Teachers Personal Annuity. (Is this a bug in the software? I would have thought they would include ATRA accounts.)

As a result, I am not clear on what would happen if I were to annuitize the money in the Fixed Account in the Teachers Personal Annuity. I assume Fixed Account must be the same thing as TIAA Traditional, but have not seen that explicitly stated anywhere. I also don't know if the loyalty bonus for an older account applies to the Fixed Account within the TPA.

The Retirement Income Illustrator tool suggests that if I were to annuitize the money in the RA account when I turn 67, I would get (if I recall correctly) $97 a month, about $20 of which would be loyalty bonus. It's not clear whether I can extrapolate from there to say that if I also annuitized the Fixed Account at the same time that I would get about $500 total, or some different amount due to a different payout rate or the absence of a loyalty bonus.

(N.B.: I would just like to be clear on what would happen, so that I could make an informed decision. I have read quite a bit on the forum here about the pros and cons of annuitization, and probably won't choose to annuitize that early if at all.)

Thanks for reading this far, and I hope one or more of you can help clarify matters for me.

Irene
crefwatch
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Re: TIAA Teachers Personal Annuity

Post by crefwatch »

TIAA has a pretty good record of their phone bank producing (upon request) annuitization estimates that are binding (for a month or two) on TIAA, but not binding on the person trying to find out what they might get. In any case, you would have to SIGN a contract to actually perform the annuitization. You can also ask for an estimate of annuitization five years from today, for example.

AFAIR, Personal Annuities are less attractive products than, for example, your RA. You might want to find out if your expenses might change upon annuitization.

Your OP suggests that you are committed to Fixed Annuity annuitization. I do not want to persuade you to change your mind, but are you aware that CREF Stock can also be (upon request, not automatically of course) life-annuitized, with a HIGHLY VARIABLE payout that has a good potential for growth? You might also have the option of moving the CREF Stock to the Fixed Account if you cannot stomach any variability in your payout - but I am not familiar with the Personal Annuity product.
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

Thanks for your response! I am not actually very concerned about whether to annuitize at this point. I do come from a long-lived family and think it's possible I may want to annuitize some of my retirement accounts eventually, but currently it doesn't look as though I will actually need to do so. My immediate concern is with figuring out what my options are, and to do that I need to know more exactly what I have. Among my questions are: Is the Fixed Account within the TeaPA the same thing as TIAA Traditional (possibly with a different credited interest rate)? What would the payout be at various ages? Would I get the loyalty bonus? Why doesn't the Retirement Income Illustrator look at the Fixed Account in the TeaPA?

(Have edited TPA to TeaPA - pronounced the same, but distinguishable from Transfer Payout Annuity in print!)
Last edited by Irene on Mon Jun 10, 2024 3:13 pm, edited 1 time in total.
crefwatch
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Re: TIAA Teachers Personal Annuity

Post by crefwatch »

Friendly advice: Do not say TPA. It already means Transfer Payout Annuity, like from an RA TIAA Traditional! :-)

This is an uninformed, biased opinion, but I think the estimator cannot work with Tchrs Psnl Ann because TIAA Traditional has much more uniform and customer-friendly (if, locked in a Black Box of secrecy) rules and costs, than Psnl Annuity. The former product is 80 years older, and may be regulated differently.

Just one tiny possible answer-in TIAA Trad payouts, un-needed reserves go back to the customers. That might not be true for Persnl Annuities?
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

I did find something at https://www.tiaa.org/public/investment- ... e/aftertax. My contract was issued before 2004, though I continued contributions after that date. It all looks very similar to TIAA Traditional, as I understand it. But the fact that it hasn't got the same name suggests to me that it may not pay a loyalty benefit.

Teachers Personal Annuity Fixed 6,7 - Current Clients - Call 1 800 223-1200
Contract Issue Date Accumulations as of 5/01/2024 Contributions as of 5/01/2024
Contract Issued After 02/29/2004 with 1.5% guarantee 1.50% 1.50%
Contract Issued After 02/29/2004 without 1.5% guarantee 2.95% 2.95%
Contract Issued Prior to 03/01/2004 3.00% 3.00%

6. Current effective annual rate credited on new fixed account premiums. This rate is subject to change. The Teachers Personal Annuity Fixed Account and the Personal Annuity Select Fixed Account provide the opportunity for additional interest on top of a guaranteed minimum. Additional interest comes from earnings over and above the amounts needed to meet contractual guarantees. The rates do not apply to accumulations in the variable components of the Teachers Personal Annuity and the Personal Annuity Select. Contracts issued prior to 03/01/2004 have a guaranteed minimum interest rate of 3%. Contracts issued after 02/29/2004 have a guaranteed minimum interest rate which varies by state of issue. Please call 1 800 223-1200 for the guaranteed minimum in your state.

7. Rates guaranteed through 05/01/2024.
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

The stock account invests in the Russell 3000 index. The fixed account goes into the general account just like TIAA Traditional.

Your payout should be similar, but there is nothing in their documentation about loyalty bonuses. When you do the illustration using your RA account, it will tell you how much the loyalty bonus is, so just take that off the payment if you are unsure. Here is what I found online:
"The Personal Annuity Select fixed account is offered by TIAA-CREF Life Insurance Company as a tax-deferred annuity for after-tax investing. It provides a highly competitive fixed rate of return, plus the opportunity for additional interest from earnings over and above the amounts needed to meet contractual guarantees. The account guarantees your principal and a minimum interest rate of 3 percent during the accumulation period, backed by TIAA-CREF Life's claims-paying ability.
* The Personal Annuity Select Fixed Account provides the opportunity for additional interest on top of a guaranteed minimum of 3 percent. Additional interest comes from earnings over and above the amounts needed to meet contractual guarantees. These rates do not apply to accumulations in the variable account, the Personal Annuity Select Stock Index Account."
The accumulation should have been around 4% per year for the last 10 years. It was higher in the early 2000s.

Here is the SEC filing
https://www.sec.gov/Archives/edgar/data ... 85bpos.htm
The question isn't at what age I want to retire, it's at what income. | - George Foreman
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

My projected payout for the RA at age 67 is 10.03%, which includes the loyalty bonus. Without that it would be 7.935%. The general rate TIAA quotes for a fixed annuity starting at age 67 is 8.23%, per https://my.tiaa.org/public/publictools/ ... yEstimator, derived by putting in a sample amount and figuring [12(monthly income)]/premium.
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

Technically the Personal Annuity Select is a different product than the Teachers Personal Annuity, per https://www.tiaa.org/public/prospectuses (under After-Tax Annuities). Neither is now offered for sale, and I don't know how they or their investment subcategories differed, if at all. The verbiage in the prospectuses looks (from a very superficial scan) essentially identical. Quite possibly they're the same thing marketed to different groups of customers.
student
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Re: TIAA Teachers Personal Annuity

Post by student »

Irene wrote: Mon Jun 10, 2024 7:06 pm Technically the Personal Annuity Select is a different product than the Teachers Personal Annuity, per https://www.tiaa.org/public/prospectuses (under After-Tax Annuities). Neither is now offered for sale, and I don't know how they or their investment subcategories differed, if at all. The verbiage in the prospectuses looks (from a very superficial scan) essentially identical. Quite possibly they're the same thing marketed to different groups of customers.
I think you have the 3% minimum guarantee rate while newer ones do not.
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

student wrote: Mon Jun 10, 2024 8:10 pm
Irene wrote: Mon Jun 10, 2024 7:06 pm Technically the Personal Annuity Select is a different product than the Teachers Personal Annuity, per https://www.tiaa.org/public/prospectuses (under After-Tax Annuities). Neither is now offered for sale, and I don't know how they or their investment subcategories differed, if at all. The verbiage in the prospectuses looks (from a very superficial scan) essentially identical. Quite possibly they're the same thing marketed to different groups of customers.
I think you have the 3% minimum guarantee rate while newer ones do not.
Anything before 2002 was 3%. Since this was from the 1990s, then it is a 3% minimum. I just checked the link above and am surprised to see how low the current payouts are. Clearly this is inferior to the TIAA Traditional.

Given how bad this fixed annuity is, the OP is fortunate that most of it is in the Stock Index Variable Annuity. I would not be pleased to be getting 1.5% to 3% in the current rate environment. The stock index annuity fees are less than 1% including mortality credits and administration, which seems really good for a variable annuity of this type.
The question isn't at what age I want to retire, it's at what income. | - George Foreman
student
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Re: TIAA Teachers Personal Annuity

Post by student »

Harmanic wrote: Mon Jun 10, 2024 8:34 pm
student wrote: Mon Jun 10, 2024 8:10 pm
Irene wrote: Mon Jun 10, 2024 7:06 pm Technically the Personal Annuity Select is a different product than the Teachers Personal Annuity, per https://www.tiaa.org/public/prospectuses (under After-Tax Annuities). Neither is now offered for sale, and I don't know how they or their investment subcategories differed, if at all. The verbiage in the prospectuses looks (from a very superficial scan) essentially identical. Quite possibly they're the same thing marketed to different groups of customers.
I think you have the 3% minimum guarantee rate while newer ones do not.
Anything before 2002 was 3%. Since this was from the 1990s, then it is a 3% minimum. I just checked the link above and am surprised to see how low the current payouts are. Clearly this is inferior to the TIAA Traditional.

Given how bad this fixed annuity is, the OP is fortunate that most of it is in the Stock Index Variable Annuity. I would not be pleased to be getting 1.5% to 3% in the current rate environment. The stock index annuity fees are less than 1% including mortality credits and administration, which seems really good for a variable annuity of this type.
Isn't the cutoff date 2004 rather than 2002 https://www.tiaa.org/public/investment- ... e/aftertax

Maybe I am getting senile, the dates on the website do not make sense to me. The different groups according to the website are "Contract Issued After 02/29/2004" and "Contract Issued Prior to 03/01/2004". Shouldn't it be "Contract Issued After 03/01/2004" and "Contract Issued Prior to 02/29/2004"?

Edit: I meant to say "Contract Issued On or After 03/01/2004" and "Contract Issued On or Prior to 02/29/2004" but they are actually the same as what TIAA has. I guess I had a senior moment.
Last edited by student on Mon Jun 10, 2024 11:15 pm, edited 4 times in total.
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

Harmanic wrote: Mon Jun 10, 2024 8:34 pm The different groups according to the website are "Contract Issued After 02/29/2004" and "Contract Issued Prior to 03/01/2004". Shouldn't it be "Contract Issued After 03/01/2004" and "Contract Issued Prior to 02/29/2004"?
I see what you mean, but I think it's actually correct, though confusing. In their version, a contract that was issued ON 02/29/2004 (not after) is clearly also prior to 03/01/2004. A contract that was issued ON 03/01/2004 (not before) is clearly also after 02/29/2004. In your version, 02/29/2004 and 03/01/2004 are ambiguous.
student wrote: Mon Jun 10, 2024 9:20 pm Given how bad this fixed annuity is, the OP is fortunate that most of it is in the Stock Index Variable Annuity. I would not be pleased to be getting 1.5% to 3% in the current rate environment.
My contract is from 1994, so I have the guaranteed 3% at least.
student
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Re: TIAA Teachers Personal Annuity

Post by student »

Irene wrote: Mon Jun 10, 2024 10:25 pm
Harmanic wrote: Mon Jun 10, 2024 8:34 pm The different groups according to the website are "Contract Issued After 02/29/2004" and "Contract Issued Prior to 03/01/2004". Shouldn't it be "Contract Issued After 03/01/2004" and "Contract Issued Prior to 02/29/2004"?
I see what you mean, but I think it's actually correct, though confusing. In their version, a contract that was issued ON 02/29/2004 (not after) is clearly also prior to 03/01/2004. A contract that was issued ON 03/01/2004 (not before) is clearly also after 02/29/2004. In your version, 02/29/2004 and 03/01/2004 are ambiguous.
You are right. What I did before did not cover 2/29/2004 and 3/01/2004. I meant to say <= rather than <, and >= rather than >. In other words,
(1) "Contract Issued On or Before 02/29/2004"
(2) "Contract Issued On or After 03/01/2004"

They are the same as what TIAA said. I guess I had a senior moment.

I will update the original message.

BTW, you swapped the quotations between Harmanic and me. He/she did not made the error, I did.
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

student wrote: Mon Jun 10, 2024 11:12 pm BTW, you swapped the quotations between Harmanic and me. He/she did not make the error, I did.
Oops! And I was so pleased with myself for figuring out how the quote button worked. I think the problem was that I highlighted part of a quotation within a reply rather than highlighting at the first place that text appeared? I hope I have it right this time.
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

Going back to your original question. Annuitizing your annuity.

I wouldn't get hung up on the loyalty bonuses for the fixed account. The amount is so small as to make little difference in the end. You are talking about maybe $300 per month total for the fixed account. The loyalty bonus would add maybe $50 to that.

The real benefit is the stock index account, which has a healthy balance and low fees. The only unfortunate things is that you will be paying regular income tax on the gains. But there are worse problems to have. You could annuitize that and spread out the tax burden over your lifetime, enjoy likely increases in monthly payments over time, and take advantage of the mortality credits if you live a long time. This is what annuities are built for, as an alternative retirement account that you can't outlive. It is about as close to an inflation adjusted pension as you will get. In fact, CREF stock annuities have strongly outpaced inflation over a long period. Just be prepared for occasional drops during market crashes.

Other options are to withdraw the money and pay the tax, either gradually or at once, depending on your tax situation and cash needs.
Exchange it for something else, like MYGAs. Although I doubt you will find a better variable annuity.

Again, these are all good problems to have.
The question isn't at what age I want to retire, it's at what income. | - George Foreman
crefwatch
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Re: TIAA Teachers Personal Annuity

Post by crefwatch »

It appears that if you start here:
https://www.tiaa.org/public/investment- ... e/aftertax

And uncheck/check the appropriate filter boxes, you can find relatively current income information for these products. In June, 2024, there were some numbers like this:

Personal Annuity Select Fixed 6,7 - Current Clients - Call 1 800 223-1200
Contract Issued After 02/29/2004 with 1.5% guarantee 1.50%
Contract Issued After 02/29/2004 without 1.5% guarantee 2.95%
Contract Issued Prior to 03/01/2004 3.00%
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

crefwatch wrote: Tue Jun 11, 2024 8:53 am It appears that if you start here:
https://www.tiaa.org/public/investment- ... e/aftertax

And uncheck/check the appropriate filter boxes, you can find relatively current income information for these products. In June, 2024, there were some numbers like this:

Personal Annuity Select Fixed 6,7 - Current Clients - Call 1 800 223-1200
Contract Issued After 02/29/2004 with 1.5% guarantee 1.50%
Contract Issued After 02/29/2004 without 1.5% guarantee 2.95%
Contract Issued Prior to 03/01/2004 3.00%
What do you think about the advice in my post above yours? I know you wrote extensively about your mother's experience with a TIAA-CREF variable annuity, so you have more experience than most people with the long term pros and cons of annuitizing both types.
The question isn't at what age I want to retire, it's at what income. | - George Foreman
crefwatch
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Re: TIAA Teachers Personal Annuity

Post by crefwatch »

Harmanic, thanks for your good research. Given that the OP has said she doesn't really need to annuitize, and because I am very reluctant to urge a VARIABLE annuity on someone who has "asked" about a FIXED annuity, I don't want to offer too much of an opinion. I certainly think that someone who needs annuity income at a lower age should think about how they intend to offset future inflation, which my mother certainly managed to do - because of CREF Stock Account returns from 1990 to 2021. "Past performance is no guarantee of future results!" Reading this busy newsboard, you'd think that no one can live without a TIPS ladder. (!)

I agree that the Variable annuitization option looks more attractive than the Fixed account, but we simply do NOT have any information on how the Personal Annuity Fixed Account ANNUITIZATION will work: Payment, Variation, Fees. The current interest rate is not attractive. I don't plan to read the entire SEC filing, but the OP certainly should. I did notice that this product CAN be "assigned", while TIAA Traditional cannot. I don't think the OP cares, but it emphasizes again how different the product is.

It may be important to understand that the Fixed Account probably is an "insurance" product that does not have to be fully described to the SEC. (State) insurance regulation offers much less disclosure.

The fact that the product is no longer for sale is an (imaginary ... ) clue to me that it may be a better deal that my "uninformed, biased" comment implied. I suspect that it does not require RMDs, but that's an important fact for the future.
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

crefwatch wrote: Tue Jun 11, 2024 11:08 am Harmanic, thanks for your good research. Given that the OP has said she doesn't really need to annuitize, and because I am very reluctant to urge a VARIABLE annuity on someone who has "asked" about a FIXED annuity, I don't want to offer too much of an opinion.
I think the OP did very well selecting an index fund in the 1990s and leaving it to grow for 30 years. That's incredible, since fewer people were investing in index funds back then. I would not be surprised if she invested about the same amount of money in both the fixed and stock index funds, but the stock has grown to be much larger over nearly 30 years!
The question isn't at what age I want to retire, it's at what income. | - George Foreman
Topic Author
Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

Harmanic wrote: Tue Jun 11, 2024 12:18 pm I would not be surprised if she invested about the same amount of money in both the fixed and stock index funds, but the stock has grown to be much larger over nearly 30 years!
I didn't, actually. I did dollar-cost averaging for quite a while, 75% stock and 25% fixed. I am not sure exactly how long, but I opened the account with some small lump sum in 1994 (at that point it might have been 50/50, dunno) and set up DCA twice a month rather later. I think I stopped making contributions about 2015, or at any rate I don't seem to have any statements about contributions past then (though my files are disorderly and incomplete - I probably do have bank statements I could check as well).

The TeaPA does not require RMDs and I could annuitize at any age up through 90. I would pay ordinary income tax on the gains but not the principal. Considering we have made out like bandits on taxes most of our lives thus far, including benefiting from the zero bracket on long-term capital gains and the step-up in basis on inheritance, it doesn't at all bother me that we'll be paying significant tax on retirement withdrawals. And we'll feel it a trifle less in this case than on withdrawals from IRAs where the whole thing gets taxed.

My retirement account through my 1990s employer included a stock portion as well, but I think that got rolled over into an IRA at some point, leaving only the TIAA Traditional bit behind.
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Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

crefwatch wrote: Tue Jun 11, 2024 11:08 amIt may be important to understand that the Fixed Account probably is an "insurance" product that does not have to be fully described to the SEC. (State) insurance regulation offers much less disclosure.
That would make sense. But the following, if I'm understanding it correctly, suggests that it might actually be the other way around, that the Fixed Account is the only one that isn't such a product: "Insurance and Annuity Contracts: TIAA's insurance and annuity contracts, other than the Teachers Personal Annuity--Fixed Account disclosed above, entail mortality risks and are, therefore, exempt from the fair value disclosure requirements related to financial instruments." https://www.sec.gov/Archives/edgar/data ... 000722.txt

I don't understand why that particular account wouldn't entail mortality risks, but who knows.

I thought of another thing that I need to figure out: I have a figure for the cost basis of the whole account, but not separate figures for how much went into the Stock Account and the Fixed Account. I know that I mostly did 75% Stock and 25% Fixed, but probably not completely so. Whee.
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Re: TIAA Teachers Personal Annuity

Post by crefwatch »

Irene wrote: Tue Jun 11, 2024 9:20 pm
I don't understand why that particular account wouldn't entail mortality risks, but who knows.

I thought of another thing that I need to figure out: I have a figure for the cost basis of the whole account, but not separate figures for how much went into the Stock Account and the Fixed Account. I know that I mostly did 75% Stock and 25% Fixed, but probably not completely so. Whee.
Again, I'm not familiar with this Fixed Account. But in TIAA Traditional, including your RA account, when you start a payout annuity, all of the Mortality Risk falls on the Participants (that is, the customers), and TIAA has no exposure to mortality risk. I hasten to add that not only does this mean that you pay NO significant Mortality Risk Charge to TIAA, but this fact is the basis of a considerable amount of the so-called Loyalty Bonus, like Unneeded Reserves that come back to the Participants. Others have reported that Covid-era deaths produced some noticeable increases to existing annuity streams. (Yet another thing that some rabid anti-annuitzation non-TIAA clients don't know about a "good" annuity.)

I don't get such check from TIAA (and it's interesting to consider what happens now that they demand Direct Deposit payouts!) but annuity checks used to have a tag line like "Non-Taxable Investment In Contract $25.37, Taxable Earnings 638.55".
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Irene
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Re: TIAA Teachers Personal Annuity

Post by Irene »

I did a bunch of digging through my files, and was kind of amused to see that I had two copies of one quarterly statement of contributions, one of which, having been incorrectly filled out, accidentally revealed the original amount I had put in (they quoted the minimum death benefit, which is essentially the cost basis, rather than the current death benefit, and I hadn't yet made any further contributions). (Did I have the original paperwork? Nah, of course not. In my defense I had very small children and moved across country about then.) It seems the original contribution was indeed evenly divided between Fixed and Stock. I have evidence that all the other contributions were sent 75% to Stock and 25% to Fixed. It did occur to me to take a sample distribution and see how the numbers jumped around (to check whether TIAA and I are on the same page about cost basis), but the minimum is $1,000 and I think I won't bother.
Harmanic
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Re: TIAA Teachers Personal Annuity

Post by Harmanic »

Irene wrote: Thu Jun 13, 2024 6:17 pm I did a bunch of digging through my files, and was kind of amused to see that I had two copies of one quarterly statement of contributions, one of which, having been incorrectly filled out, accidentally revealed the original amount I had put in (they quoted the minimum death benefit, which is essentially the cost basis, rather than the current death benefit, and I hadn't yet made any further contributions). (Did I have the original paperwork? Nah, of course not. In my defense I had very small children and moved across country about then.) It seems the original contribution was indeed evenly divided between Fixed and Stock. I have evidence that all the other contributions were sent 75% to Stock and 25% to Fixed. It did occur to me to take a sample distribution and see how the numbers jumped around (to check whether TIAA and I are on the same page about cost basis), but the minimum is $1,000 and I think I won't bother.
Hardly an unexpected outcome considering that the Russell 3000 had grown like gangbusters over the past decade. A perfect example of the power of compounding.
The question isn't at what age I want to retire, it's at what income. | - George Foreman
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