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Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 7:13 am
by spdoublebass
I recently asked a different question on TIAA Traditional found here:

viewtopic.php?f=1&t=321889

I also am aware of the fact that TIAA does not let you choose a different AA for your PreTax and Roth 403b.


My question is more basic.

My wife and I are in the 12% tax bracket. Even when we have a good year, after deductions, we always have some wiggle room before we would hit the next tax bracket.

Our TIAA 403b's are not our main (meaning largest) retirement accounts. We max our ROTH IRA's and use Individual 401Ks (which I also have set as ROTH for now).

Does TIAA traditional work any different for Roth vs PreTax? What I mean is if I have the option, should I try to use the Roth version as long as it doesn't bump us up to the next tax bracket?

When it comes time to annuitize Tiaa Traditional, can will they factor in how much is PreTax and how much is Roth? Does that change the monthly payout?
Or, does it just change how much of the payout is taxable?

Thanks. I don't like making any changes before asking this forum and while TIAA is ok, sometimes you don't get the right answer when you call.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 7:23 am
by student
spdoublebass wrote: Fri Sep 04, 2020 7:13 am I also am aware of the fact that TIAA does not let you choose a different AA for your PreTax and Roth 403b.
I don't understand. You have different "accounts" for regular 403b and Roth 403b, right?

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 7:30 am
by spdoublebass
student wrote: Fri Sep 04, 2020 7:23 am
spdoublebass wrote: Fri Sep 04, 2020 7:13 am I also am aware of the fact that TIAA does not let you choose a different AA for your PreTax and Roth 403b.
I don't understand. You have different "accounts" for regular 403b and Roth 403b, right?
No. I'm sorry I wasn't clear.

I do not have a Roth 403b.

I've read on the forum about some issue with how they track the Roth and Pretax by it being in the same account.

viewtopic.php?t=250781

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 8:09 am
by aristotelian
That is absolutely nuts. I hate TIAA with a passion... except for TIAA Traditional Annuity, which I love.

Roth vs Traditional is purely an account-level designation that determines how withdrawals are taxed. Whether an account is Roth, Traditional, or mixed should not affect the investments inside the account.

What is your current breakdown between Roth and Traditional? 12% bracket is a kind of gray area where you could go either way. I would be tempted to do all Roth or all Traditional just to keep things simple.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 8:47 am
by spdoublebass
aristotelian wrote: Fri Sep 04, 2020 8:09 am That is absolutely nuts. I hate TIAA with a passion... except for TIAA Traditional Annuity, which I love.

Roth vs Traditional is purely an account-level designation that determines how withdrawals are taxed. Whether an account is Roth, Traditional, or mixed should not affect the investments inside the account.

What is your current breakdown between Roth and Traditional? 12% bracket is a kind of gray area where you could go either way. I would be tempted to do all Roth or all Traditional just to keep things simple.
Currently my wife and I only have money PreTax 403B's. We do not have any money in the Roth 403B.



I don't really care about the investments being the same, I only use Traditional and an equity index. I'm after the traditional. I'd like to put everything in that in retirement and annuitize it. I have stocks in our other accounts.

I'm curious though is they treat Roth vs Pretax contributions to Traditional differently.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 8:52 am
by aristotelian
spdoublebass wrote: Fri Sep 04, 2020 8:47 am
I'm curious though is they treat Roth vs Pretax contributions to Traditional differently.
I don't see why they would. You should note that there are several different varieties of TIAA Traditional which have different options, rates, and restrictions, whether they are in Roth or pretax. I would say it is worth a call to TIAA in either case if you want a clear sense of your options.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 9:16 am
by spdoublebass
aristotelian wrote: Fri Sep 04, 2020 8:52 am
spdoublebass wrote: Fri Sep 04, 2020 8:47 am
I'm curious though is they treat Roth vs Pretax contributions to Traditional differently.
I don't see why they would. You should note that there are several different varieties of TIAA Traditional which have different options, rates, and restrictions, whether they are in Roth or pretax. I would say it is worth a call to TIAA in either case if you want a clear sense of your options.
I will call for sure. I am also aware of the different varieties of Trad and accounts (gra vs gsra etc)

I guess my questions is (and these are all made up numbers) say you want to annuitize $200K and they quote you at $1000 a month for life. The only thing that would change is that if you had a lot of Roth money, less of the $1000 for life would be taxable. If I'm understanding correctly.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 9:18 am
by little_star
spdoublebass wrote: Fri Sep 04, 2020 7:13 am I recently asked a different question on TIAA Traditional found here:

viewtopic.php?f=1&t=321889

I also am aware of the fact that TIAA does not let you choose a different AA for your PreTax and Roth 403b.
This must be something specific to your organization's plan. I have had retirement accounts with TIAA for the past two decades and the employer contributions and employee contributions have been in different accounts with my own choice of funds and allocations of contributions. This is important because TIAA treats employer/employee contributions to TIAA traditional differently, and therefore one might want to contribute more/less to TIAA traditional in the two accounts. We did not have the option for Roth 403b's, but I assume that choosing Roth would create yet another account (employer, employee pre-tax, employee Roth). In any event, once the funds are in the accounts, you are free to re-balance to whatever AA you like (with the exception regarding moving funds out of TIAA traditional).

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 9:19 am
by crefwatch
I wonder if you mean to say that you have, now, a TIAA Traditional account that has both post-tax contributions and pre-tax earnings in it? That was common in earlier years of personal retirement savings, but is less common today, because of many changes and increased choices for retirement savers. In any case, there is a long history of TIAA sending payouts to retirees that consist of both taxable earnings and non-taxable investments (sometimes referred to as Investment In Contract.) At the end of the year, your 1099 has two boxes, one with the full amount, and another with the non-taxable amount of those distributions. It's not a big confusion to a tax preparer, although it can look intimidating to the uninitiated.

TIAA is, in general, famous for making people open "new" (by which I mean, additional) accounts. Because some employers handle salary-reduction and optional additional savings differently, people with one job can have as many as three accounts to which they are making current contributions. Although this increases TIAA's costs, it has ONLY good benefits for you. You can treat each account separately (I mean, for annuitization decisions, for withdrawals, and for styles and guarantees upon annuitization.) I'm not talking about getting a grand total for RMD calculations, but that's not what you asked about.

Your original question is not clear enough for me to try and answer. Roth money is Roth money, whether it was rolled over or put in during the earning of the money. It's never mixed with any other kind of money. It's also unusual (but not impossible ... ) for institutions to offer Roth 403(b)s. It took a while for Roth 401(k)s to become widely available, and it may yet happen for Roth 403(b)s.

I have FIVE TIAA accounts. They are listed sequentially on my quarterly statements. I have an RA from my first (1975) employer, an SRA from a later employer, an ATRA that TIAA opened for me because I used to make after-tax optional contributions, an IRA, and a Roth IRA. I used to have more accounts, but I rolled over two 403(b)s to create the IRA so that I could open a brokerage platform. None of those five accounts has anything to do with any of the others. Only the ATRA has two types of money in it, because all my contributions were after-tax, and all those earnings are tax-deferred because they were earned inside the ATRA wrapper.

Edit: Each of those five accounts includes money in TIAA Traditional. So when I say (as you did) that I have five TIAA Traditional accounts, what that really means is that I have five holdings of TIAA Trad, inside five accounts that include other investments. Each TIAA Trad "account" has different vintage structures, different average interest rates, and different restrictions on liquidity. None of them has anything to do with any of the other four TIAA Traditional accounts.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 9:30 am
by spdoublebass
little_star wrote: Fri Sep 04, 2020 9:18 am

This must be something specific to your organization's plan. I have had retirement accounts with TIAA for the past two decades and the employer contributions and employee contributions have been in different accounts with my own choice of funds and allocations of contributions. This is important because TIAA treats employer/employee contributions to TIAA traditional differently, and therefore one might want to contribute more/less to TIAA traditional in the two accounts. We did not have the option for Roth 403b's, but I assume that choosing Roth would create yet another account (employer, employee pre-tax, employee Roth). In any event, once the funds are in the accounts, you are free to re-balance to whatever AA you like (with the exception regarding moving funds out of TIAA traditional).
The linked thread I posted was not my post. I stated above I do not have an Roth contributions so far.

I know that TIAA treats Employer and Employee contributions differently. In my case, Employer contributions and my required amount to get my employer match go into an RA account. My voluntary contributions go into a GSRA account.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 9:37 am
by spdoublebass
crefwatch wrote: Fri Sep 04, 2020 9:19 am

Your original question is not clear enough for me to try and answer. Roth money is Roth money, whether it was rolled over or put in during the earning of the money. It's never mixed with any other kind of money. It's also unusual (but not impossible ... ) for institutions to offer Roth 403(b)s. It took a while for Roth 401(k)s to become widely available, and it may yet happen for Roth 403(b)s.

I have FIVE TIAA accounts. They are listed sequentially on my quarterly statements. I have an RA from my first (1975) employer, an SRA from a later employer, an ATRA that TIAA opened for me because I used to make after-tax optional contributions, an IRA, and a Roth IRA. I used to have more accounts, but I rolled over two 403(b)s to create the IRA so that I could open a brokerage platform. None of those five accounts has anything to do with any of the others. Only the ATRA has two types of money in it, because all my contributions were after-tax, and all those earnings are tax-deferred because they were earned inside the ATRA wrapper.

Edit: Each of those five accounts includes money in TIAA Traditional. So when I say (as you did) that I have five TIAA Traditional accounts, what that really means is that I have five holdings of TIAA Trad, inside five accounts that include other investments. Each TIAA Trad "account" has different vintage structures, different average interest rates, and different restrictions on liquidity. None of them has anything to do with any of the other four TIAA Traditional accounts.
I'm at 4 different school this year. All of which offer 403B Roths through TIAA. It seems to be common, but maybe I'm just lucky.

I probably worded things poorly, which was by accident.

All I meant was I currently have:

School 1:
403B GRSA = voluntary contributions
403B RA = 3% of my salary and 8% employer contribution. These are set amounts.

School 2:
403b GSRA = Voluntary contributions.

I teach at 2 other schools which offer accounts with Tiaa, but I choose not to do so because the expense rations are too high.

At school 1 and 2 I can contribute as PreTax or Roth for the GSRA accounts only.

I didn't know when it comes time to annuitize Traditional if this changed anything. From what you wrote above, it shouldn't because the payout would be the same, just that some would still have taxed owed and some wouldn't.

I think I got it.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 10:03 am
by crefwatch
spdoublebass wrote: Fri Sep 04, 2020 9:37 am School 1:
403B GRSA = voluntary contributions
403B RA = 3% of my salary and 8% employer contribution. These are set amounts.

School 2:
403b GSRA = Voluntary contributions.

...

At school 1 and 2 I can contribute as PreTax or Roth for the GSRA accounts only.
Because Roth 403(b) accounts did not exist when I was working, I don't have personal experience. But it still seems to me (that is not a fact-based statement!) that to have "Roth 403(b)" money, you need a Roth 403(b) Retirement Account, in additiona to a Tax-Deferred 403(b) Retirement Account. When my wife was working, she had a 401(k) and a Roth 401(k). After retirement, she rolled over the 401(k) directly to her existing IRA, and rolled over the Roth 401(k) to a new, Roth IRA. Maybe I am ignorant, and it is possible for the two 403(b) products to be combined in a single TIAA account.

I may have made things harder for you because I referred to the long history of mixed pre and post-tax contributions (now, denigrated) in TIAA 403(b) accounts. In the pre-internet days, this was completely invisible to Participants at the time of earnings. You only saw it when you got 1099's (maybe it was on the check stubs, too) showing the two amounts. Today, "Investment In Contract" is shown in your online account, I think. Eliminating that mixture is why TIAA MADE ME have an ATRA account. But I don't think of my post-tax money in the ATRA as "Roth" money, because it isn't.

It would be helpful to all if you can confirm that you really do have both types of money in one single GSRA account. How does that look on your quarterly statement? (Of course, I'm not asking for the actual dollar amounts.) Thanks.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 10:48 am
by FiveK
spdoublebass wrote: Fri Sep 04, 2020 7:13 amWhat I mean is if I have the option, should I try to use the Roth version as long as it doesn't bump us up to the next tax bracket?
That depends on what you expect for your future marginal tax rate (after retirement).

See that and the rest of the Traditional versus Roth wiki article for a TIAA-independent review of that question.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 11:03 am
by spdoublebass
FiveK wrote: Fri Sep 04, 2020 10:48 am
spdoublebass wrote: Fri Sep 04, 2020 7:13 amWhat I mean is if I have the option, should I try to use the Roth version as long as it doesn't bump us up to the next tax bracket?
That depends on what you expect for your future marginal tax rate (after retirement).

See that and the rest of the Traditional versus Roth wiki article for a TIAA-independent review of that question.
I know and have read both those articles.

I guess I know the answer to my question. I was just trying to avoid missing anything from the TIAA end of things. The accounts get tricky. It look me a long time to understand the difference between GSRA and GRA Traditional. Throwing in the the Roth GSRA version, I just wanted to make sure I wasn't opening up another can of worms.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Fri Sep 04, 2020 12:12 pm
by Hydromod
The one complication that I became aware of was when I started contributing to a Roth 403b. From what I understand, TIAA keeps track of deferred versus Roth, even with contributions of both types to the same fund, but doesn't report the split between the two.

I decided to do the split by funding TIEIX with one type of contribution and TISPX with the other, since these are essentially the same thing. That way I could precisely track the status of the two contribution types, and I will be able to control withdrawals in a straightforward way. Unfortunately this strategy won't work with TIAA traditional.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Wed Dec 09, 2020 10:44 am
by beernutz
little_star wrote: Fri Sep 04, 2020 9:18 am
spdoublebass wrote: Fri Sep 04, 2020 7:13 am I recently asked a different question on TIAA Traditional found here:

viewtopic.php?f=1&t=321889

I also am aware of the fact that TIAA does not let you choose a different AA for your PreTax and Roth 403b.
This must be something specific to your organization's plan. I have had retirement accounts with TIAA for the past two decades and the employer contributions and employee contributions have been in different accounts with my own choice of funds and allocations of contributions. This is important because TIAA treats employer/employee contributions to TIAA traditional differently, and therefore one might want to contribute more/less to TIAA traditional in the two accounts. We did not have the option for Roth 403b's, but I assume that choosing Roth would create yet another account (employer, employee pre-tax, employee Roth). In any event, once the funds are in the accounts, you are free to re-balance to whatever AA you like (with the exception regarding moving funds out of TIAA traditional).
Post resuscitation. I have two separate TIAA 403b accounts, a GSRA tax deferred plan and an employer RA matching plan (my employer stopped matching contributions though).

For my first 20 years at TIAA all my contributions were pretax however this year I switched my contributions into a Roth 403b.

A new account was not opened, rather when I look at my GSRA tax deferred plan I see the message: Includes an after-tax Roth balance of : $xx,xxx.xx. If I look at a quarterly statement I see the AA breakdown of that $xx,xxx.xx.

Re: Tiaa Traditional: PreTax or Roth?

Posted: Wed Dec 09, 2020 10:57 am
by coffeecat16
From my understanding, TIAA Traditional is not any different whether it is funded with Roth versus Pre-Tax dollars as long as you are comparing them within the same type of account. Having said that, you should be aware that the different types of accounts play a major role in the crediting rate, minimum guarantees, and liquidity restrictions associated with your TIAA Traditional. For example, you can purchase TIAA Traditional in an IRA and it will be fully liquid, but you will receive a 1.00% current crediting rate and a 1.00% minimum guarantee. In contrast, TIAA Traditional held within an RA Contract of your 403(b) is currently receiving a 3.00% crediting rate (3.00% minimum guarantee). Note: not all 403(b) contracts are the same - you may have a GRA, GSRA, RC, RA, or RCP contract with each TIAA Traditional varying -- https://www.tiaa.org/public/investment-performance

Overall, it is important to determine your desired overall Asset Allocation. x% equities, 100-x% fixed income/TIAA Traditional, and then consider the location of your assets. Roth receives tax-free growth, as such, consider putting assets that have a higher propensity for capital appreciation in your Roth accounts. Your tax-deferred vehicles, like your 403(b), can house your lower-risk/lower-growth assets (like TIAA Traditional).

Be mindful of the type of account while considering your global household allocation.