TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

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Trakl
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Joined: Tue Jun 07, 2016 10:24 am

TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by Trakl » Tue Mar 13, 2018 10:35 am

I am sure others have wondered about this but I couldn't find a thread to answer this question, so here I am.

I recently changed my AA for new money going into my 403b, and also specified that my annual rebalance should use the new AA for the target.

I was putting 20% into TIAA Traditional. Now I'm only putting 10% in Traditional. So when rebalance occurs, money will need to come out of Traditional to buy more shares of other investments.

I know there are restrictions about taking money out of Traditional once you put it in, so I'm not sure if there will be adverse effects upon this rebalance?

I am not retired, still actively contributing to 403b, 15 years or more away from withdrawing anything.

Thanks,

beardsworth
Posts: 2135
Joined: Fri Jun 15, 2007 4:02 pm

Re: TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by beardsworth » Tue Mar 13, 2018 11:10 am

There are a number of people here on Bogleheads who have TIAA accounts, and they may be along to answer your questions.

Meanwhile:

1. Did you talk to TIAA itself, before asking strangers here? You can send a Secure Message after logging in to your accounts at the TIAA site.

2. There is a TIAA-specific discussion forum on Morningstar, and you may wish to post your concerns there. As far as I know, signing up for the Morningstar discussion forums is still free of charge.

http://socialize.morningstar.com/NewSoc ... 00044.aspx

Trakl
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Joined: Tue Jun 07, 2016 10:24 am

Re: TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by Trakl » Tue Mar 13, 2018 11:28 am

beardsworth wrote:
Tue Mar 13, 2018 11:10 am
1. Did you talk to TIAA itself, before asking strangers here? You can send a Secure Message after logging in to your accounts at the TIAA site.
Ha, I sure did, and they were not very helpful, as I am not the first to have found (e.g. viewtopic.php?t=91943). The "strangers" on this site have often given me better information than customer service reps have.

Thanks for the redirect to Morningstar. I will try there.

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House Blend
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Re: TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by House Blend » Tue Mar 13, 2018 11:32 am

Trakl wrote:
Tue Mar 13, 2018 10:35 am
I know there are restrictions about taking money out of Traditional once you put it in, so I'm not sure if there will be adverse effects upon this rebalance?
What kind of adverse effects are you worried about?

Presumably you have one of the liquid forms of Traditional.

If not, this would be a wide open backdoor out of non-liquid Traditional. Change your AA to include 0% Traditional, and then wait for your annual rebalance.

aristotelian
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Re: TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by aristotelian » Tue Mar 13, 2018 11:37 am

I don't think there are adverse consequences. Either they will let you do it, or they won't.

If you take out more than allowed, you will be hit with surrender charges, but I am sure you will get some warning.

I definitely recommend calling TIAA until you get a straight answer. Among other things, there are different share classes of TIAA Traditional with different rules. In the future, it is not a good idea to invest in TIAA Traditional with funds that you need to have available for rebalancing.

Trakl
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Joined: Tue Jun 07, 2016 10:24 am

Re: TIAA 403b rebalance will force "sale" of Traditional -- Consequences?

Post by Trakl » Tue Mar 13, 2018 12:21 pm

Thanks, y'all. Finally found this on an old trade confirmation statement from an automatic annual rebalance:

"TIAA Traditional & Redistributions: With each rebalance, we will transfer balances among your
investment choices and to TIAA Traditional, if appropriate, to achieve the allocation percentages
selected. The transfer of accumulations from the TIAA Traditional Account in Retirement Annuities
and Group Retirement Annuities can only occur over ten annual installments using our Transfer
Payout Annuity (TPA). The transfer of accumulations from the TIAA Traditional Account in Retirement
Choice Annuities can only be made over 84 months in monthly systematic payments. As a result, if
the accumulation in the TIAA Traditional Account is higher than the amount that corresponds to the
selected target percentage, transfers will not be made out of the TIAA Traditional Account.
In this
case, transfers will be made among your investment options proportionately based on selected
target percentages."

So the answer is, as aristotelian said, "Either they'll let you do it, or they won't," and they won't.

Thanks again.

PS The Morningstar forum site is awful -- would not let me create a username, had to abandon ship.

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