Tiaa creft 403B rollover to Vanguard pros and cons

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Thevillianinbrown
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Tiaa creft 403B rollover to Vanguard pros and cons

Post by Thevillianinbrown » Mon Dec 02, 2019 5:58 pm

Hello Bogleheads,

I have left my teaching position where I had a 403B plan that my former employer matched. TIAA Creft is the holder of my account. After 17 years, I'm considering rolling over all of my money to Vanguard (was planning on doing it earlier ,but life got in the way, and 17 years went by fast!). The financial planner I worked with over the years has been excellent! He has given me Boglehead type advice and doesn't make commission. I think TIAA Creft has a different model for compensation. TIAA Creft mutual funds are expensive compared to Vanguard I think the cheapest one I found is 0.45 expense ratio. With that being said, is there any rationale for leaving a little bit behind? Or for simplicity reason move to Vanguard? I'm 40 y.o. and I just keep thinking over the long term, those fees just keep adding up and eating into my nest egg. Please share your thoughts, insights, and experiences with TIAA Creft.

Thanks in advance for your responses!

T.V.I.B

student
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by student » Mon Dec 02, 2019 6:05 pm

TIAA-CREF has competitive institutional funds but not everybody has access to it. Currently, I use TIAA-CREF almost exclusively for the TIAA Traditional. I prefer this over bond funds. A good recent thread. viewtopic.php?f=10&t=280858

retire2022
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by retire2022 » Mon Dec 02, 2019 6:07 pm

Op make sure it is not subject to surrender charges or if it is an annuity

IRS Publication 590a page 22 explains what you are allowed to transfer to and from:

https://www.irs.gov/pub/irs-pdf/p590a.pdf

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jjustice
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by jjustice » Mon Dec 02, 2019 8:35 pm

CREF: College Retirement Equity Fund. The organization has now changed its name to simply TIAA. If you have a CREF account, then it is an annuity account. There are several different CREF annuity accounts. The largest is CREF Stock, which is a diversified global fund with 70% domestic stocks and 30% foreign stocks.

Before you transfer to Vanguard, you should make sure that you would not do better to annuitze the account and receive lifetime income for you and an annuity partner (if you have a spouse). I have had a CREF Stock annuity for over six years, and it may be the best financial decision I ever made. I also have annuities with TIAA Traditional and TIAA Real Estate.

John

lassevirensghost
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by lassevirensghost » Mon Dec 02, 2019 8:36 pm

TIAA has some unique funds such as TIAA Traditional and TIAA Real Estate (both of which I hold) that may be worth looking at. But if you don't know much about them and only want to hold a portfolio of stocks and bonds there is probably no harm in switching to Vanguard. I will keep my TIAA with a plan to annuitize some of my portfolio through TIAA Traditional.
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

InMyDreams
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by InMyDreams » Mon Dec 02, 2019 10:56 pm

I have my 403b at TIAA because my former employer's contract gives me access to many Vanguard institutional class mutual funds without adding additional fees.

Look closely at your complete fund list.

MathWizard
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by MathWizard » Tue Dec 03, 2019 1:42 am

Back around 2014 or 2015, the funds have classes: either R1 , R2, or R3, based on the size of the employer. R3 is for employer's who have the largest amounts from their employees , and has the lowest expense ratios.

Make sure you are looking in the right class.

My accounts are class R3 , and I can find finds with lower ERs than 0.45 .

For IRAs, you will be R1 and get the highest ERs. I have my IRAs at Vanguard

Vanguard is a good place to roll it over if you really have fees in excess of 0.45 .

Now, TIAA does give me access to financial planners, in person, at no charge, so I am getting something for that expense ratio.

jane8
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by jane8 » Tue Dec 03, 2019 2:34 am

Hi there TVIB. I recently went through a similar decision-making process. I ultimately decided to go ahead with the rollover. Here's my post: viewtopic.php?f=1&t=294096 There were a number of very informative replies that helped me make the decision, and people made great suggestions to consider things I hadn’t thought of myself. Ultimately I was turned off by the high expense ratios, along with other “plan servicing fees” in one of my accounts. And I became convinced that, with my personal time horizon and risk tolerance, I could ultimately at least match, if not exceed, the guaranteed returns on the popular TIAA Traditional Annuity that many point to as one of TIAA's highlights. But everyone’s situation is different, and if you have built up a good balance (particularly in Traditional), that may be worth holding onto for annuity purposes in the future.

Also, as others have mentioned, the details of your specific plan do make a difference, such as which levels of funds you have available to you (R1, R2, or R3 for Variable Annuities, reflected in different expense ratios, and Retail, Retirement, Premier, or Institutional fund classes, also reflected in different expense ratios), any fees (above and beyond the standard expense ratios) that are specific to your employer etc.

Also, if your financial advisor has been helping you for free as part of TIAA-CREF's service to you, that is a value that you may also wish to take into consideration, as you won’t have access to that person if you rollover out of TIAA completely.

fourwheelcycle
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by fourwheelcycle » Tue Dec 03, 2019 8:00 am

My wife and I were trapped at TIAA by our employers' custodial decisions for more than twenty years. Initially their fund ERs were in the .55% range. Later, they moved to the .27% range - still much higher than Vanguard, where our IRA and taxable savings ERs are in the .04 - .09 range. As soon as possible, at retirement for me and due to her employer's custodial change for my wife, we rolled over 100% of our non-annuity TIAA funds to Vanguard IRAs. Our ten year roll-out TIAA annuities will finally "complete" in May, 2020. We will be happy when we are totally finished with TIAA.

My wife's employer has negotiated with Fidelity to allow custodial investment choices that include Vanguard's Institutional class fund shares, which have lower ERs than Admiral shares, so we may leave her remaining 403(b) funds at Fidelity after she retires.

InMyDreams
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by InMyDreams » Tue Dec 03, 2019 10:29 am

jane8 wrote:
Tue Dec 03, 2019 2:34 am
Also, if your financial advisor has been helping you for free as part of TIAA-CREF's service to you, that is a value that you may also wish to take into consideration, as you won’t have access to that person if you rollover out of TIAA completely.
WMA compensation has been discussed here and elsewhere. It is a topic worth googling if you are using a WMA.

cyclist
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by cyclist » Tue Dec 03, 2019 10:50 am

DW had multiple TIAA-CREF 403b accounts. Most were eligible for direct rollover to an IRA and those funds are now at Vanguard (mostly to minimize fees and complexity.) The funds she had invested directly in TIAA Traditional could only be disbursed over a 10-year period, and we're doing so.

On reflection her TIAA Traditional contracts look very attractive now, but she didn't have enough there to make it worth keeping the relationship with TIAA. If yours has a lot in TIAA Traditional I'd check her contract terms - you might choose to keep those funds there for a while if they're still favorable.

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Michael Patrick
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by Michael Patrick » Tue Dec 03, 2019 11:03 am

cyclist wrote:
Tue Dec 03, 2019 10:50 am
DW had multiple TIAA-CREF 403b accounts. Most were eligible for direct rollover to an IRA and those funds are now at Vanguard (mostly to minimize fees and complexity.) The funds she had invested directly in TIAA Traditional could only be disbursed over a 10-year period, and we're doing so.

On reflection her TIAA Traditional contracts look very attractive now, but she didn't have enough there to make it worth keeping the relationship with TIAA. If yours has a lot in TIAA Traditional I'd check her contract terms - you might choose to keep those funds there for a while if they're still favorable.
In our case, DW had a number of different retirement accounts from differing employers, and we decided to consolidate them all into her Vanguard IRA. That included her TIAA Traditional, which was small enough that the annuity would have been a pittance. Plus we will both have pensions through the state, so an annuity seemed somewhat redundant in our retirement planning anyway.

It was kind of a pain because we had to spread the withdrawals out over a number of years, and we still have a couple of years to go. But it was worth it.

bikechuck
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by bikechuck » Tue Dec 03, 2019 11:18 am

I have approx 20% of my retirement funds with TIAA. Most are invested in TIAA traditional in two flavors that have been paying a blended average of 4.0%. I consider this as a bond fund substitute and I prefer it to a bond fund because the value does not change as interest rates rise and fall. I also have some TIAA Real Estate which is a unique fund and somewhat different from a REIT.

I plan to keep this money with TIAA and begin taking interest only payments in 2021 on traditional until I reach the age of 70.5 and have to begin taking RMDs.

I will note that last year when most of my portfolio was flat to down it was very nice to see my TIAA investments grinding out small but steady gains all year long.

The rest of our portfolio is at Vanguard, Schwab and a fixed annuity (not annuitized) that pays a guaranteed minimum of 4.5%.

bornloser
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Re: Tiaa creft 403B rollover to Vanguard pros and cons

Post by bornloser » Tue Dec 03, 2019 8:56 pm

Just remember if you roll it into a traditional IRA at Vanguard, which I assume is what you plan to do, you now become subject to pro rata for Roth conversions. Just food for thought.


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