Lockup fixed income in TIAA Traditional GRA for 2% premium?

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torius71
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Lockup fixed income in TIAA Traditional GRA for 2% premium?

Post by torius71 »

Most fixed income in our early accumulation years has been invested in a stable value fund crediting 3% within a 403b administered by a previous employer. The rate has always been competitive and served me well while my fixed allocation was low. I also had access to TIAA Traditional Group Retirement Annuity (GRA), crediting 3.70%- 4.35%, during that time. I opted not to contribute (or subsequently transfer in) and forgo the premium over stable value/total bond for several reasons:

1) I would have lost the ability to rebalance into equities
2) I didn’t understand the product well enough to lock up my funds

I recently noticed that new contributions (or transfers in) are crediting 5.50% for August, that rate being effective through Feb 2023. Due to regular contributions to current employer 401ks, the 403b funds above now only represent ~60% of our fixed income (this will only go down). We could weather a 50% drop in equities and still rebalance to target AA. I think I understand the Traditional GRA well enough at this point.

To this end, I'm considering transferring all my 403b holdings into the GRA. Any watch-outs or something I’m missing? The GRA rate may be borderline teaser, but the TIAA white paper indicates they’ve paid a >1.5% premium over 10 yr treasury since at least 1997. The more I've thought about this, the more it seems like a no-brainer?

**We plan to retire early in about 10 yrs and live off taxable for about 10 yrs, while converting to Roth. This move might mean these funds aren’t eligible but we should still have enough pre-tax to convert up to the 24% bracket (if we chose to) for 10 yrs.**
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