16 Replies Latest reply on May 31, 2013 1:09 PM by JerryD

    TIAA Guaranteed Funds

    Englert
      I plan to retire in 24 months. I have TIAA-CREF thru my employer,which has been growing over the last 30+ years.  When I first enrolled in TIAA, and not having much "investment" experience, I opted to allocate a portion of my contributions to the Traditional (guaranteed).  Currently almost 52% of my entire TIAA account is in the Traditional - someone just recently mentioned to me that I cannot get my $$ out of traditional/guaranteed on a monthly basis when I retire, nor can it be rolled over into something else.  they said I would have to take out funds over a 10 year period.  This particular dollar amount of my overall TIAA account is, of course, the largest.  Does anyone know anything about this, and what my options are?
        • Re: TIAA Guaranteed Funds
          wpickett
          Two things.  First, it depend on which type of acccount you have the money in.  The Supplemental does not have the same requirement as the other account.  Two, this is serious stuff, so just call Tiaa-Cref and ask.  The will politely explain it all to you.  They have for me several times.
           
          • Re: TIAA Guaranteed Funds
            cyber888
            Yes, this is true.  You can only withdraw 1/10 of it for the next 10 years.  Tiaa guaranteed is an annuity with guaranteed interest rates - that's why. 
             
             
            Englert said...
            I plan to retire in 24 months. I have TIAA-CREF thru my employer,which has been growing over the last 30+ years.  When I first enrolled in TIAA, and not having much \"investment\" experience, I opted to allocate a portion of my contributions to the Traditional (guaranteed).  Currently almost 52% of my entire TIAA account is in the Traditional - someone just recently mentioned to me that I cannot get my $$ out of traditional/guaranteed on a monthly basis when I retire, nor can it be rolled over into something else.  they said I would have to take out funds over a 10 year period.  This particular dollar amount of my overall TIAA account is, of course, the largest.  Does anyone know anything about this, and what my options are?
              • Re: TIAA Guaranteed Funds
                smaneck
                If you make a retirement annuity contract with TIAA then I think you have to withdraw the money over ten years. But before you retire and commit to such a contract you can transfer the money any TIAA-CREF account you like. When I retire I intend to roll-over my GRA into an IRA account as they have more flexibility. 
                  • Re: TIAA Guaranteed Funds
                    JerryD
                    smaneck said...
                    If you make a retirement annuity contract with TIAA then I think you have to withdraw the money over ten years. But before you retire and commit to such a contract you can transfer the money any TIAA-CREF account you like. When I retire I intend to roll-over my GRA into an IRA account as they have more flexibility. 
                    Yes. Can do a transfer payout annuity to transfer out of TIAA in 10 payments (not really 10 years, but 9). Did that to an IRA. But do check out the new rules about creating an IRA. Many have a 3% TIAA guarantee whereas new IRA's get a 1% guarantee.
                      • Re: TIAA Guaranteed Funds
                        smaneck
                        But why would you keep that money in an fixed income annuity anyhow? I generally use TIAA Real Estate or the High Yeild Account (junk bonds) to balance my portfolio of equities. Yes, those took a hit in 2008 but all the money back now and I'm getting great returns. 
                        TIAA-CREF Ira accounts have lot more flexibility than does my GSRA or my SRA. 
                          • Re: TIAA Guaranteed Funds
                            JerryD
                            First, I never meant to say that I use fixed income annuities. I don't believe in annuities unless I lose my ability to invest in opportunities. Also, I should have clarified that I am referring to TIAA Supplemental where one can move in and out without the 10 payment transfer payout annuity requirement.
                             
                            Where you put your money depends on your circumstances, your other assets, your proximity to or actual participation in retirement and market conditions. Let me ask you, would you rather have a 3% return for several years while equities drop 30-40% and even Real Estate does a rare but similar dive? Do you appreciate that it takes a 40-70% rise to offset a 30-40% loss and then you are just even with years prior?
                             
                            With your capital preserved you are positioned to take advantage of conditions without being concerned about recovering that kind of loss just to get even. Not to thump my chest about being a great investor, I am NOT but "Saint" Warren Buffet guides me finally, my small TIAA-CREF equity exposure in late 2008 until today is approaching 100% returns in 3 different accounts.
                             
                            I have been an intense student, but maybe a slow learner, for close to 40 years. I have gone through the performance chasing and have settled on a long-term, index based equity view, majority of investments in very predictable accounts and absolutely no loss of principal view. A 3% return in very bad markets has a very important place in this strategy. That pretty much insures that your principal almost keeps up with inflation without any risk while you wait patiently for rare opportunities.
                             
                            Oh, also, I am NOT committed to or believe in asset allocation or rebalancing.  Opportunities are opportunities. Frequently these strategies are ploys for investment companies to keep your money in place and in markets like 2008-2009 offer ABSOLUTELY no protection unless you ind very rare ways to preserve principal.
                             
                             
                              • Re: TIAA Guaranteed Funds
                                smaneck
                                JerryD said...
                                First, I never meant to say that I use fixed income annuities. I don\'t believe in annuities unless I lose my ability to invest in opportunities. Also, I should have clarified that I am referring to TIAA Supplemental where one can move in and out without the 10 payment transfer payout annuity requirement.
                                 
                                Susan:
                                 
                                I have a very small amount of money in those accounts mostly just enough to secure my loans. But I do get the 3% for those annuities. I think it is only the IRAs where you get only 1%.   
                                 
                                Jerry: Where you put your money depends on your circumstances, your other assets, your proximity to or actual participation in retirement and market conditions. Let me ask you, would you rather have a 3% return for several years while equities drop 30-40% and even Real Estate does a rare but similar dive? Do you appreciate that it takes a 40-70% rise to offset a 30-40% loss and then you are just even with years prior?
                                 
                                Susan:  
                                Of course, that is what just what happened in 2008. And it was pretty scary. I took my money out of the Real Estate fund just before it took a steep tumble but I didn't touch the equities because I knew it was already too late. I do intend to balance my investments a bit better because I can't afford to take a hit like happened in 2008 this close to retirement when I won't have time to recover. I plan to buy a longevity annuity. TIAA doesn't sell these at present, but I noticed they are researching it. A longevity annuity doesn't kick in until you are 80 or 85.   Near as I can figure I can buy such an annuity at 60 or 65 for about 30-50K and it will produce a pretty decent monthly income of about 1200-1800 a month. This leaves me free to enjoy the rest of my assets without fearing I will run out before I die. I'm waiting until interest rates go up before I purchase one, however. I'm also waiting for the change in IRS rules which is apparently in the works which allows me to buy one of these with my IRA funds without it becoming subject to minimum distribution rules until payout begins at 85.
                                 
                                As for money I'll need in the immediate future upon retirement, I will probably do what my mother (who used to be a financial advisor) does. She keeps the equivalent of a year or two income in bonds. That way if she needs to take money out in a bad year for her minimum distribution it can come out of the bond fund rather than equities.
                                 
                                Jerry:
                                 
                                With your capital preserved you are positioned to take advantage of conditions without being concerned about recovering that kind of loss just to get even.
                                 
                                Susan: I do regret I did not have that much money to invest when the market was at its very worst, partly because like everyone else my credit was frozen giving me very little flexibility. But that eased up and I was even able to take on some consulting work which allowed me to invest like crazy just as the market began to rise. 
                                 
                                Jerry:  
                                Not to thump my chest about being a great investor, I am NOT but \"Saint\" Warren Buffet guides me finally, my small TIAA-CREF equity exposure in late 2008 until today is approaching 100% returns in 3 different accounts.
                                 
                                Susan:
                                 
                                I notice that Berkshire's is number one in investments in the Social Choice fund. ;-} And I took Warren Buffets advice to start buying real estate. My mother and I bought two pieces of rental property, investing 60K for which we are now getting a return of nearly 10K a year.
                                 
                                Jerry:  
                                 
                                Oh, also, I am NOT committed to or believe in asset allocation or rebalancing. 
                                 
                                Susan:
                                 
                                Well, I wouldn't let anyone do my rebalancing for me. But now that my retirement accounts have reached a level where I can be pretty confident I will have enough money, I am more concerned with preserving my investments than I once was. Still, regular annuities just don't strike me as good enough deal. I'm just shifting my investments slowly  into more conservative funds like Social Choice and Real Estate. Even bond funds I'm not particularly interested in just yet except the High-Yield ones.  
                                 
                                 
                                  • Re: TIAA Guaranteed Funds
                                    D1953
                                    The returns in Junk Bonds and Real Estate may very well have been good during the time period you are referring to, but as you near retirement these would tend to be quite risky.  Junk bonds are defined as fixed-income instruments that carry a rating of 'BB' or lower by Standard & Poor's, or 'Ba' or below by Moody's. Junk bonds are so called because of their higher default risk in relation to investment-grade bonds. A good balance of the guaranteed and, if you have the stomach, junk bonds would lessen the risk exposure.  If you are dealing with individual securities in the junk market, I'd recommend a stop loss strategy. I look at it as sort of the 'Tortoise and the Hare' analogy.  Personally, I sleep better at night knowing that more than half of my retirement money is guaranteed.   I have never risked what I can't afford to lose.
                        • Re: TIAA Guaranteed Funds
                          D1953
                          I've been told that it is only the employer contribution that is 10-year restricted, not the amount you have paid in.  You may wish to verify this with TIAA-CREF - their representatives can tell you where this is explained in your contract.  Good luck and let us all know the result!
                            • Re: TIAA Guaranteed Funds
                              JerryD
                              D1953 said...
                              I've been told that it is only the employer contribution that is 10-year restricted, not the amount you have paid in.  You may wish to verify this with TIAA-CREF - their representatives are very helpful and can tell you where this is explained in your contract.  Good luck and let us all know the result!
                              ABSOLUTELY! I was never told that any portion of a TIAA Traditional withdrawal was exempt from the 10-payment requirement (not year, as I understand it, which is just over 9 years). Definitely verify this with TIAA-CREF.
                                • Re: TIAA Guaranteed Funds
                                  D1953
                                  I spoke with a representative at TIAA-CREF today and learned that the prior information I had was incorrect regarding the fixed traditional annuity payout options (mutual funds may be different).  All contributions under the employer contracts I am enrolled in are subject to the payout rules. The transfer payout schedule depends on the type of contract your employer had set up.  In my particular case one employer offered the Retirement Annuity Contract, which has the 10 annual payments, or lifetime annuitizing as the choices (or a combination of the two, partial transfer, partial lifetime annuity, with certain minimums).  My other employer offered the Retirement Choice plan, which is a 7 year (or 84 month), systematic monthly withdrawal, or the lifetime annuity choice.  Again, both of these can be split into systematic and lifetime annuitizing with minimum amounts for each. I hope this is helpful, and would recommend that participants check their specific contract for the terms and conditions or phone a TIAA-CREF representative.
                              • Re: TIAA Guaranteed Funds
                                D1953
                                One more comment - a non-employer Traditional fixed annuity in an IRA is not subject to the restrictions in the employer/employee accounts.
                                  • Re: TIAA Guaranteed Funds
                                    JerryD
                                    I would check that too. You may be referring to Supplemental TIAA. If it is called "Traditional", I believe that there is the 10-payment restriction. I give the example of TIAA in the After Tax Retirement Annuity totally funded by after-tax income and not employers. 
                                     
                                    Check any such assumptions about TIAA very carefully. A 10-payment payout is a very long time. Been there, done that.

                                      • Re: TIAA Guaranteed Funds
                                        D1953
                                        My fixed IRA annuity is called Traditional IRA and is funded solely with my pre-tax contributions, no employer contributions.  I have rolled over 2 other IRAs into this account, and according to the TIAA-CREF representative there is no payout restriction on this, it is treated as any other individually funded IRA. I was emailed a plan document called "Transfer Payout Annuities" that explains the different employer contracts that are subject to the payout schedules.  As stated in my earlier email, the 7 year payout contract is called Retirement Choice and the 10 year payout contract is called Retirement Annuity Contract (though they are both annuities).  Anyone with an employer account should find out which they have, as they are not all 10 year payouts.  The other 2 options aside from the scheduled payouts are lifetime annuity or interest only payments, or a combination lifetime/payout.  You can phone and request the above brochure by email or regular mail.  Hope this helps!
                                        • Re: TIAA Guaranteed Funds
                                          kwendy
                                          I have essentially planned for 5 more years before I retire (doing some late catch up) 
                                          You referenced Warren Buffet - Is there a particular resource you found to be most useful-100% in 3 years caught my attention. 
                                           
                                            • Re: TIAA Guaranteed Funds
                                              JerryD
                                              There are several books about Warren Buffet and many articles. I believe that I was referring above to his oft quoted investment advice to buy when others are selling and sell when others are buying. Back in 2008/early 2009 the majority thought the stock market was doomed. My read of Buffet's philosophy is that it was really cheap and therefore a great buy. That is what I did but not using single stocks. I used ETF-like TIAA-CREF accounts. I also researched what these accounts did over 4-5 periods in the previous downturns. I am not any good at all at fundamental analysis of specific stocks (Buffet would NEVER hire me) but I can certainly use broad market-based investments like several of the stock accounts at TIAA-CREF. Remember that past performance is no assurance of future performance. Monitor, monitor, monitor. Just don't sell at every little correction by keeping a 5-year perspective.