TIAA CREF Annuity Questions

[CALTCAgent]

Hello,

Anyone familiar with TIAA CREF & their annuities?

I am looking at a client statement and its vague. I didn't have time to call the company at the appointment.

What is their "TIAA Traditional" annuity like?

I see that its only earning 1% this quarter and total 2% for the year. Is this just a fixed annuity that fluctuates every quarter?

It doesn't show surrender charges, anybody know what they typically are here?

It says 100% vested.

I know I should probably know this but don't come across TIAA CREFF very often.

If you'd like to e-mail me direct that is fine too.

Thanks!

 

[VolAgent]

To the best of my knowledge TIAA CREF only does fixed and variable annuities, no indexed. Also, no living benefit riders on the VAs. Very low M&A on the VAs too, 25 basis points I believe. And yes, no surrender fees on the VA, probably the same on the fixed product.

 

[TRSecurity]

I thought TIAA's minimum was 3% on the Traditional. That may have changed recently along with the rest of the world.

Those client statements can be very confusing and I automatically pick up the phone whenever I run into them. One thing that makes it confusing is that they have separate accounts and returns depending on who contributed the money (employer vs individual).

I ran into one 2 weeks ago that was annuitized. He and his wife have 18 years to live before they get their own $600k back (without interest). They are in their late 60's already. They have only a 10 year period certain and are kinda regretting the payout option they chose. Nothing I could do to help them at this point - with that pool of retirement money at least.

 

[Norwayguy]

The best way to think about TIAA-Cref is to think of 2 entities:

TIAA - Fixed Annuity every one of these I have run into the only option the client has is a 10 year annuitization.

Cref - Mutual Funds easier to move money out of these accounts...

Whenever requesting a rollover form make sure you explain rollover to an outside firm otherwise the form you will recieve will only allow rollover into another TIAA-CREF account.

 

[CALTCAgent]

Thanks for the responses so far!

I wished I would have called when I was there. I will do that on the 2nd appointment. Might have to switch gears if this thing is all locked up.

The statement does say "asset class" guaranteed. So maybe its a variable annuity thats liquid, we'll see. It also says only 1% this quarter and 2% total this year. Seems less likely that would be the fixed annuity rate.

Thanks!

 

[scagnt83]

Thanks for the responses so far!

I wished I would have called when I was there. I will do that on the 2nd appointment. Might have to switch gears if this thing is all locked up.

The statement does say "asset class" guaranteed. So maybe its a variable annuity thats liquid, we'll see. It also says only 1% this quarter and 2% total this year. Seems less likely that would be the fixed annuity rate.

Thanks!

1% for the quarter sounds like a fixed annuity to me (that would make a 4% yearly rate))
Also, the fund selection would have to be terrible for only a 2% increase for the year... especially only 1% this quarter, considering that the market is way up for the quarter.

A VA statement should make it pretty clear that its a VA, but I have never dealt with TIAA before.
It should have securities disclaimers at the bottom or on back, which a fixed would not have.

If the money is locked up in a fixed and it has to be taken over 10 years, look at a flex premium IA.
Your comp might not be as high as with a full drop in, but at least you will gain the assets and create a 10 year income stream for yourself...

 

[Franz Kafka]

Also, the fund selection would have to be terrible for only a 2% increase for the year... especially only 1% this quarter, considering that the market is way up for the quarter.

The latest quarter ended in September. Fixed don't send quarterly statements.

$INDU - SharpCharts Workbench - StockCharts.com

 

[CALTCAgent]

Well TIAA CREF kicked my butt on this one, lol.

What a tricky annuity to get your money out of.

No lump sum withdrawls (except interest) they must be spread over 5 or 10 years. Transfers out of TIAA CREF must be spread over 10 years.

The customer service person on the phone was trained to go right into a schtick that if they transfer over 10 years they cannot guarantee the RMD will be satisfied on the 403 (b).

She also stated, "the 403(b) RMD rules won't be met if she goes to a traditional IRA". I forget as it hardly comes up for me, whats the difference?

They can't satisfy RMD from remaining balance in annuity if they transfer 10% per year. I guess you could get the RMD out of the new company but you would have to satisfy total 403 (b) RMD from the 10% transfered amount at new company, which would be a large portion assume 3-4% of total for RMD.

I didn't think about this at the time but the client already took RMD this year, wouldn't matter until next year when all the RMD must come from the new annuity.

All this hassle and the client has to take all the money over 10 years, no changing your mind. Although this is really the only way they are going to get the money anyway.

Anyway, good news is she had a "supplemental" annuity which is fully liquid, only 35K, that she will transfer with me. It pays .7 % a quarter now. They call that 2.8% total for the year.

Maybe my math sucks, even though I have a degree in Finance, lol, long time ago, but isn't .7% each quarter not really getting 2.8% for the year but a total added up?

Thanks!

 

[scagnt83]

Maybe my math sucks, even though I have a degree in Finance, lol, long time ago, but isn't .7% each quarter not really getting 2.8% for the year but a total added up?

.7% each quarter is equal to a 2.8% yearly return, they are correct.

 

[VolAgent]

Wow, didn't Allianz get in a lot of trouble for forcing people to annuitize? Perhaps some attorney should go after TIAA-CREF for the same thing.