My retirement account set-up is, let’s just say “complex”. I have collected accounts across multiple employers, all of which have had desirable, low-fee investment options but the main reason is just inertia. At TIAA, I have 6 accounts. That current complexity gives me access to multiple “flavors” of TIAA Traditional.
I was considering consolidation of accounts, which would simplify the situation and restrict my investment options. However, I had a recent conversation about this with a TIAA rep and their basic response was that I may not want to consolidate plans because my current employer does not allow in-service distributions and therefore I would not be able to access any monies rolled in until after retirement from my current position. On the flip side, if I were to continue working past RMD age, RMDs would not be required from my current employer’s plan. This is more than 20 years away, so still plenty of time to consolidate if delaying RMDs were a goal. I did not ask for a portfolio review from the rep because they are only seeing a portion of my accounts and we did not discuss the below issues. The rep did confirm that any accounts I consolidated would go into the account with GSRA as the Traditional option. It was only after the meeting that I started contemplating some of these issues, as I had originally thought I would be reducing the flavors of Traditional available to me.
I currently have a 60/40 (equity/fixed income) AA across all of my accounts, but I have realized that it is not best tax-optimized across account types. I have therefore been moving more of my TIAA accounts into fixed income vehicles, with one of the main vehicles being TIAA Traditional.
I have moved all of one account into the non-liquid GRA version at a current blended crediting rate of 6.1%. I decided I was comfortable with the distribution restrictions for the extra crediting rate on a portion of my funds. That account does receive current contributions which are currently going into the GRA. I have another small account that has access to the GRA version, which has a current rate of 5% until the end of September. I would be comfortable subjecting that additional amount to the distribution restrictions. Of course, rates on all flavors will reset in February 2025. Another option would be to consider this account too small to worry about keeping and have it be one of the first that I convert to Roth or roll into my current employer plan at an opportune time. It is currently in the CREF Stock R3 (0.26% ER), which is the highest expense ratio of any of my plans. Oddly, there appear to be no bond funds available in this account (former employer stopped using TIAA and many of the prior options are now restricted), so the only fixed income option that seems to be available is the GRA. My understanding is that putting it into the GRA would make it impossible to move or consolidate given the structure of my current employer plan, and I’d have to start a payout plan or wait until RMD age to access the money.
Most of my funds are in accounts that have access only to the “liquid” GSRA and RCP versions.
GRSA current crediting rate is 4.25% with a 3% guarantee.
RCP is at 4.5% crediting rate with a (current) 2.75% guarantee. I know that the RCP guarantee can be moved between 1-3%.
Thus far, I have been keeping my “liquid” fixed income in a money market (MM) fund paying ~5.2%, but with rates on the downswing, who knows how long those will last? I have been having a hard time justifying why one would use the liquid versions that pay less than a MM while above the guarantee. Presumably, one can move into the liquid funds as the level that might trigger the guarantee approaches (as long as the plan administrator doesn’t make a change to available investments, which they have had to announce in advance for past changes).
I do not know if I will ever annuitize the Traditional accounts, and my general thinking is that annuitization would only be considered past age 75 if it looks like more guaranteed income than SS will be needed. I’m not sure if there is any relationship, but given that TIAA has collapsed vintages before 2006 (18 years ago), it seems I may still have a few years before maximizing the “loyalty bonus” would come into play.
So, my initial questions are 1) should I immediately “lock-in” (until February!) that current 5% rate on the GRA for the small account that is eligible, and 2) should I begin using the GSRA or RCP as a fixed income vehicle instead of MM now? If so, why?
Thanks for any responses to this admittedly convoluted situation.
I was considering consolidation of accounts, which would simplify the situation and restrict my investment options. However, I had a recent conversation about this with a TIAA rep and their basic response was that I may not want to consolidate plans because my current employer does not allow in-service distributions and therefore I would not be able to access any monies rolled in until after retirement from my current position. On the flip side, if I were to continue working past RMD age, RMDs would not be required from my current employer’s plan. This is more than 20 years away, so still plenty of time to consolidate if delaying RMDs were a goal. I did not ask for a portfolio review from the rep because they are only seeing a portion of my accounts and we did not discuss the below issues. The rep did confirm that any accounts I consolidated would go into the account with GSRA as the Traditional option. It was only after the meeting that I started contemplating some of these issues, as I had originally thought I would be reducing the flavors of Traditional available to me.
I currently have a 60/40 (equity/fixed income) AA across all of my accounts, but I have realized that it is not best tax-optimized across account types. I have therefore been moving more of my TIAA accounts into fixed income vehicles, with one of the main vehicles being TIAA Traditional.
I have moved all of one account into the non-liquid GRA version at a current blended crediting rate of 6.1%. I decided I was comfortable with the distribution restrictions for the extra crediting rate on a portion of my funds. That account does receive current contributions which are currently going into the GRA. I have another small account that has access to the GRA version, which has a current rate of 5% until the end of September. I would be comfortable subjecting that additional amount to the distribution restrictions. Of course, rates on all flavors will reset in February 2025. Another option would be to consider this account too small to worry about keeping and have it be one of the first that I convert to Roth or roll into my current employer plan at an opportune time. It is currently in the CREF Stock R3 (0.26% ER), which is the highest expense ratio of any of my plans. Oddly, there appear to be no bond funds available in this account (former employer stopped using TIAA and many of the prior options are now restricted), so the only fixed income option that seems to be available is the GRA. My understanding is that putting it into the GRA would make it impossible to move or consolidate given the structure of my current employer plan, and I’d have to start a payout plan or wait until RMD age to access the money.
Most of my funds are in accounts that have access only to the “liquid” GSRA and RCP versions.
GRSA current crediting rate is 4.25% with a 3% guarantee.
RCP is at 4.5% crediting rate with a (current) 2.75% guarantee. I know that the RCP guarantee can be moved between 1-3%.
Thus far, I have been keeping my “liquid” fixed income in a money market (MM) fund paying ~5.2%, but with rates on the downswing, who knows how long those will last? I have been having a hard time justifying why one would use the liquid versions that pay less than a MM while above the guarantee. Presumably, one can move into the liquid funds as the level that might trigger the guarantee approaches (as long as the plan administrator doesn’t make a change to available investments, which they have had to announce in advance for past changes).
I do not know if I will ever annuitize the Traditional accounts, and my general thinking is that annuitization would only be considered past age 75 if it looks like more guaranteed income than SS will be needed. I’m not sure if there is any relationship, but given that TIAA has collapsed vintages before 2006 (18 years ago), it seems I may still have a few years before maximizing the “loyalty bonus” would come into play.
So, my initial questions are 1) should I immediately “lock-in” (until February!) that current 5% rate on the GRA for the small account that is eligible, and 2) should I begin using the GSRA or RCP as a fixed income vehicle instead of MM now? If so, why?
Thanks for any responses to this admittedly convoluted situation.
Statistics: Posted by epoche — Wed Sep 18, 2024 5:18 pm — Replies 0 — Views 30