Ready to get started?
If you’re ready to start planning for a brighter financial future, Rockbridge is ready with the advice you need to achieve your goals.
March 5, 2024
Investing
TIAA Traditional – Interest Rate Renewals
Many clients have employer sponsored plans with TIAA-CREF which offers various investment options including TIAA Traditional, its flagship fixed annuity product. This type of financial product guarantees a minimum rate of interest while you save, and if you annuitize your retirement plan, it provides a minimum monthly amount of income during retirement like Social Security or a pension.
More specifically, TIAA Traditional is a guaranteed insurance contract that guarantees your principal and a contractually specified minimum interest rate. In addition to the guaranteed rate, TIAA can update their interest rates for new funds at any time, which will remain in effect through the “declaration year” which begin March 1st for accumulating annuities and January 1st for payout annuities. As a result, money you contributed during earlier time periods can earn different interest rates, which can leave you with balances in multiple “interest buckets.”
Interest rates for each “bucket”, in excess of the guaranteed minimum rate, is determined by the current interest rate environment at the time of contributions/transfers, changes in interest rates over time, TIAA’s expenses, and the financial performance of TIAA’s general account. Given today’s interest rate environment, it’s worthwhile to understand this part of your retirement portfolio if you hold TIAA Traditional assets.
In addition to the nuances around crediting rates, TIAA Traditional assets also have liquidity restrictions depending on the total amount of contributions as well as who contributed the funds to the accounts (you or your employer). With all of this in mind, a simple TIAA Authorization Form can allow your Rockbridge advisor to access the details of your TIAA account, providing a more holistic approach for investment management and financial planning. For prospective clients with TIAA Traditional assets, contact a Rockbridge advisor today who can help you navigate the complexities of TIAA as you save for and enter retirement.
