Personal Investments • TIAA Traditional

You bet they have reserves. State Insurance Commissions require it. BUT, when a cohort dies off (or whatever the trigger is), the "un-needed reserves" belong to, and are distributed to ... ... wait for it .... THE PARTICIPANTS, not TIAA! In fact, until 1997, this "income" was not taxable before distribution. But congress wanted to stick it to TIAA and Mutual of America and the like.

This is one of the reasons that TIAA payouts are not, strictly speaking, the same for every month of your life after you make the annuitization decision. Technically, they could go ... gasp ... down. But historically, TIAA has tried very hard to avoid that. And they have handed out some (permanent) INCREASES in payouts that were never promised. Including in recent years.

All of this is complex and unusual, and it partly accounts for (legitimate) complaints about how complex TIAA is. But such complaints overlook how, for 100 years, TIAA has been more customer-oriented than most of its competition. I agree, however, that "this is not your mother's TIAA."

I just find that a lot of TIAA Traditional participants never annuitize. Maybe I am wrong about that. But if so, they would be subsidizing those who do.

Why, especially for the liquid version? I don't plan to annuitize and I am treating it as a bond fund replacement. Since it is liquid, I can transfer out if I am not happy with the crediting rate. (I know I am simplifying as TIAA uses a bucket system and any withdrawal is pro rated from each bucket.)

Statistics: Posted by Harmanic — Mon Apr 29, 2024 8:11 pm — Replies 13 — Views 1402