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Explorer ○○

TIAA stable fund - good or not?

So I just got notified the University I retired from will allow contributions, and perhaps transfers, to the TIAA stable value fund.

https://www.tiaa.org/public/retire/financial-products/annuities/retirement-plan-annuities/tiaa-stabl...

I don't know much about this fund. It looks like I can not see the prospectus  that would apply to me until May 15 when I might be able to put in funds.

I'm thinking about using it as a flexible alternative to money market, and short term bond funds.

I've already got as much flexible tiaa traditional as my accounts can hold.

To those that have access to this fund, what are your thoughts? Would it make a good alternative to MM and short term bond funds. I can not really tell if it makes sense for me till I know what it returns.

I suspect it is worth a closer look. I like keeping a couple of years of expenses in a "cash like" account. And this seems like it might be a good alternative.

 

Thanks for you help

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26 Replies
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Frequent Contributor

Re: TIAA stable fund - good or not?

This is not Traditional.

See brochure on TIAA Stable Value Fund. It can pay 1-3% and in 2020 first half it is paying 1%. There are no vintages. Transfer rules similar to other SVs apply [90-day equity wash before transferring to competing funds].   https://fluenttech.tiaa.org/pdf/factsheet/878094400.pdf

Another general explanation   https://www.tiaa.org/public/retire/financial-products/annuities/retirement-plan-annuities/tiaa-stabl...

YBB
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Explorer ○○

Re: TIAA stable fund - good or not?

Thanks. I guess I'll have to wait and see " if my plan offers investment options known as “competing funds” .

1% is not good, but it is better than 0%. I might be happy taking 1% for a year or two.

I think I might use it for awhile. Perhaps just put in enough for a years expenses. Thoughts?

 

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Frequent Contributor

Re: TIAA stable fund - good or not?


@dknightd wrote:

Thanks. I guess I'll have to wait and see " if my plan offers investment options known as “competing funds” .

1% is not good, but it is better than 0%. I might be happy taking 1% for a year or two.

I think I might use it for awhile. Perhaps just put in enough for a years expenses. Thoughts?

 


Competing funds are CREF m-mkt, T-C m-mkt, T-C short-term bond funds.

Unclear what you mean in your OP by "I've already got as much flexible tiaa traditional as my accounts can hold."

Why do you have such a limitation? SRA and RCP are flexible Traditional [unlike RA, RC which allow withdrawals in installments only] and they pay higher rates.

In my TIAA 403b, I can have 100% Traditional SRA but I don't.

YBB
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Explorer ○○

Re: TIAA stable fund - good or not?

TBB

For better or worse I have 6 TIAA-Cref accounts. Some of those are potentially subject to state income tax. Which I'd like to avoid. NY does not tax SS (which my wife has claimed, but I'm waiting till 70 for) they also do not tax some of my retirement accounts since it was their money that went in to them.

In the RA accounts TIAA traditional is not flexible. I plan to annuitize those holdings. Already did did most of them. Will do the rest before I'm 70. A small part of that will be subject to NY state tax.

I also have some TIAA traditional in a GSRA account. This will be subject to NY state tax. So my plan is withdraw slowly to keep it under the NY tax $20k/year freebee. All my GSRA money is currently in TIAA-
Tradional. It earns 3%. I think I'll be OK with that.

The money I'm thinking about moving into TIAA stable fund is money I currently have in MM and short term bond funds (plus maybe some from TREA)

In the long run it probably does not make much difference. But since it was a new offering to me I thought I should check it out. Perhaps the easiest solution is to split what was 1/2 MM 1/2 short term bond into 1/3 1/3 1/3. Or maybe not bother and just ignore the new option

 

 

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Participant ○

Re: TIAA stable fund - good or not?

I think the answer on what to do depends on how your combined monthly retirement income compares to your average monthly expenses.

I'm not a fan of keeping a lot of "cash" around to cover a year's expenses, which would be around $100k. But my income from SS+ pension/annuities is significant and I generally have leftover cash most months after bills are paid, etc. This is especially true right now since I can't spend much on travel.

Excess cash, beyond around $10k in checking, gets invested in stock index funds in my taxable account...

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Participant ○

Re: TIAA stable fund - good or not?

I would be careful not to confuse the newer Separate Account Stable Value product with TIAA Traditional. Looking just at the posted fact-sheet, I get the idea that annuitization of this product is not necessarily like annuitization of TIAA Traditional. It may be more like buying a SPIA at the time you annuitize. But we don't have all the data yet.

This may be a wise marketing response to younger clients suspicious of annuities and the opaqueness of TIAA Traditional. But it does not make it the best product for every client.

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Frequent Contributor

Re: TIAA stable fund - good or not?

TIAA designed TIAA Stable Return Annuity [inception 7/1/06] and TIAA Stable Value Annuity [inception unknown] for open-architecture plans where it is only a record-keeper with a few TIAA or CREF offerings among many multi-vendor offerings. In some such plans, TIAA offers TIAA Traditional RC and RCP.

So, these are not brand new and their crediting rates have been rather low. IMO, these are not good.

YBB
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Explorer ○○

Re: TIAA stable fund - good or not?

Currently the majority of my expenses are covered by quarterly withdrawals from 403b.

If the stable value is only returning 1% as mentioned above, there is not much point to it. But I'll still look into it when it gets added to my plan.

Thanks for the feedback.

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Contributor ○

Re: TIAA stable fund - good or not?


@dknightd wrote:

If the stable value is only returning 1% as mentioned above, there is not much point to it.


TIAA cannot print its own currency. Only Fed can do it. Congress also does it just adding the number to the debt.

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Explorer ○○○

Re: TIAA stable fund - good or not?


@yogibearbull wrote:

@dknightd wrote:

Thanks. I guess I'll have to wait and see " if my plan offers investment options known as “competing funds” .

1% is not good, but it is better than 0%. I might be happy taking 1% for a year or two.

I think I might use it for awhile. Perhaps just put in enough for a years expenses. Thoughts?

 


Competing funds are CREF m-mkt, T-C m-mkt, T-C short-term bond funds.

Unclear what you mean in your OP by "I've already got as much flexible tiaa traditional as my accounts can hold."

Why do you have such a limitation? SRA and RCP are flexible Traditional [unlike RA, RC which allow withdrawals in installments only] and they pay higher rates.

In my TIAA 403b, I can have 100% Traditional SRA but I don't.


Yogi, it would be helpful to state specific tickers for the comparisons that you mention. I have not located several and would like to see what each is paying, including TIAA IRA. I suspect the brokerage cash return is fairly poor so that return would be nice also.

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Frequent Contributor

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]


@judger wrote:
.....

Yogi, it would be helpful to state specific tickers for the comparisons that you mention. I have not located several and would like to see what each is paying, including TIAA IRA. I suspect the brokerage cash return is fairly poor so that return would be nice also.


OK, here is the list of competing VA and mutual fund tickers that would require 90-day equity-wash according to my interpretation - but double-check w/TIAA. Tickers are listed in high-ER to low-ER order. Equity-wash is now a generic term but it means equity and longer-term bond funds. I don't know why T-REA belongs but TIAA says it does.

T-REA QREARX

M-Mkt Funds

QCMMRX/QCMMPX/QCMMIX

TIRXX/TIEXX/TPPXX/TMHXX/TCIXX

Short-term Bond Funds

TSDBX/TSDDX/TSDFX/TSDHX/TSDJX

TCTRX/TISRX/TSTPX/TCTHX/TISIX

TRSHX/TESHX/TPSHX/TTBHX/TNSHX

https://fluenttech.tiaa.org/pdf/factsheet/878094400.pdf

In TIAA's own words, "If your plan offers investment options known as “competing funds” (for example, a money market account, short-term bond funds, self-directed brokerage accounts, or the TIAA Real Estate Account), and you want to transfer money from TIAA Stable Value to one of those options, the amount you transfer must first be directed to a non-competing option (for example, a stock fund or intermediate-term bond fund), where it must remain for 90 days before being transferred to the competing fund. This is referred to as the "90-day equity wash rule". "

YBB
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Explorer ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

It turns out TIAA stable value fund is available in one of my accounts. Current crediting rate after fees is 2.3%.

Unfortunately I do not want stable value in that account, but if the crediting rate is the same in other accounts then I'll probably use it instead of MM and short term bond funds.

 

I'd have to be mindful of the the "90-day equity wash rule", and the restriction "to minimize the negative effects of frequent trading, transfers into TIAA Stable Value may not be made for 30 days following a transfer out. " Although I do not think the latter would apply to withdrawals.

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Frequent Contributor

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

@dknightd , 2.3% current rate for TIAA Stable Value Annuity isn't bad.

I don't understand why the current rate isn't mentioned in its brochures [only the min rate is] or on the TIAA website or in the monthly TIAA IPS reports.

There was/is a similar product TIAA Stable Return Annuity and it was listed in the monthly TIAA IPS reports until October 2016 and its crediting rate was mentioned in the footnotes. "The returns shown for the TIAA Traditional and Stable Return Products are based on a single investment at the beginning of each period. The Crediting Rates as of October 01, 2016 are as follows: TIAA Traditional Annuity - RC ( 4.00%); TIAA Traditional Annuity - RA, GRA and GA ( 3.75%); TIAA Traditional Annuity – SRA, GSRA, GSA and SSRA ( 3.00%); TIAA Traditional Annuity - RCP ( 3.25%); TIAA Stable Return Annuity ( 1.25%)."

YBB
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Explorer ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

Well, I can now see more details on the TIAA stable fund that will be available to me tomorrow. It is the same as what is available to me in another RA account.

Current crediting rate is 2.45%, less .15% expenses, netting 2.3%. The crediting rate is adjusted twice a year (Jan and July).

The crediting rate can not fall by more than .75% at each adjustment. It is guaranteed to not fall below 1%. For me it seems like a no brainer to use this account at least for now. MM and short term bond are currently returning less than that. I've scheduled a transfer of the bulk of MM and short term bond holdings to be transferred to this account at the end of business tomorrow. I could change my mind, and transfer all of it, or none of it. Probably I should transfer it all, but I do not like to do everything at once. Even this change is much larger than I would normally do. . .

I think I can get around the "90-day equity wash rule" if required. If I want to move from stable value to a competing fund (say MM) I'd take the money out of stocks and bonds and put it into MM. Then the next day I'd take the money out of stable fund and put it into stocks and bonds. The 30 day in-out limit does not bother me (it is part of the reason I might leave some money in MM and short term bonds.)

I'm glad the University and TIAA agreed to make this fund available to me :) It may not suit everybody, but for me, right now, it suits me fine :)

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Frequent Contributor

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

FWIW, If I were you I would be pleased.

Bob 

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Explorer ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

I am :) I'm glad you agree :)

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Participant ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

dknightd, sounds good to me.  It's a plan.

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Explorer ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

Key to me was "Withdrawals and transfers, if permitted by your plan, are paid without any surrender charges or
adjustments based on market fluctuations". I did not want to invest in a stable value fund that might adjust withdrawals based on  market fluctuation NAV. To me this is essentially like buying long term CDs without withdrawal penalties, and tax deferred ;) I will be a happy camper as long as it continues to return about inflation rates.

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Participant ○○

Re: TIAA stable fund - good or not? [Competing Funds Requiring Equity-Wash]

"I will be a happy camper as long as it continues to return about inflation rates."

For a significant portion of my portfolio, I think the same way.  If you are already a hero, you don't need to try to be a hero.

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