TIAA Traditional Liquidity Options

November 17, 2023

Welcome to the HigherEd Retire Blog, your go-to resource for navigating the often confusing landscape of higher education retirement plans. I'm Greg Shepard, an independent financial advisor specializing in higher ed retirementplans, and today's discussion revolves around TIAA accounts. If you're feeling overwhelmed or confused about liquidity options within TIAA's traditional contracts, you're in the right place. Let's dive into the three most popular contracts: RA (Retirement Annuity), GRA (Group Retirement Annuity), and RC (Retirement Choice).

Understanding RA Contracts:

If your RA account exceeds $2,000, you can consider a Transfer Payout Annuity (TPA) to reinvest while you’re still in service. You would do this if you have funds in TIAA Traditional and you’re looking to create liquidity for those monies.  This option can be advantageous in high-interest rate environments in order to take advantage of the current TIAA Traditional rates. Upon separation of service, if your RA account holds less than $2,000, it becomes liquid (NY resident’s different rules). Most individuals opt to roll this over to an IRA.

For RA accounts greater than $2,000, you have various options, including Required Minimum Distributions (RMD), TPA, interest-only options, and lifetime income annuities. It's essential to weigh these choices based on your unique situation.

Decoding GRA Contracts:

If your TIAA Traditional GRA account surpasses $5,000, you can opt for a TPA to reinvest while still in service. Post-termination, if your GRA account is less than $5,000 those monies become liquid and most folks would choose to roll that account over to a Rollover IRA.  

For GRA accounts greater than $5,000 within 120 days of separation of service, you have the option to incur a 2.5% penalty for liquidity. If you’ve surpassed the 120 days or not interested in the 2.5% penalty strategy, there are other various choices as well, such as a five-year fixed option, RMD, interest-only, TPA, and lifetime income annuity.

Exploring RC Contracts:

If your TIAA Traditional RC account exceeds $5,000, consider a seven-year TPA or systematic withdrawals to reinvest while still in service. Post-termination, if your RC account is less than $5,000, it becomes liquid, and most retirees roll it over to an IRA.

For RC accounts greater than $5,000 within 120 days of separation of service, a 2.5% penalty can make the money liquid. Other options include an 84-month TPA, RMD, lifetime income annuity, and interest-only.

Conclusion:

Navigating TIAA retirement plans can be daunting, especially when dealing with TIAA Traditional liquidity options. Remember, this blog is not providing investment advice, but rather an overview to help you make informed decisions. If you find this overwhelming or confusing, don't hesitate to reach out to TIAA or contact me directly – I'm here to assist.

As you embark on your retirement journey, make informed choices based on your unique financial situation. Take care, and take control of your retirement today!

Greg Shepard

S&A Financial Services, Inc.

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greg@shepardfinancial.com

*Disclosure* S&A Financial Services, Inc. is a registered investment advisor. Content presented is for informational purposes only and should not be considered as investment advice or as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Always consult with your tax advisor or attorney regarding your specific situation.