Sy, I do NOT get that warning! I cannot explain why you do and I do not but I don't and my trades execute.

Ray 

Gentlemen,

In several of the above posts, it has been mentioned that there may be some restrictions on moving $$ in and out of the TIAA Traditional Account invested via SRA's and GSRA's.  In one post it is mentioned that if one moves $$ from the TIAA Traditional and then back into TIAA Traditional, one does not get the new rates unless some conditions are met.  Can anyone specifically address the following situation?

I have divided my TIAA Traditional assets between my RA and my SRA in order to obtain exposure to both long-term and short-term bonds.  I have accepted the lower yield in my SRA in return for the privilege of being able to move funds from the TIAA account when I wish.  My question is this.  My funds currently invested in TIAA Traditional in my SRA are earning a lower interest rate than what is now being credited for new funds.  If I move funds from TIAA Traditional to another account (e.g. money market), can I move them back into TIAA Traditional at the new rate, or is there some waiting period or other restrictions on such movements?

 Thank you in advance for any information you can provide.

 
Philip
 

I have been disturbed by some of the posts here about the interest rate one earns on the Traditional Account after a move. I do not believe what has been posted is in fact correct so I phoned in and spoke with a WMA a few minutes ago. Keep in mind that the fact that she and I agree does not mean we are right but I do believe we are.

Under current rules you can moved Traditional Funds out of the SRA to another account and move them back after 24 hours. If you do that and you only move some Traditional Funds from your holding of this account in your SRA, there is a catch; the oldest funds, which MAY have a higher rate than currently being paid, are moved first. Having said that you can move the funds out and later move them back. When moved back the funds do earn the POSTED INTEREST RATE; the guaranteed rate does not entering into the equation.

Now, she did say the above is the case under existing rules but that T-C is considering placing some new rules in place. When asked what the rules under consideration were, she did not know. She did mention the change from the three moves per month to the 60-day rule for equity investments that I have posted elsewhere but neither I nor her know what the new rules may be or when they will be placed in effect, if ever.

Call in yourself; see what they tell you. Read the relevant part of your post and ask an answer for it. The counseling number if 1 8000 842 2776. 

Ray 

PhilipT:

I have divided my TIAA Traditional assets between my RA and my SRA in order to obtain exposure to both long-term and short-term bonds.  I have accepted the lower yield in my SRA in return for the privilege of being able to move funds from the TIAA account when I wish.

Philip, I don't have the personal experience to comment on the specific question you asked.  But I wanted to separate the two sentences quoted above from your statement.

The second sentence makes good sense.  People who feel hemmed in by the TIAA Traditional withdrawal restrictions would be happier using non-RA accounts, all other factors being equal.

The first sentence is not correct.  While there have been many times when some older vintages of TIAA Traditional are paying lower interest than some newer vintages,  it is not correct to think of an SRA account as providing "exposure" to shorter-term bonds. I think it is an illusion to see the difference in interest rates between RA and IRA accounts (which is a fixed number for years at a time) as a response to short-term interest rates.  There is only one "General Account" of the TIAA Insurance company, not two accounts, one for each group of TIAA Traditional Annuities.  And it's not a Bond Mutual Fund, in any case.

I do not have any special insight into how the TIAA Traditional rates are set.  But I think the difference between RA and IRA rates is probably more related to such issues as interest rate volatility, liquidity needs, and trends in investor behavior.  And we are never going to learn exactly how either the absolute rates or the difference are decided upon.

Isn't the most important factor in the "riskless" portion of your portfolio the actual amountof interest your earn?  That is, someone who has sleepy old money in the Pre-1992 vintage of TIAA Traditional RA (5.5%) is still earning more than you will be if you manage to shift your IRA funds out and back into the 5/1/2008 to 5/31/2008 Vintage of TIAA Traditional IRA (5.0%).  I'm sure you can find a one or two-year period when this was briefly untrue.  But that Pre-1992 RA has been doing better than the corresponding IRA money for 2008-1992=16 years or more.

We're talking about a long-term retirement account here. 

Tim

raywax:

the oldest funds, which MAY have a higher rate than currently being paid, are moved first. 

If so, this would be a change.  When funds are withdrawn from a SRA account, the amount withdrawn from each vintage is based upon the percentage of your funds that you have in each vintage.

So, if your average "weighted" interest rate in your SRA is less than the current rate, it would make sense to withdrawal all funds and then reinvest at the current vintage.  I made such a move back in 2000.

Note that your average return over all vintages would have to be less than 5% in order to make this move profitable.

Dick 

Dick,

It would do more if the oldest funds are taken out first. It would, for those who have been in the system more than 22 years, take out the grandfathered funds that do not require RMD withdrawals at age 70.5. This is probably not a great sum because most of the accumulation in the Traditional Account probably comes through the compounding effect over the decades. Also, all the grandfathered funds provide is another 4.5 years of accumulation without the need for RMD withdrawals as they are subject to RMD at age 75.

Ray 

"Under current rules you can moved Traditional Funds out of the SRA to another account and move them back after 24 hours. Call in yourself; see what they tell you."

Right on, Ray!

I called in today and got a knowledgeable WMA. All of a sudden, the answer is different! That is; we are still able to transfer Traditional to Money Market (or any other fund), then back again the next day to Traditional to receive the new higher rate. She did point out that there is the possibility that the newer vintage may not be treated as well as the older vintage in the future, but nothing is definite about that.

Anyway, there is no waiting period, as I was misinformed by several TIAA-CREF counselors earlier this week.

Sy

Ray, Tim, Dick, and Sy,

You have very directly answered my question.  Thank you.  I have long followed this discussion group and have learned from many of your previous posts as well as those of other regulars on this board.   

 
Tim, you are correct in that I was not accurate when I wrote

"I have divided my TIAA Traditional assets between my RA and my SRA in order to obtain exposure to both long-term and short-term bonds." 

Let me know whether the following statement which more accurately reflects my approach seems logical to you, given what we know about TIAA Traditional.  I came of "financial age" in the late 70's during the height of stagflation, and because of the pounding that long-term bonds had during that time, I have been cautious about holding them.  Of course, this limited my gains during the great extended rally in long-term bonds as inflation and bond yields subsided during the 80's and 90's.  That being water under the bridge, I am now concerned that our country's massive debt and "imbalance" of international payments will ultimately result in higher long-term bond yields.  I thus attempt to divide my fixed income assets between long-term bonds and other investments which are not as sensitive to inflation and rising interest rates.  I view an investment in the TIAA Traditional account within an RA as being similar (although not identical) to buying and holding long-term bonds until maturity, and a portion of my fixed income assets are invested there within an RA.  On the other hand, funds invested in the TIAA Traditional account within an SRA can be withdrawn at any time without loss of principal even if interest rates rise, and such funds could be invested in a higher yielding MMF should we experience a jump in inflation and interest rates.  In this regard, I tend to think of the SRA as being similar (although not identical) to a money market fund or an ultra-short bond fund (hence my inaccurate reference to "short-term bonds" in my previous post).  In my mind this provides me with an investment vehicle for a portion of my fixed income assets which currently pays more than a MMF, which will not be adversely affected by a jump in interest rates, and which will allow me an immediate exit without loss of principal if other investments look more promising.  I view the difference in rates between the RA and SRA investments as the price of this flexibility and potential inflation protection.  If you or others have any comments on this line of reasoning, I would appreciate hearing them.

 
Thanks, Philip
        

Your description of how you see and use the Traditional Account in your SRA is fine. It will do what you want. As you may know from my recent posts I have moved quite a bit of money out of the REA in my IRA to the Traditional in the IRA because I believe the latter will outperform the former through the remainder of 2008. What I am doing in my IRA can be done in your SRA - you can move into the Traditional and out again as you see fit. It is in my opinion superior to a MM account because it has the guaranteed rate. There indeed may be times, recently was one, when a MM may pay more than the Traditional Account in the SRA and so if that does happen you can move from t