Ray,

I don't mean to intrude on your post to Henry, but I too would find the discrepancy a real concern.  I am also disturbed to hear you received actuarial trash. 

Both the above matters would give me pause, and from what I understand WMAs are in no position (e.g., have no authority or actuarial expertise) to certify results.

I think I'd go up the chain of command, Ray, and contact the head of the Board of Overseers.  I think the Overseers' addresses are available under the "governance" heading at the homepage.

I contacted an overseer a couple of years ago and received a pretty prompt response.  Best wishes, Bob 

Edit: I used the following contact link when I went up the chain of command.  http://www.tiaa-cref.org/about/governance/corporate/topics/contact_our_boards.html 

Ray, I'm guessing that TPA in your post stands for Transfer Payout Annuity. Are there still transfers in progress from a TIAA Traditional account? If so, I wonder if the TPA funds are not being annuitized immediately in the model, but only in future years, which would produce a higher payout?  Also, presumably a TPA involves an RA or other higher-interest-rate TIAA Traditional account than an IRA account. Could that affect the assumed principal if there is any delay (from today) in the annuitization? Could there be older vintages in the TPA that result in higher annuitization rates?  The pre-1992 annuitization rate is 8.5% while the 2008 annuitization rate is 5.5% right now.

When I log in and go to the "Retirement Illustrations from Standard Folio", I see a set of assumptions that looks like this. I only paste it here to indicate how complex (and presumably interacting) the assumptions in the calculator could be. And I'm proposing (without actual knowledge) that there are invisible data that TIAA ought to have and apply, like vintage distributions.

Tim

Tim,

I covered all the assumptions and they were the same for both runs; the WMA did the same also.

My rudimentary understanding of the process is that in an annuitization the funds are transferred out of the account in which they are housed to the General Account and then the annuitization calculations are done. The annuitization payout then reflects a given rate for the participant and the assumptions; it should be the same for all accounts he/she has as long as the assumptions for each run are the same.

As I said, I will meet with my WMA on Monday; he will have received a communication of some sort from the WMA I spoke with this morning and an e-mail from me. I may (or may not) have an explanation then. 

The WMA who ran the two runs on her own this morning was at a complete loss as to why the difference existed. She was of the opinion the annual rate of return for the IRA run was correct but that for the TPA was high and she knew of no reason for that. 

I personally think it is an error in the calculator of some sort. If I ever find out, I will post the cause.

Ray

The WMA who ran the two runs on her own this morning was at a complete loss as to why the difference existed.

 Ray,

I like the idea of the WMAs, but I really don't have too much faith in them. The young lady that was my WMA who I thought highly of has been kicked upstairs to the New York office.

I went to Philadelphia and met a sharp guy with an advanced title (which I forgot), who was well liked in the office and I got some very good conversation and advice from him. Incidentally, he reads this board and is impressed with it. But when I tried to contact him to follow up on what we were discussing, I found that he no longer worked there, and his existence was wiped from official memory.

I've been reassigned to a new WMA who my wife and I met with recently. He seemed very nice, but I doubt that he could come up with an answer to a question like yours. Can't you say that you want to Annuitize a certain amount, but you won't sign the contract until they show you the figures?

Sy

Sy,

I expect to get the right numbers, or a promise to have them delivered to me, when I meet with our WMA on Monday. I have written him three e-mails, which he has acknowledged and responded to, so he knows exactly what the agenda will be for the Monday meeting. 

I am not committed to annuitizing and I probably won't now that I believe the payout from the TPA is erroneous and not real.

Monday's meeting should be interesting.

Ray

We met with my WMA today and much to my surprise I discovered that the results obtained from the income calculator presented in the original post in this thread are correct. The on-line WMA who told me this past Sat. that there should be no difference between the two estimates (assuming equal principals), one from my IRA and one from one of my TPAs, was mistaken. Becuase one of the TPA holds Traditional Funds that go back as far as 1969, and because is such a large proportion (%) of the funds in that TPA, the weighted interest rate for that TPA is higher than one would expect.

At the moment I am holding off on annuitizing. We may annuitize the TPA distribution coming out early next year and annually thereafter make the decision at that time whether or not to annuitize that year's TPA distribution. The WMA did think this was a reasonable way to go as he did not favor a all-at-once annuitization of the entire TPA. To be exact he discouraged us from annuitizing at all.

If I decide to annuitize, the Traditional funds in the TPA are the ones I would annuitize if I were going to take a "fixed" annuity with the payout coming directly from the Traditional Account funds because of the surprisingly high interest rate associated with that early vintage. Of course there is no guarantee that the vintage will retain its current interest rate.

If I wanted to take advantage of the high interest rate associated with that early vintage in the TPA now I would have to annuitize the entire principal in this TPA, one cannot do a partial annuitization of fund in a TPA, but this is something I do not want to do. What I may do is to allow the principal to "run down" over the next few years and then annuitize. But again, I have no guarantee the early vintage will retain its surprisingly high interest rate. Of course if you had multiple TPAs, one could annuitize all of the one that would have a vintage with a high interest rate. When you create a TPA, the vintages are retained in the TPA.

Ray,

Thanks for this update. I understand that the payout interest rates from those old vintages can be substantial.

Henry

Yes, it can and was. I believe Tim posted information that it was as high as 13% but remember, that was for a comparatively short period of time. My first vintage now spans a period of about 13 years - not sure exactly because I am not sure of the exact year in which it ended.

If you are going to annuitize, know your vintages and their interest rate. And if you know you are going to annuitize, think of the TPA as a way to lock-in the vintages and associated interest rates for up to nine years and one day. But of course, realizing that the balance diminishes by 1/10 every TPA anniversary date.

Ray

I want to make sure that newer readers don't confuse TPAs with life annutization, if one choses to annuitize. 

If I understand correctly, the purpose of a TPA is primarily to reallocate (... or cash out, either in-hand or to another company) funds that are in a TIAA Traditional account within an RA/GRA. But someone who has not begun a TPA and wanted to annuitize a portion of their TIAA Traditional account (as long as it's pre-tax money) can do so, and more than once. On the other hand, if someone begins a TPA and wishes to redirect a TPA payment back to TIAA Traditional, it goes back