Teachers Insurance and Annuity Association (TIAA)

What Is the Teachers Insurance Annuity Association (TIAA)?

The Teachers Insurance and Annuity Association (TIAA) is a financial organization that gives investment and insurance services to those working for organizations in the nonprofit industry in scholar, research, medical, government, and social fields. TIAA has a history that dates back to the late Andrew Carnegie, whose Carnegie Foundation for the Advancement of Teaching made the initial organization to service the pension needs of teachers. The financial services company was established in 1918 with a $1 million endowment from the Carnegie Foundation. It went by the name TIAA-CREF, short for Teachers Insurance and Annuity Association-College Retirement Equities Fund, until 2016 when it rebranded under the shortened name of TIAA.

TIAA Explained

After Congress revoked its tax-exempt status in the Taxpayer Relief Act of 1997, TIAA moved its model to turn into a for-profit financial services corporation, offering retirement products, 529 college savings plans, managed investment accounts, savings products, and brokerage accounts. Presently structured as a nonprofit organization has taxable auxiliaries. TIAA's profits are dispensed to policyholders of the TIAA Traditional account in light of a yearly determination by the TIAA board. The primary office is in New York, and as of March 2022, there are 146 offices in the U.S.

Starting around 2021, TIAA had in excess of 5 million active and retired employee accounts at in excess of 15,000 institutions, with $1.3 trillion under management. Its investment manager, Nuveen, is the No.1-positioned asset manager of real assets in farmland as of Oct. 04, 2021. It was positioned the No.1 Best Overall Large Fund company by the Refinitiv Lipper Fund Awards for a very long time, from 2013 to 2018. It additionally won the Lipper Best Mixed Assets Large Fund Group award for five sequential years, from 2016 to 2020.

Adding the College Retirement Equities Fund (CREF)

While the creation of TIAA in 1918 for of giving guaranteed lifetime income and insurance was a groundbreaking new resource for teachers and instructors, it was the foundation of the College Retirement Equities Fund (CREF) in 1952 that began the company on the road to turning into a diversified financial services firm.

Refering to quickly progressively life hopes, CREF permitted individuals the opportunity to add equity investments to their personal portfolios through a variable annuity product. It was intended to utilize the higher expected returns of stocks to assist with stretching out the retirement income floods of workers. Fortune magazine depicted CREF in 1952 as "the greatest development in the insurance investment business since the passage of the Social Security Act in 1935." TIAA dropped CREF from its name in 2016.

TIAA Acquisitions

In the past decade, TIAA has made a few acquisitions to develop its portfolio and product offerings.

In April 2014, TIAA announced it would secure Nuveen Investments in a deal valued at $6.25 billion.
In April 2015, TIAA announced that it had acquired full ownership of TIAA Henderson Real Estate, buying out its joint venture partner, Henderson Global Investors, for \u00a380 million.
In August 2016, TIAA consented to purchase EverBank Financial Corp. for $2.5 billion in cash. The deal was completed in June 2017.

TIAA has demonstrated a history of accepting investment strategies before the strategies became mainstream. In 1979, the company was one of the first to utilize a broad portfolio of international stocks as part of its investment strategy. In 1990, it added the CREF Social Choice Account to its setup, giving customers a socially responsible investing option. In 1992, it presented the Rollover IRA. In 1995, TIAA offered individuals the ability to invest in straightforwardly owned real estate properties. In 1998, the company entered the 529 marketplace.

On May 1, 2021, Thasunda Brown Duckett turned into TIAA's leader and chief executive officer (CEO), making her one of just two Black ladies heading Fortune 500 companies. Already, she was the CEO of Chase Consumer Banking. Duckett was named one of Fortune's Most Powerful Women in 2021. American Banker magazine named her the seventh Most Powerful Woman in Banking in 2019. Black Enterprise magazine remembered her for its Most Powerful Women in Corporate America list in 2015.

TIAA Retirement Products

TIAA offers an assortment of retirement products. Among the most well known are:

TIAA-CREF Traditional Plan

This employer-sponsored plan is a defined-contribution plan like a 401(k), and there are huge differences between the two with regards to their structure, funding, investments, and payouts. The TIAA-CREF Traditional plan can be funded with either fixed or variable annuities, and its accentuation is on giving lifetime income at retirement instead of tax-exempt wealth accumulation. There are eight distinct variable CREF structures: Stock Account, Growth Account, Global Equities Account, Equity Index Account, Social Choice Account, Bond Market Account, Inflation-Linked Bond Account, and Money Market Account.

TIAA plans aren't as worried about the amount of money saved, which is expected to supplement other retirement income; all things being equal, they shift focus over to future annual income generated by the accumulated money. The funds are annuitized to give guaranteed lifetime annual income. In that sense, the TIAA traditional plan works more like a defined-benefit pension plan than a 401(k).

TIAA Personal Annuities

You can likewise purchase a personal annuity straightforwardly from TIAA, which offers both the fixed and variable kind. A fixed annuity develops at a sluggish yet consistent rate as you save, even during financial slumps. There are no mandatory withdrawals prior to age 90, and the money in your annuity develops tax-deferred. An assortment of time spans are accessible.

A variable annuity offers a chance for greater growth through investments however is subject to the fancies of the market. There are essentially no contribution limits, permitting you to keep investing retirement money after you have maximized your 401(k), 403(b), or individual retirement account (IRA). TIAA offers more than 60+ investment decisions, and your money develops tax-deferred. You can invest or pull out funds whenever, and both you and your spouse can receive payments in retirement. At retirement, you can decide to generate a set amount of annual lifetime income or take the money in a lump-sum payment. You never pay a surrender charge.

TIAA IRAs

TIAA offers traditional and Roth IRAs, and it likewise permits you to roll over other retirement accounts — 401(k), 403(b), or IRA plans — into a new or existing TIAA IRA. Rollovers can likewise go the alternate way: from a TIAA plan to a customary retirement account. Traditional IRAs give a tax break on the money you deposit, yet you must pay taxes on the money when you pull out it. Roth IRAs include after-tax contributions, implying that you don't pay taxes on withdrawals. TIAA additionally has SEP and SIMPLE IRAs for small businesses.

TIAA Target-Date Funds

Target-date funds are named "lifecycle" funds by TIAA and permit you to invest in mutual funds. You pick a retirement date, and the fund naturally changes its mix of high-hazard and okay investments over the long run, with the last option expanding as you draw nearer to your retirement date.

Features

TIAA was formerly likewise part of the College Retirement Equities Fund (CREF), which veered off as a separate entity in 2016.
TIAA is an abbreviation for the Teachers Insurance and Annuity Association.
A for-profit financial institution gives pension, insurance, and investment services, principally for teachers and their families.
TIAA is driven by Thasunda Brown Duckett, its leader and CEO.
Prior to 1997, TIAA-CREF operated as a nonprofit.

FAQ

Is a TIAA-CREF Plan the Same as a 401(k)?

No, however there are a few likenesses. Both are defined-contribution plans, yet a 401(k) is intended to turn out supplemental revenue in retirement and endeavors to expand the funds in it, while a TIAA plan is expected to give a guaranteed lifetime annual income by annuitizing the money in the plan, making the amount saved less paramount.

Is the TIAA a Nonprofit Organization?

No, in any case, they are owned by a not-for-profit company and have a charter to operate without profit. Such an organization appeared after Congress stripped the TIAA of its tax-exempt status in the Taxpayer Relief Act of 1997.

Who Is Eligible for a TIAA-CREF Retirement Plan?

These plans are accessible to workers in the nonprofit sector in scholar, research, medical, government, and social fields. TIAA was initially begun in 1918 to give pensions to teachers.