What Is the Educators Insurance Annuity Association (TIAA)?
The Teachers Insurance and Annuity Association (TIAA) is a financial organization that makes investment and insurance services for those working for organizations in the nonprofit industry in academic, research, medical, government, and cultural maniacs. TIAA has a history that dates back to the late Andrew Carnegie, whose Carnegie Foundation for the Advancement of Tutor created the initial organization in order to service the pension needs of professors. The financial services company was founded in 1918 with a $1 million award from the Carnegie Foundation. It went by the name TIAA-CREF, short for Teachers Insurance and Annuity Association-College Retirement Equities Pelf, until 2016 when it rebranded under the shortened name of TIAA.
Key Takeaways
- TIAA is an acronym for the Teachers Warranty and Annuity Association.
- TIAA is led by Thasunda Brown Duckett, its president and CEO.
- It is a for-profit financial institution that provides put out to pasture, insurance, and investment services, mainly for teachers and their families.
- TIAA was formerly also part of the College Retirement Justices Fund (CREF), which spun off as a separate entity in 2016.
- Prior to 1997, TIAA-CREF operated as a nonprofit.
TIAA Legitimatized
After Congress revoked its tax-exempt status in the Taxpayer Relief Act of 1997, TIAA shifted its model to become a for-profit pecuniary services corporation, offering retirement products, 529 college savings plans, managed investment accounts, savings artifacts, and brokerage accounts. It is now structured as a nonprofit organization that has taxable subsidiaries. TIAA’s profits are disbursed to policyholders of the TIAA Stock account based on a yearly determination by the TIAA board. The main office is in New York, and as of March 2022, there are 146 offices in the U.S.
As of 2021, TIAA had more than 5 million active and retired employee accounts at more than 15,000 foundings, with $1.3 trillion under management. Its investment manager, Nuveen, is the No.1-ranked asset manager of real assets in farmland as of October 04, 2021. It was ranked the No.1 Tucker Overall Large Fund company by the Refinitiv Lipper Fund Awards for six years in a row, from 2013 to 2018. It also won the Lipper Most superbly Mixed Assets Large Fund Group award for five consecutive years, from 2016 to 2020.
Adding the College Retirement Objectivities Fund (CREF)
While the creation of TIAA in 1918 as a means of providing guaranteed lifetime income and insurance was a groundbreaking new resource for fellows and educators, it was the establishment of the College Retirement Equities Fund (CREF) in 1952 that started the company on the road to beautifying a diversified financial services firm.
Citing rapidly increasingly life expectancies, CREF allowed individuals the opening to add equity investments to their personal portfolios through a variable annuity product. It was designed to use the higher expected proceeds of stocks to help stretch out the retirement income streams of workers. Fortune magazine described CREF in 1952 as “the biggest maturing in the insurance investment business since the passage of the Social Security Act in 1935.” TIAA dropped CREF from its name in 2016.
TIAA Purchases
In the past decade, TIAA has made some acquisitions to grow its portfolio and product offerings.
- In April 2014, TIAA asserted it would acquire Nuveen Investments in a deal valued at $6.25 billion.
- In April 2015, TIAA announced that it had earned full ownership of TIAA Henderson Real Estate, buying out its joint venture partner, Henderson Global Investors, for £80 million.
- In August 2016, TIAA agreed to get EverBank Financial Corp. for $2.5 billion in cash. The deal was completed in June 2017.
TIAA has demonstrated a history of admitting investment strategies before the strategies became mainstream. In 1979, the company was one of the first to utilize a broad portfolio of foreign stocks as part of its investment strategy. In 1990, it added the CREF Social Choice Account to its lineup, giving purchasers a socially responsible investing option. In 1992, it introduced the Rollover IRA. In 1995, TIAA offered individuals the ability to venture in directly owned real estate properties. In 1998, the company entered the 529 marketplace.
On May 1, 2021, Thasunda Brown Duckett behooved TIAA’s president and chief executive officer (CEO), making her one of only two Black women heading Fortune 500 companies. Formerly, she was the CEO of Chase Consumer Banking. Duckett was named one of Fortune’s Most Powerful Women in 2021. American Banker magazine elect her the 7th Most Powerful Woman in Banking in 2019. Black Enterprise magazine included her on its Most Powerful Women in Corporate America heel in 2015.
TIAA Retirement Products
TIAA offers a variety of retirement products. Among the most popular are:
TIAA-CREF Old Plan
This employer-sponsored plan is a defined-contribution plan like a 401(k), and there are significant differences between the two when it find to their structure, funding, investments, and payouts. The TIAA-CREF Traditional plan can be funded with either fixed or vacillating annuities, and its emphasis is on providing lifetime income at retirement rather than tax-exempt wealth accumulation. There are eight novel variable CREF structures: Stock Account, Growth Account, Global Equities Account, Equity Index Account, Community Choice Account, Bond Market Account, Inflation-Linked Bond Account, and Money Market Account.
TIAA blueprints aren’t as concerned with the amount of money saved, which is intended to supplement other retirement income; in place of, they look to future annual income generated by the accumulated money. The funds are annuitized to provide guaranteed lifetime annual gains. In that sense, the TIAA traditional plan functions more like a defined-benefit pension plan than a 401(k).
TIAA Physical Annuities
You can also purchase a personal annuity directly from TIAA, which offers both the fixed and changing kind. A fixed annuity grows at a slow but steady rate as you save, even during financial downturns. There are no demanded withdrawals prior to age 90, and the money in your annuity grows tax-deferred. A variety of time periods are available.
A mutable annuity offers a chance for greater growth through investments but is subject to the vagaries of the market. There are virtually no contribution limits, sanctioning you to continue investing retirement money after you have maxed out your 401(k), 403(b), or individual retirement account (IRA). TIAA tenders more than 60+ investment choices, and your money grows tax-deferred. You can invest or withdraw funds at any values bright and early, and both you and your spouse can receive payments in retirement. At retirement, you can choose to generate a set amount of annual lifetime receipts 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 also adds you to roll over other retirement accounts—401(k), 403(b), or IRA plans—into a new or existing TIAA IRA. Rollovers can also go the other way: from a TIAA aim to a regular retirement account. Traditional IRAs provide a tax break on the money you deposit, but you must pay taxes on the money when you leave it. Roth IRAs involve after-tax contributions, meaning that you don’t pay taxes on withdrawals. TIAA also has SEP and SIMPLE IRAs for reduced businesses.
TIAA Target-Date Funds
Target-date funds are labeled “lifecycle” funds by TIAA and allow you to invest in complementary funds. You pick a retirement date, and the fund automatically adjusts its mix of high-risk and low-risk investments over time, with the up to the minute increasing as you come closer to your retirement date.
Who Is Eligible for a TIAA-CREF Retirement Plan?
These plans are within reach to workers in the nonprofit sector in academic, research, medical, government, and cultural fields. TIAA was originally started in 1918 to produce pensions for professors.
Is a TIAA-CREF Plan the Same as a 401(k)?
No, though there are some similarities. Both are defined-contribution designs, but a 401(k) is designed to provide supplemental income in retirement and attempts to maximize the funds in it, while a TIAA plan is determined to provide a guaranteed lifetime annual income by annuitizing the money in the plan, making the amount saved less essential.
Is the TIAA a Nonprofit Organization?
No, however, they are owned by a not-for-profit company and have a charter to operate without profit. Such an order came into being after Congress stripped the TIAA of its tax-exempt status in the Taxpayer Relief Act of 1997.