Step one: Classify your assets
The first step in an asset location review is to organize your assets by account types and when they’ll be taxed. Decide if the asset belongs in the “now,” “later” or “never” bucket.
For instance, let’s say you have an asset in a certain account. If that asset is taxed before it’s used, investment gains may be impacted. Instead, it may be more efficient to move the asset to a different account to better match when it’ll be used and taxed.
STEP TWO: Designate the purpose of your accounts
Now, it’s time to identify how you plan to use each account. You probably use different assets for your:
Needs—the essential costs ofliving
Wants—things that are important to you, but can be cut back
Wishes—your own vision of an ideal retirement or legacy
Step three: Locate your assets
Your TIAA advisor can conduct an asset location review of your accounts—those you hold with TIAA and any you may hold elsewhere. When the review is complete, you should have a clearer idea of whether your assets are in the right location—and if your strategy is as tax smart as it could be. Consult with your tax advisor prior to making any changes.
| Time horizon | Now | Later | Never |
| Purpose | Assets for near term and/or assets for non-negotiable daily living expenses | Assets for future use such as retirement income, healthcare and/or elastic expenses | Assets to fund longer term wishes such as leaving a legacy |
| Saving for shorter term financial needs (e.g., home, renovation) | Cash/Money Markets The flexibility of these accounts allows near-term goals to be met with little tax implication due to the minimal interest distributions. | CDs A savings vehicle with a fixed period for the length of time you want to save with a fixed interest rate. | |
| Emergency fund | Long-term Care Tax-free income benefit should you need long-term care services. | ||
| College savings | 529 College Savings Plans Specialized accounts for college savings that offer tax benefits when used for qualified education expenses. | ||
| Wealth accumulation | Managed accounts From self-guided to advisor-led, managed accounts provide enhanced investment capabilities, resources and committed people who will professionally manage your portfolio based on what matters most to you. | ||
| Retirement savings | Qualified retirement plans and IRAs Potential growth of any investment earnings are tax-deferred until you make a withdrawal or distribution. | Roth IRA Contributions are after tax, and withdrawals can be tax-free in retirement. Ability to leave income tax-free assets to your family and heirs. | |
| Supplement retirement savings | Personal (after-tax) annuities A great way to supplement pension plans and other tax-qualified options, with additional retirement savings, and guaranteed retirement income options. | ||
| Income protection/ Legacy planning | Life Insurance Generally income tax-free death benefit proceeds can help replace income for beneficiaries and create a legacy for heirs.2 | ||
Please log on to tiaa.org/prospectuses for underlying product and fund prospectuses that contain this and other information. Read the prospectuses carefully before investing.