How it works

This section provides answers to participant questions about the features and benefits of the TIAA Secure Income Account.

FAQs

What are the main features of the TIAA Secure Income Account?

The TIAA Secure Income Account:

Protects your principal and accrued interest from market volatility
Guarantees a minimum interest rate between 1% and 3%
Delivers consistently positive rates of return that are announced in advance
Gives you the opportunity to convert some or all of your balance to an annuity that will provide retirement income, that you, your spouse or partner can never outlive

If you choose to take lifetime income, you will receive a predictable, protected source of income throughout your retirement.

How does the TIAA Secure Income Account work?

While you’re saving for retirement

The TIAA Secure Income Account is exclusively available as part of the asset allocation program that your employer has made available under your plan (e.g., managed account or custom model portfolio). Contributions to the TIAA Secure Income Account will be made according to the rules of that program.

Your contributions to the TIAA Secure Income Account receive competitive interest rates, regardless of market conditions. These rates will always be greater than or equal to the guaranteed minimum interest rate, which fluctuates between 1% and 3%.

The TIAA Secure Income Account is fully liquid. This means that you can transfer or withdraw your balance whenever you want (depending on the rules of your employer’s plan). Like any retirement plan investment option, there may be tax penalties if you withdraw any savings before age 59½ in addition to ordinary income tax.

If you leave your current employer, you may be able to keep your balance in their plan and the TIAA Secure Income Account, if it is still available in the plan. If you do, your balance will continue to earn interest until you make a withdrawal.

When you retire

Depending on the rules of your employer’s plan, you may have a few options:

Importantly, you typically may make more than one decision regarding your TIAA Secure Income Account balance (depending on your employer’s plan rules). For example, you can:

Convert some of your balance to lifetime income now
Take partial withdrawals for a period of time
Convert some your remaining balance to lifetime income later
Let the rest remain in the account to be available as an emergency fund
Pass any remaining balance in the account to your heirs

Who is TIAA?

TIAA (the Teachers Insurance and Annuity Association of America) was founded by Andrew Carnegie more than 100 years ago to provide retirement income to college educators. Since 1918, TIAA has paid more than $459 billion in benefits.³

Today, TIAA is a global, diversified financial services company with more than $1 trillion in assets under management (as of 12/31/19).⁴ With an award-winning⁵ track record for consistent investment performance, TIAA is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.

You can find additional information about TIAA at TIAA.org.

Why do we have annuities in our retirement plan? I thought annuities are expensive and not ideal for a retirement savings plan.

The TIAA Secure Income Account is designed to:

Protect your principal and accrued interest from market volatility
Guarantees a minimum interest rate of between 1% and 3%
Deliver consistently positive rates of return that are announced in advance
Give you the opportunity to convert some or all of your balance to retirement income that you, your spouse or partner, can never outlive

If you choose to take lifetime income, you will receive a predictable, protected source of income throughout your retirement. The TIAA Secure Income Account also provides a guaranteed minimum amount of lifetime income. While the amount of actual lifetime income may vary from year to year, it will always be greater than or equal to the guaranteed minimum lifetime income amount as described in the contract.

Because the TIAA Secure Income Account is included in your plan, there are no expense loads or commissions paid if you select lifetime income. This means that you may be able to receive more lifetime income than if you were to purchase a retail annuity product outside of your plan. Who can use the TIAA Secure Income Account? How do I contribute to it?

The TIAA Secure Income Account is typically only available as part of an asset allocation program such as a managed account or custom model portfolio. Contributions to the TIAA Secure Income Account will be made according to the rules of the asset allocation program.

If you want some of your contributions allocated to the TIAA Secure Income Account, you’ll need to subscribe to your employer’s asset allocation program. Once you subscribe, then depending on the rules of the asset allocation program, some of your contributions and balance may be allocated to the TIAA Secure Income Account. This will occur automatically as a part of the asset allocation program.

If you find that you already have a balance in the TIAA Secure Income Account, your funds were likely defaulted into the plan’s default investment, which includes an allocation to the TIAA Secure Income Account.

Is the TIAA Secure Income Account a publically traded investment or registered with the Securities and Exchange Commission (SEC)? Is there a prospectus?

No. The TIAA Secure Income Account is not a securities product. It does not have to be registered with the SEC so a prospectus is not necessary.

The TIAA Secure Income Account is a guaranteed insurance product. It is subject to oversight by state insurance commissioners including TIAA’s primary state regulator, the New York Department of Financial Services.

The TIAA Secure Income Account is not a mutual fund and is not publicly traded, so there is no “ticker” for it.

How does the TIAA Secure Income Account help my long-term retirement planning?

The TIAA Secure Income Account offers you the benefits of any fixed annuity: it can provide stability, protection, and flexibility. It offers a solid foundation for your retirement savings because its guaranteed returns do not fluctuate with market volatility, thereby protecting this portion of your retirement savings from losses. This can be especially important as you approach and live in retirement, when market downturns may have a negative impact on your standard of living more so than if market downturns had occurred earlier in your career.

The TIAA Secure Income Account can also provide a foundation of protected lifetime income. You can use this, for example, to help cover your essential living expenses in retirement. Of course, you’re not required to convert any of your account balance to lifetime income, but you have the choice.

Any amounts that you do not convert to lifetime income can remain in the account and continue to earn interest (depending on the rules of your employer’s plan). You can choose to withdraw these amounts in full or in part later, at whatever pace suits your needs.

What guarantees does the TIAA Secure Income Account provide?

While you’re saving for retirement

The TIAA Secure Income Account provides guaranteed interest rates, declared in advance. This means that your account balance will never decrease because of market downturns—and you know what your return will be You will never lose the value of the principal and interest that’s already been credited to you. The guaranteed interest rates will always be greater than or equal to the guaranteed minimum rate of between 1% and 3%, which is re-determined annually. Additional amounts are not guaranteed for periods other than the period for which they are declared.

When you retire

The TIAA Secure Income Account can also provide a guaranteed minimum amount of lifetime income. While the amount of actual lifetime income may vary from year to year, it will always be greater than or equal to the guaranteed minimum lifetime income amount as described in the contract. In fact, in a similar TIAA annuity product, TIAA has paid more than the guaranteed minimum lifetime income amount every year since 1949. (Source: TIAA Actuarial Department, December 2018)

What insurance company backs the guarantees?

The TIAA Secure Income Account guarantees are backed by the financial strength of TIAA (the Teachers Insurance and Annuity Association of America), a New York-based insurance company that has been providing guaranteed lifetime income products for over 100 years.

Like all insurance companies, TIAA is required to hold a certain amount of capital in reserve to help satisfy guarantees. TIAA is also required to maintain sufficient liquidity and adhere to specific investment type and quality standards.

TIAA’s financial strength ratings—a measure of the firm’s claims-paying ability—are among the highest for U.S.-based life insurance companies.

In fact, for its stability, claims-paying ability and overall financial strength, TIAA is a member of one of only three insurance groups in the United States to currently hold the highest rating available to U.S. insurers from three of the four leading insurance company rating agencies: A.M. Best (A++ as of 6/19), Fitch (AAA as of 5/19) and Standard & Poor’s (AA+ as of 12/19), and the second-highest possible rating from Moody’s Investors Service (Aa1 as of 8/19). There is no guarantee that current ratings will be maintained. The financial strength ratings represent a company’s ability to meet policyholders’ obligations.

Additional information:

How TIAA backs its guarantees:

tiaa.org/public/pdf/How_TIAA_Supports_Guarantees.pdf

TIAA’s financial strength ratings and associated ratings agency reports:

tiaa.org/public/pdf/performance/retirement/profiles/TIAA_Gen_Act_Fin_Strength.pdf

TIAA’s capital and surplus position: Is the TIAA Secure Income Account the same as the TIAA Traditional Annuity?

No. Although the TIAA Secure Income Account shares some of the distinctive benefits of the TIAA Traditional Annuity, it is designed specifically for private sector retirement plans where TIAA is not the plan’s recordkeeper.

My employer has removed the TIAA Secure Income Account from the plan investment menu and it’s being mapped to something else. I like the product and want to retain it. What are my options?

Contributions will no longer be made to the TIAA Secure Income Account. However, if you’re eligible to take a distribution from your employer’s plan (typically because you’ve already terminated employment), you may be able to roll over your TIAA Secure Income Account balance to a similar TIAA fixed annuity product available in an Individual Retirement Account (IRA) from TIAA. The IRA-based fixed annuity includes guaranteed crediting rates and the choice of lifetime income payments when you retire—the features also available through the TIAA Secure Income Account used in your employer plan.

Keep in mind, though, that the interest crediting rates and lifetime income payout rates in the IRA-based fixed annuity typically won’t be as high as they had been in the TIAA Secure Income Account.

There are some eligibility conditions for the IRA-based fixed annuity, but we’re told that many employees will be able to meet them.

Of course, if you’re eligible to take distributions from the plan, you have other options to roll your balance out of the plan. However, those options will not typically include access to a similar TIAA fixed annuity.

If you’re not eligible to take distributions from the plan, your balance in the TIAA Secure Income Account will be transferred according to the mapping instructions that your employer provided.

Note for call center representatives: Additional information, including the eligibility questions, is available at www.tiaa.org/public/retire/financial-products/iras. Participants can review the information on the page and then select Open an Account to get started and determine if they’re eligible to rollover to the TIAA IRA fixed annuity product.

If you have questions or need additional information, please contact TIAA_DCIO_Support@tiaa.org. TIAA will be happy to help you.

¹ Payout options are also subject to the terms of the plan. In addition, withdrawals prior to age 59½ may be subject to a 10% federal tax penalty, in addition to ordinary income taxes.

² All guarantees are based on TIAA’s claims-paying ability.

³ As of 12/31/18. Other benefits from TIAA include: surrender benefits and other withdrawals, death benefits, health insurance and disability insurance benefits, and all other policy proceeds paid.

⁴ Based on $1.1 trillion of assets under management across Nuveen Investments affiliates and TIAA investment management teams as of 12/31/19.

⁵ The Lipper Mixed-Assets Large Fund Award is given to the group with the lowest average decile ranking of three years’ Consistent Return for eligible funds over the three-year period ended 11/30/15 (against 39 fund families), 11/30/16 (36), 11/30/17 (35) and 11/30/18 (35). Note this award pertains to mixed-assets mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson Reuters Lipper Awards, ©2019 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. Past performance does not guarantee future results. For current performance, rankings and prospectuses, please visit the Research and Performance section on TIAA.org. The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products.