TLDR: Should we be able to move (with 1-2 phone calls), long-seasoned money at TIAA that is earning the SRA rate (~4.30%) to the higher RA rate (~5.05%)?
(Tried last year unsuccessfully, but sometimes phone reps are inconsistent. Complicated strategies are precluded, but a few phone calls/forms would be ok).
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Background in longer thread from last year. But that thread meandered to many topics, and I want focus on the current situation.
My parents are both alive, in their 80s. My brother and I manage their finances. My parents are wealthy, with assets that are substantially in excess of any realistic needs during their lifetime, with most/all excess to pass to us (3 brothers, including one who isn't involved on the financial side).
My mother has ~$99K at TIAA, with $74K in an SRA (Supplemental Retirement Annuity?), $25K in an RA (Retirement Annuity?). IIUC, the earning rate on these varies over time, but currently the SRA is at 5.05%, the RA is at 4.30%. The SRA basically always earns more, with the rationale being that the RA is somehow more liquid.
Liquidity is ~meaningless in my mother's context. She takes the RMDs but has no realistic need in her lifetime to touch the principal.
I estimate my mother's remaining lifespan at maybe 8-12 years, but could be longer (or less). My father is a bit older and in a bit worse health, with a shorter expected lifespan. Detailed conversations with my parents about expected lifespan are awkward.
After looking at things last year, I estimated that annuitizing would have a modestly positive expected value, vs. the status quo, but my brother was negative on the idea (more complexity plus maybe awkward conversations. In any case, we're trying to avoid excess transaction that we have to involve our parents directly in).
With annuitizing ~out, and no need for liquidity, I thought the right play was to try to move the ~$25K in the slightly lower paying RA to the SRA side, to earn ~60-70bp more. This is not a huge financial win - around $190/year in extra "interest". Given a ~10 year expected lifespan for my mother, about $2K in lifetime expectation.
My parents don't have (and none of us want) online access to TIAA. We called in to TIAA last year (speakerphone with me sitting by my mother), and after, to my understanding, having been told on a previous phone call to TIAA that it *would* be possible to move the RA sum to SRA, on the subsequent call we were told that it was *not* possible - maybe connected to how these accounts were set up/funded decades ago - I don't really remember. Anyways, I'm circling back to this now (having addressed many higher priority financial issues).
Anything I/we do with respect to these accounts for a ~$2K lifetime win would have to be something we could do with 1-3 phone calls to TIAA, maybe filling out a form or two. If it's MORE involved than that, then it's just not worthwhile in terms of time and hassle.
What's the likelihood that we were somehow misinformed and we COULD, with another try, switch the RA money to the higher paying SRA rate?
(The previous thread mentioned moving money out of the account somehow then back in in 121 days. I didn't understand it exactly - move it out of TIAA entirely, then back, or move it to some other subaccount type within TIAA, then back? And if the latter, does it still earn ~t-bill interest rates for the 121 days that it's out?)
If that's unlikely, is there some kind of other SIMPLE thing we could do that's likely to be net positive for the RA money (or the combined pool)? Like switch to some other sub-account within TIAA (a bond fund or something like that?) My mother has an external (Schwab) taxable trust account and a Roth IRA, but no external traditional IRA, so rolling it over would involve a fairly high pain factor - probably not of interest.
Again, it's ~$2K *maximum* expected value - not to be scorned if easily achieved, but at the end of the day, not *that* meaningful or worth major hassle for my parents or their heirs.
(Tried last year unsuccessfully, but sometimes phone reps are inconsistent. Complicated strategies are precluded, but a few phone calls/forms would be ok).
===
Background in longer thread from last year. But that thread meandered to many topics, and I want focus on the current situation.
My parents are both alive, in their 80s. My brother and I manage their finances. My parents are wealthy, with assets that are substantially in excess of any realistic needs during their lifetime, with most/all excess to pass to us (3 brothers, including one who isn't involved on the financial side).
My mother has ~$99K at TIAA, with $74K in an SRA (Supplemental Retirement Annuity?), $25K in an RA (Retirement Annuity?). IIUC, the earning rate on these varies over time, but currently the SRA is at 5.05%, the RA is at 4.30%. The SRA basically always earns more, with the rationale being that the RA is somehow more liquid.
Liquidity is ~meaningless in my mother's context. She takes the RMDs but has no realistic need in her lifetime to touch the principal.
I estimate my mother's remaining lifespan at maybe 8-12 years, but could be longer (or less). My father is a bit older and in a bit worse health, with a shorter expected lifespan. Detailed conversations with my parents about expected lifespan are awkward.
After looking at things last year, I estimated that annuitizing would have a modestly positive expected value, vs. the status quo, but my brother was negative on the idea (more complexity plus maybe awkward conversations. In any case, we're trying to avoid excess transaction that we have to involve our parents directly in).
With annuitizing ~out, and no need for liquidity, I thought the right play was to try to move the ~$25K in the slightly lower paying RA to the SRA side, to earn ~60-70bp more. This is not a huge financial win - around $190/year in extra "interest". Given a ~10 year expected lifespan for my mother, about $2K in lifetime expectation.
My parents don't have (and none of us want) online access to TIAA. We called in to TIAA last year (speakerphone with me sitting by my mother), and after, to my understanding, having been told on a previous phone call to TIAA that it *would* be possible to move the RA sum to SRA, on the subsequent call we were told that it was *not* possible - maybe connected to how these accounts were set up/funded decades ago - I don't really remember. Anyways, I'm circling back to this now (having addressed many higher priority financial issues).
Anything I/we do with respect to these accounts for a ~$2K lifetime win would have to be something we could do with 1-3 phone calls to TIAA, maybe filling out a form or two. If it's MORE involved than that, then it's just not worthwhile in terms of time and hassle.
What's the likelihood that we were somehow misinformed and we COULD, with another try, switch the RA money to the higher paying SRA rate?
(The previous thread mentioned moving money out of the account somehow then back in in 121 days. I didn't understand it exactly - move it out of TIAA entirely, then back, or move it to some other subaccount type within TIAA, then back? And if the latter, does it still earn ~t-bill interest rates for the 121 days that it's out?)
If that's unlikely, is there some kind of other SIMPLE thing we could do that's likely to be net positive for the RA money (or the combined pool)? Like switch to some other sub-account within TIAA (a bond fund or something like that?) My mother has an external (Schwab) taxable trust account and a Roth IRA, but no external traditional IRA, so rolling it over would involve a fairly high pain factor - probably not of interest.
Again, it's ~$2K *maximum* expected value - not to be scorned if easily achieved, but at the end of the day, not *that* meaningful or worth major hassle for my parents or their heirs.
Statistics: Posted by psteinx — Wed Jun 05, 2024 4:50 pm — Replies 3 — Views 138