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My mother is going to retire in mid '98 from a job with a public university. All of her retirement savings are currently invested through TIAA-CREF (I assume this to be a 403(b) fund?) Although the expenses seem pretty reasonable, the returns are anemic, so my mother is considering going "Foolish" by transferring these funds to a self-directed account.

Since she will already be retired, can't she roll any or all of her retirement fund into an IRA? Any reason not to?

I have heard that any pre '87 monies in her fund are not considered in calculating her minimum distribution requirement for the first five years of the requirement (age 70-75) as long as that money remains in a TIAA-CREF fund (she will be 67 1/2 yrs. old at retirement). Is this true? If so, can she still withdraw post '87 monies without affecting the five year "exemption"?

My recommendation at this point is that she put her money into Foolish strategies, based in part, on the excellent 'drawdown' thread of posts from some time ago. But if the exemption from the minimum distribution requirement is true, it may make since to keep at least all pre'87 money in the TIAA-CREF fund for the five years , and then add it to her Foolish portfolio.

I'm a little worried that I may be missing something. Thanks in advance for any thoughts on these subjects.

kpatt
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kpatt wrote: "All of her retirement savings are currently invested through TIAA-CREF (I assume this to be a 403(b) fund?) Although the expenses seem pretty reasonable, the returns are anemic, "

I have been in TIAA-CREF since about 1984 and there are many options. I have about 80%+ in the CREF stock account which has had the following annual returns:

1. 1997 annual return to 12/26/97 22.28%

2. For the period ending 9/30: (Annual growth)

1 Year--33.72%

5 Year--18.705

10 Year-- 13.09%

The CREF growth account has had the following returns:

1. 1997 annual return to 12/26/97: 23.69%

2. For the period ending 9/30:

1 Year--35.965

5 Year--29.03%

Since inception 4/94--27%

Now, if someone chooses not to invest in the stock accounts but instead in only the TIAA accounts, which are much safer and are invested primarily in fixed securities, their annual returns would be as follows:

1 Year--7.24%

3 Year--7.25%

5 Year--7.29%

10 Year--8.04%
These might be anemic but the stocks returns are respectable and relatively safe because they are highly diversified, especially in the regular CREF stock account, which is where I will stay with my money. For more information on TIAA-CREF, go to http://www.tiaa-cref.org

rickisme
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Correction: The second figure under CREF growth account should be for 3 years, not 5 years obviously since they just opened it in 1994. Sorry.

rickisme
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<<These might be anemic but the stocks returns are respectable and relatively safe because they are highly diversified, especially in the regular CREF stock account, which is where I will stay with my money. >>

This was a nice reassuring post, since I discovered a few years ago that I had about 5M in a TIAA account that I didn't know was there! They very kindly tracked me down to let me know about it. It has since grown to more than 7M, and a week ago I decided to transfer from the traditional TIAA annuity to CREF equity fund. (I decided to do this after discovering the Motley Fool and hanging around reading the boards for a few weeks.

This transfer must be done over a ten-year period. Each year they will move 10% of the TIAA over to CREF.
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Kpatt,

<<My mother is going to retire in mid '98 from a job with a public university. All of her retirement savings are currently invested through TIAA-CREF (I assume this to be a 403(b) fund?) Although the expenses seem pretty reasonable, the returns are anemic, so my mother is considering going "Foolish" by transferring these funds to a self-directed account.

Since she will already be retired, can't she roll any or all of her retirement fund into an IRA? Any reason not to?>>

Since she will be retired, she may indeed transfer all or part of her 403b monies to an IRA. Whether she should or not is entirely up to her. As Rickisme pointed out, TIAA-CREF offers some fairly good selections that might be worth a look. It all depends on how active she wants to be in managing her own portfolio and her tolerance for the ups and downs of the marketplace. Personally, I have a high regard for the management capabilities of TIAA-CREF. It's the largest pension plan administrator in the world, has a solid reputation, and does reasonably well by its retirees. The selections it offers has something for everyone save the ability to do one's own trading.

<<I have heard that any pre '87 monies in her fund are not considered in calculating her minimum distribution requirement for the first five years of the requirement (age 70-75) as long as that money remains in a TIAA-CREF fund (she will be 67 1/2 yrs. old at retirement). Is this true? If so, can she still withdraw post '87 monies without affecting the five year "exemption"?>>

This is true only provided she is still working beyond age 70. Otherwise, the money is subject to minimum distribution rules at age 70 1/2.

<<My recommendation at this point is that she put her money into Foolish strategies, based in part, on the excellent 'drawdown' thread of posts from some time ago. ... I'm a little worried that I may be missing something. >>

The only thing you're missing is a consideration of HER ability to sleep at night. Foolish strategies are fine for you and me because it's out own funds we are risking. When it comes to other people's money, though, the picture changes. Is she content with and does she understand the possibilities of using these methods? You might want to print off those earlier posts so she can see some of the historical ups and downs. Point out that those ups and downs will be present to some degree in any alternative as well. Then let her make up her own mind. Maybe she'll elect to stay with TIAA-CREF or maybe she'll roll to a self-directed IRA. Either way, though, it will be her decision made by herself after full consideration of available data.

Regards.....Pixy
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Yo, Rickisme   

<<For more information on TIAA-CREF, go to http://www.tiaa-cref.org>>

They've got a great library, too. :-)

Regards.....Pixy
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Yo, 5853.

<<... and a week ago I decided to transfer from the traditional TIAA annuity to CREF equity fund. (I decided to do this after discovering the Motley Fool and hanging around reading the boards for a few weeks.>>

FWIW and IMHO, that was probably a smart move.

Regards.......Pixy
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Yo, 5853.

<<... and a week ago I decided to transfer from the traditional TIAA annuity to CREF equity fund. (I decided to do this after discovering the Motley Fool and hanging around reading the boards for a few weeks.>>

FWIW and IMHO, that was probably a smart move.

Regards.......Pixy
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5853:

You said: "This transfer must be done over a ten-year period. Each year they will move 10% of the TIAA over
to CREF."

Do you know whether the ten-year period applies to people who are already retired?

Thanks.
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Kpatt,

<<You said: "This transfer must be done over a ten-year period. Each year they will move 10% of the TIAA over
to CREF."

Do you know whether the ten-year period applies to people who are already retired?>>

I recall reading that it does on the TIAA-CREF site. You might want to check there in their library. I found it in a discussion of distributions as I recall.

http://www.tiaa-cref.org

Regards....Pixy

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RE: TIAA-CREF, Pixy said

<<<<... and a week ago I decided to transfer from the traditional TIAA annuity to CREF equity fund.
(I decided to do this after discovering the Motley Fool and hanging around reading the boards for a
few weeks.>>

FWIW and IMHO, that was probably a smart move.

Regards.......Pixy>>

I've spent some time on the CREF web site, and agree that the returns on their funds look good, but aren't the funds with track records still variable annuities? Aren't all annuities, even those that are well managed, inherently "wise" investments? I haven't seen anything in TMF regarding annuities that makes them sound good. OTH I notice that CREF has recently opened some mutual funds. Any feedback regarding those? I assume they would be the better investment, if one were choosing between one of them and one of the annuities?

Thanks
Kpatt
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Kpatt,

<<I've spent some time on the CREF web site, and agree that the returns on their funds look good, but aren't the funds with track records still variable annuities? Aren't all annuities, even those that are well managed, inherently "wise" investments? I haven't seen anything in TMF regarding annuities that makes them sound good. OTH I notice that CREF has recently opened some mutual funds. Any feedback regarding those? I assume they would be the better investment, if one were choosing between one of them and one of the annuities?>>

Given my great antipathy to annuities, I think many options make better alternatives. The freedom to break free into other funds available in CREF and ultimately from there into a wider world is what prompted my comment. As to the returns on CREF funds, I can't say. I make no effort to track them. Nevertheless, I would consider them to be the better investment in the sense of the ability to move money to something else more quickly than within the annuity.

Regards......Pixy

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