TIAA Issues New IRA Contracts With Lower Guarantee

That free lunch that TIAA was offering...gone, for the most part. Up until October 10th you could open an IRA with TIAA-CREF and if you qualified you could get a 3% minimum crediting rate and guarantee - with full liquidity. Those days are gone (thank you Ben Bernanke). The new minimum rate is somewhere between 1 and 3% - my experience is that it is now 1.25%. It still has full liquidity, so its still a reasonable option, its just not an amazing option (like it was before).

You can bet this move is based upon TIAA belief that interests rates will likely remain low for an extended period of time. I don't like the move, but I understand it. For those of you who have TIAA products with a 3% guarantee, you should be careful when moving money so as not to mess that up.

Below is the press release (which I missed):

The effective date of this change has been updated from October 13 to October 11, 2010.

Beginning October 11, new Investment Solutions IRA contracts which contain TIAA Traditional Annuity will have an adjustable guaranteed crediting rate of 1% to 3%.

The TIAA Traditional Annuity in IRAs pays a guaranteed crediting rate while offering the opportunity for additional interest amounts, as declared by the TIAA Board of Trustees. Additional amounts, when declared, remain in effect for the “declaration year” which begins each March 1.

This change does not affect the minimum crediting rate for other TIAA Traditional retirement products, including Retirement Annuities (RAs), Supplemental Retirement Annuities (SRAs), Group Retirement Annuities (GRAs), or Group Supplemental Retirement Annuities (GSRAs).

This change only affects the TIAA Traditional Annuity in Investment Solutions IRA accounts opened after October 11, 2010. TIAA-CREF IRAs that do not offer the TIAA Traditional Annuity product are unaffected by this change.

The prospective change to the Investment Solutions IRA TIAA Traditional Annuity crediting rate reflects the prevailing low interest rate environment and conforms with state insurance laws, which allow insurers to adapt more quickly to the interest rate environment than in years past. TIAA holds the highest insurer financial strength ratings from all leading independent rating agencies.

Questions & Answers

Will my Investment Solutions IRA contracts be subject to a change in the guaranteed minimum crediting rate?
This change only affects Investment Solutions IRA accounts opened after October 11, 2010. TIAA-CREF IRAs that do not include the TIAA Traditional Annuity are unaffected by this change.

Who is eligible to open a TIAA-CREF Investment Solutions IRA?
The TIAA-CREF Investment Solutions IRA is available to participants and their spouses or partners who work for institutions that are eligible to use TIAA-CREF products for their retirement plans. Please note that TIAA-CREF offers other types of IRAs to the investing public.

How is the minimum crediting rate on the TIAA Traditional Annuity account in the TIAA-CREF Investment Solutions IRA changing?
The minimum crediting rate for the TIAA Traditional Annuity in the TIAA Investment Solutions IRA contracts issued on or after October 11, 2010 will change to a minimum guarantee of between 1 percent and 3 percent, compared with a guarantee of 3 percent for Investment Solutions IRAs opened before that date. These changes, which are in conformance with state insurance laws, reflect the current low interest rate environment. Minimum crediting rates for the TIAA Traditional Annuity in existing IRAs and the TIAA Traditional in other TIAA contracts such as the RA, SRA, GSRA and GRAs are unaffected by this change.

Where can I get more information on IRA products?
TIAA-CREF offers several IRA solutions to meet investors’ needs. For more information, please visit or speak with an advisor at 800 842-2776.

What is TIAA’s insurance financial strength rating? What does this mean?
TIAA holds the highest insurer financial strength ratings from:

A.M. Best Company as of 12/2009 — A++
Moody’s as of 7/2010 — Aaa
Fitch Ratings as of 4/2010 — AAA
Standard & Poor (S&P) as of 5/2010 — AAA
These ratings are for TIAA as an insurance company and do not apply to variable annuities, mutual funds or any other product or service not fully backed by the claims-paying ability of TIAA. Ratings are subject to change. There is no guarantee that current ratings will be maintained.

The insurance financial strength ratings are one means of assessing the financial strength of an insurance organization, including the ability of the insurer to meet its obligations. TIAA’s capital and contingency reserves – which determine its claims-paying ability – are among the highest in the company’s history, ending the first quarter of 2010 at $24.1 billion, an increase of $1.3 billion over year-end 2009.

This message is informational only and not intended to solicit any TIAA-CREF product or promote any contract transaction.

Guarantees are based on the claims-paying ability of TIAA.

Annuity products are issued by TIAA (Teachers Insurance and Annuity Association), New York, NY. Brokerage Services are provided by TIAA-CREF Brokerage Services, a division of TIAA-CREF Individual & Institutional Services, LLC, members FINRA and SIPC.