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Maximizing TIAA Traditional While Still Employed: A Lucrative Yet Little-Known Strategy for Higher Education Employees

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Hey, there, fellow educators! Greg Shepard here from S& Financial Services. I've got something rather special to share with you today. I'll be unveiling a little-known strategy, particularly beneficial for those of you in the realm of higher education, and it centers around TIAA Traditional.

This strategy isn't for the faint-hearted, but for those who wish to supercharge their retirement accounts while still in the workforce, this might be a game-changer. Today, we'll discuss how you can create liquidity and potentially boost your interest rate using TIAA Traditional. But first, a few words of caution: while this strategy can be advantageous, it's not without complexity, so I strongly advise you to consult a financial expert before proceeding.

Understanding TIAA Contracts and Rates 

Let's start by setting the stage. Imagine you're currently working for your higher education institution, and you have TIAA Traditional inside an illiquid contract. Our strategy begins with understanding the type of contracts you possess. For the sake of this explanation, I'll refer to two key contracts: an RC (Retirement Choice) and an RCP (Retirement Choice Plus). 

In our scenario, we've got an RC contract that offers TIAA Traditional with a 4.7% average crediting rate. Simultaneously, the RCP contract allows you to invest in TIAA Traditional. However, the latter contract holds a unique attribute – it's liquid, which means you can access your funds more readily. This is where our strategic maneuvering begins and, for new deposits, you get a staggering 6% interest rate.

The Seven-Year Transfer Payout Annuity 

Now, let's break down the strategy. Our goal is to initiate a Transfer Payout Annuity (TPA) within the RC contract, which is a 7-year TPA set at 84 months. The TPA will allow you to divert your funds into another contract called the IH (Intermediate Holding) contract. This contract serves as an intermediary, ensuring that our strategy stays compliant with TIAA's guidelines. More crucially, the IH contract acts as a bridge to our RCP contract.

The RCP contract within the TIAA framework offers an unexpected advantage. If you're invested in TIAA Traditional within this contract, it's liquid. Liquid, meaning you can easily move / access your money. The puzzle pieces are coming together, aren't they?

Boosting Your Interest Rate 

So, why are we going through all this trouble? Well, it's all about that interest rate. The key here is that new contributions to TIAA Traditional inside an RCP contract offer a more attractive rate – 6%, to be precise (as of October of 2023). This rate outperforms the 4.7% offered in the RC contract (per this client’s specific contract), where the money is currently tied up.

Here's where the magic happens. After initiating the TPA, you'll select the default investment option available in the RCP contract. In our scenario, this happens to be the Vanguard Treasury Money Market.

Next, you initiate a transfer of your funds from the Vanguard Treasury Money Market in the RC contract to TIAA Traditional in the RCP contract. With the new 6% interest rate, your money is not only more accessible but also earning a more favorable return.

Ongoing Management and Liquidity 

Now, let's address the ongoing management of this strategy. The TPA will involve periodic payments, and initially, you can set up a simple online transfer of these funds from the RC to RCP contract. This transfer allows you to switch the investment from the Vanguard Treasury Money Market to TIAA Traditional at the higher 6% interest rate. This process is repeated every month or at the frequency you determine, ensuring that your funds are invested at the more attractive rate.

While the strategy does require some administrative diligence, the overall goal is to seize the advantage of high rates in TIAA Traditional. These interest rates might not last forever, given the current unusual financial environment. So, acting promptly can make a considerable difference.


There you have it – a little-known strategy to potentially boost your interest rate, create liquidity, and enhance your retirement accounts, all while still employed. But remember, this strategy is intricate and may not be suitable for everyone. Consult with a financial expert or reach out to me for more guidance tailored to your specific situation.

As educators, you've dedicated your careers to empowering others with knowledge. Now, it's time to empower yourselves financially. Don't let these opportunities slip by. Get out there and explore the potential benefits of this strategy. And as always, make informed choices that align with your unique financial goals.

So, what are you waiting for? Go out and have a great day, and take charge of your financial future. You've earned it!

Contact Information: If you have questions or need assistance with your retirement plan choices, you can reach out to Greg Shepard at greg@shepardfiancial.com

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*Nothing discussed in this blog post should be construed as investment advice.  Each situation is unique and you need to receive professional advice from independent fee-only financial advisor that's familiar with higher ed retirement plans prior to implementing any strategies discussed or thought of on your own.  

**S&A Financial Services, Inc. is a registered investment advisor. Content presented is for informational purposes only and should not be considered as investment advice or as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Always consult with your tax advisor or attorney regarding your specific situation.

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