Why University Employees Should Explore TIAA Traditional inside RCP Contracts

Greetings to all educators in higher education! Greg Shepard here, representing S&A Financial Services, and I'm here today to delve into a subject that's particularly pertinent for those of you navigating the intricate landscape of higher education retirement plans.

We're living in a time of constantly evolving financial landscapes and investment opportunities. Today, I want to center our discussion around a specific aspect of TIAA (Teachers Insurance and Annuity Association) retirement plan contract, namely the RCP contracts. It's vital for you, especially given the current high-interest rate environment, to understand why taking a closer look at TIAA Traditional within your RCP contracts might be the missing piece in your financial puzzle.

I can't stress this enough – while the information I'll provide might change in the coming years, it's valuable for you today, on this 20th of October, 2023.

So, why is this focus on high-interest rates in TIAA Traditional within RCP contracts so significant? Let's explore.

The RCP Contracts - A Hidden Gem

The core of our discussion revolves around RCP contracts – Retirement Choice Plus. These contracts harbor an attribute that many may not be aware of: liquidity when it comes to TIAA Traditional.

This liquidity in your RCP contract is of paramount importance when you consider the high interest rates currently being offered by TIAA Traditional. And why is this significant? Well, on the 20th of October, 2023, new money funneled into your TIAA Traditional within an RCP contract is earning an attractive 6% crediting interest.

Now, let's take a moment to absorb the implications of this. If you're familiar with higher education retirement plans, you might realize that finding a bond investment under the TIAA platform that's consistently outperforming 6% is a rarity. Most institutions' bond funds don't come close to such a return.

This, my friends, is why our strategy becomes intriguing. And let me emphasize – this is not financial advice. It's an exploration of an enticing opportunity, so please consult a financial expert to see how it aligns with your individual financial goals.

Unlocking Potential: RCP Contracts and TIAA Traditional

Let's dissect this a bit further. The interest rate being offered in TIAA Traditional within your RCP contract is notably higher than what's commonly found in comparable investments. As of October 20, 2023, the 6% interest rate stands tall, outshining most fixed-income alternatives available to you in your higher ed retirement plan.

In contrast, when you examine the vast majority of higher education institution retirement plans, the bond investment options typically underperform the 6% rate. This situation creates a golden opportunity.

Let's dive into the potential strategies you might consider:

1.     Moving Bond Investments: If your portfolio includes bond investments under the RCP contract, it could be advantageous to transition a portion or the entirety of that bond portfolio into TIAA Traditional within the same RCP contract. Doing so allows you to enjoy the 6% return rate, a considerably more attractive option than most bond investments in higher education retirement plans.

2.     Contract-to-Contract Swap: If you hold a GSRA contract, you might be missing out on better returns offered by RCP's TIAA Traditional. The remedy? Utilize the contract-to-contract swap, which can be done online in most cases.

3. Transfer Payout Annuity (TPA): Consider leveraging TPAs to create liquidity. In this process, you can conduct a TPA out of an illiquid contract, thus freeing your money over the course of a number of years. You can then funnel these funds into your liquid RCP contract, giving you the chance to earn a more attractive interest rate. Remember, TPAs can be somewhat more complex, so consulting a financial expert is a wise decision.

The Takeaway: Don't Miss the Opportunity

In essence, the message here is quite clear. If you're an educator with an RCP contract, it's in your best interest to examine the potential of TIAA Traditional. This is especially crucial if your portfolio contains bond investments that are underperforming in the current market.

While the financial world is continually shifting, and the opportunities we're discussing today might not be available tomorrow or the coming years, there's no denying the importance of taking advantage of what's within reach currently. In this case, it's the rare circumstance of extraordinarily high interest rates in TIAA Traditional.

Don't let this opportunity slip through your fingers. It's a moment to harness the strengths of your retirement plan and seize the chance to maximize your financial well-being.

Conclusion: Invest in Your Financial Future

So, the path is clear – explore your RCP contract, unlock the power of TIAA Traditional, and harness the benefits of current high interest rates.

Remember, this isn't just another financial strategy; it's a pivotal moment that could significantly impact your financial future. But I implore you once more – consult a financial expert to craft a strategy that fits your specific financial objectives.

As educators, you’ve dedicated your lives to nurturing knowledge. Now, it's time to ensure your financial futures are equally well-crafted. Don't hesitate – take charge of your financial destiny today.

Seize this moment, go out and have a fantastic day, and as always, feel free to reach out if you need guidance. Your financial future is worth every bit of attention.

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

📆 Jump on MY CALENDAR to see how we can improve your higher ed retirement plan

Check out my YouTube Channel 

Other educational podcast episodes found at HigherEd Retire Podcast

*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.