Consolidating Your TIAA Account

Written by Carson Hamill CIM®, CRPC®, Associate Portfolio Manager and Assistant Branch Manager & Dean Moro BComm, CIM®, Associate Portfolio Manager

Introduction

Efficient retirement planning often involves streamlining your portfolio into a single account. One such retirement account you might encounter is the TIAA account, commonly provided by employers in the academic, medical, and nonprofit sectors. In this article, we delve into the world of TIAA accounts, examining what they entail and exploring the possibility of transferring them into an Individual Retirement Account (IRA).

• Understanding TIAA Accounts
• Can You Rollover a TIAA Account into an IRA?
• Process of Rolling Over Your TIAA Account Into an IRA
• Advantages of Rolling Over Your TIAA into an IRA
• Summary

Understanding TIAA Accounts

The acronym TIAA stands for Teachers Insurance and Annuity Association of America, although it's no longer exclusive to educators. TIAA is a financial services organization specializing in retirement planning and investment products. They offer diverse retirement account options, including 403(b) and 401(k) plans as well as IRAs.

TIAA accounts are renowned for their emphasis on long-term growth and the potential for retirement income. These accounts typically comprise a mix of investment options. The specific features and investment choices within TIAA accounts can vary based on your employer's plan.

Can You Rollover a TIAA Account into an IRA?

Yes, in many instances, you have the option to roll your TIAA account to an Individual Retirement Account (IRA). However, it is of utmost importance that you verify this eligibility and any potential tax implications with your TIAA administrator.

If your TIAA account does meet the criteria for rollover, a process commonly referred to as a "rollover" or "transfer rollover" allows you to seamlessly shift your retirement savings from your TIAA account to an IRA without facing tax liabilities or penalties, provided it is executed correctly.

Process of Rolling Over Your TIAA Account Into an IRA

Check Eligibility: Ensure you meet the transfer eligibility requirements. Typically, employer-sponsored retirement plans, such as TIAA accounts, allow for rollovers when you leave your job, retire, or meet specific criteria while still employed. It's crucial to confirm your eligibility for a rollover and discuss any potential tax consequences with your TIAA administrator.

Open an IRA: If you don't already possess an IRA, establish one with a financial institution of your choosing. You can opt for either a Traditional IRA or a Roth IRA, depending on your tax preferences and eligibility.

Contact TIAA: Once you've received confirmation of your eligibility to roll over your TIAA account into your IRA without tax concerns, inform your TIAA administrator of your intent to transfer your retirement savings to an IRA. They will assist you throughout the process, which typically entails completing the required paperwork.

Choose the Transfer Method: There are two common methods for transferring your TIAA account into an IRA:

1. Direct Rollover: In this method, TIAA directly transfers the funds to your newly opened IRA. This approach is often preferred as it sidesteps potential tax withholding.
2. Indirect Rollover: With this method, TIAA disburses the funds to you, granting you 60 days to deposit the money into your IRA. Exercise caution with this option, as failing to complete the rollover within the stipulated timeframe may result in taxes and penalties.

Complete the Transfer: Adhere to the instructions provided by TIAA and your chosen IRA custodian to finalize the transfer. Maintain records of all transactions.

Review Investment Options: Once your funds reside in your IRA, you gain access to a broader array of investment options than those available within your TIAA account. This allows you to tailor your portfolio to align with your retirement objectives and risk tolerance.

Work with a Cross-border Professional: Another approach is to collaborate with a cross-border financial advisor who can both open an IRA for you and initiate the transfer directly. If you'd like to explore the reasons for working with a cross-border advisor further, please CLICK HERE.

Advantages of Rolling Over Your TIAA into an IRA

There are several reasons, including consolidation of your retirement accounts, which makes managing your assets easier. This also allows your investments to be actively managed without any restrictions and provides you with more investment options. And importantly, it is less complex for beneficiaries and provides for estate planning benefits.

Summary

In summary, TIAA accounts, commonly offered by employers in education, healthcare, and non-profit sectors, present attractive retirement benefits. However, if you meet the eligibility criteria, you can transfer these accounts into an IRA, granting you greater investment flexibility and control over your retirement funds. It is crucial to comprehend the rules and procedures governing the transfer process to ensure a seamless transition. Consider seeking advice from a financial advisor to make well-informed decisions regarding your retirement savings and investments.

Next Steps

If you’re planning on moving to Canada and need assistance with your investments, estate planning, and portfolio management, please call or email us at Snowbirds Wealth Management as we specialize in cross-border financial planning and wealth management. We work closely with experienced cross-border lawyers and accountants to ensure you have a team behind you.

About Snowbirds Wealth Management

Gerry Scott is a portfolio manager and founder of Snowbirds Wealth Management, an advisory firm focussed on the cross-border market. Together with Dean Moro and Carson Hamill, associate financial advisors and assistant branch manager with Snowbirds Wealth Management, they provide investment solutions for Americans living in Canada, and Canadians residing in the United States. Licensed in both Canada and the US, they provide tailored investment solutions to minimize the tax burden when moving assets across borders.

To schedule an introductory call, please click here.