The Teachers Insurance and Annuity Association (TIAA) is a distinguished financial organization that has provided investment and insurance services for individuals working in the nonprofit industry. Its reach spans multiple fields, including academia, research, medical, government, and cultural sectors.
TIAA’s inception traces back to the efforts of Andrew Carnegie, who established the Carnegie Foundation for the Advancement of Teaching to address the pension needs of professors. Founded in 1918 with a $1 million endowment from the Carnegie Foundation, TIAA has evolved into a powerhouse in the financial services industry, rebranding from TIAA-CREF to simply TIAA in 2016.
Incredible Highlights of TIAA’s Journey
- TIAA stands for Teachers Insurance and Annuity Association.
- The organization is headed by Thasunda Brown Duckett, who serves as its president and CEO.
- TIAA operates as a for-profit financial institution, primarily offering pension, insurance, and investment services to educators and their families.
- Originally known as TIAA-CREF, TIAA rebranded itself in 2016.
Transforming Financial Realities: Understanding TIAA
Established as a nonprofit entity, TIAA’s tax-exempt status was revoked by Congress under the Taxpayer Relief Act of 1997. Today, it functions as a nonprofit organization with taxable subsidiaries, all profits being returned to policyholders. TIAA presents an array of financial products, including retirement plans, 529 college savings plans, managed investment accounts, savings accounts, and brokerage services.
Policyholder distributions from the TIAA Traditional account depend on an annual assessment by the TIAA board. Headquartered in New York, TIAA boasts 133 offices across the United States as of 2024.
With nearly 5 million active and retired employee accounts across 15,000 institutions and managing $1.2 trillion in assets in 2024, TIAA shines as a leader in asset management through Nuveen, known particularly for its dominance in farmland asset management and multiple awards for fund management.
From Inception to Evolution: Adding the College Retirement Equities Fund (CREF)
The groundbreaking establishment of TIAA in 1918 provided guaranteed lifetime income and insurance to educators. The introduction of the College Retirement Equities Fund (CREF) in 1952 marked TIAA’s journey towards becoming a diversified financial services provider.
CREF was revolutionary, allowing individuals to enhance their portfolios with equity investments through variable annuities, addressing increasing life expectancies and boosting retirement income streams.
The innovation didn’t go unnoticed—Fortune magazine hailed CREF as the most significant advancement in the insurance investment business since the Social Security Act of 1935. TIAA dropped ‘CREF’ from its name as part of its rebranding in 2016.
Enhancing Services Through Strategic Acquisitions
TIAA’s strategic acquisitions in recent years underscore its ambition to diversify and expand its offerings:
- April 2014: Acquired Nuveen Investments for $6.25 billion.
- April 2015: Gained full ownership of TIAA Henderson Real Estate, purchasing Henderson Global Investors’ stake for £80 million.
- August 2016: Agreed to acquire EverBank Financial Corp. for $2.5 billion, completing the deal in June 2017.
TIAA’s rich history of adopting avant-garde investment strategies positions it as a forward-thinking leader. From embracing international stock portfolios in 1979 to launching the socially responsible CREF Social Choice Account in 1990, and entering the 529 marketplace in 1998, TIAA continuously pushes boundaries.
May 1, 2021, marked a significant milestone as Thasunda Brown Duckett took on the role of CEO, becoming one of only two Black women to lead a Fortune 500 company. Duckett’s reputation as a powerhouse was solidified through various recognitions, including Fortune’s Most Powerful Women list and American Banker magazine’s Most Powerful Woman in Banking ranking.
Diverse Retirement Products for Every Need
TIAA offers a broad spectrum of retirement products tailored to meet different financial goals:
Unmatched Security: TIAA-CREF Traditional Plan
An employer-sponsored defined-contribution plan akin to a 401(k) but distinct in structure and funding, the TIAA-CREF Traditional Plan can be funded via fixed or variable annuities. Unlike 401(k)s, TIAA plans focus on providing lifetime income at retirement.
Personal Growth: TIAA Personal Annuities
Purchase personal annuities directly from TIAA, available in fixed or variable kinds. Fixed annuities offer steady growth even in downturns, while variable annuities provide greater growth potential but come with market risks.
Flexible Options: TIAA IRAs
TIAA gives you the choice of traditional and Roth IRAs and allows rollovers from 401(k), 403(b), or other IRA plans. Rollovers can also be directed into or out of TIAA plans.
Targeted Goals: TIAA Target-Date Funds
Labeled as ’lifecycle’ funds, TIAA’s target-date funds let you align your investments with your retirement timeline, balancing high-risk and low-risk investments as retirement approaches.
Tailored Retirement Solutions for Nonprofit Sector Workers
Eligible individuals for TIAA plans are those employed in nonprofit sectors such as academia, research, medical, government, and cultural fields. TIAA’s origin lies in its mission to serve educators, a commitment it upholds to this day.
TIAA Plans vs. 401(k): Know the Difference
Though TIAA plans and 401(k)s share similarities as defined-contribution plans, their primary objectives differ. While 401(k)s aim to maximize savings for retirement, TIAA plans focus on guaranteeing lifetime annual income.
Understanding TIAA’s Nonprofit Structure
Though not a nonprofit organization, TIAA operates under a not-for-profit charter, returning proceeds to policyholders. This structure emerged post the 1997 Taxpayer Relief Act which stripped TIAA’s tax-exempt status.
Conclusion: Securing Retirement for Those Who Serve
The Teachers Insurance and Annuity Association (TIAA) stands as a premier financial institution dedicated to supporting educators and nonprofit workers. Founded more than a century ago, TIAA’s mission to foster financial confidence in retirement continues to resonate, extending its indispensable services beyond the field of education and into various sectors. Serving over five million active and retired employees, TIAA remains committed to turning dreams into secure retirements.
Related Terms: 401(k), 403(b), IRA, annuities, defined-benefit plan, defined-contribution plan.
References
- Carnegie Corporation of New York. “The Origins of the Carnegie Foundation for the Advancement of Teaching and the Birth of TIAA-CREF”.
- Carnegie Foundation for the Advancement of Teaching. “Foundation History”.
- Teachers Insurance and Annuity Association. “TIAA-CREF Begins New Chapter as TIAA”.
- Teachers Insurance and Annuity Association. “Our Investment Products”.
- Internal Revenue Service. “A History of the Tax-Exempt Sector: An SOI Perspective”, Page 111.
- Cision PR Newswire. “TIAA Traditional Payout Increases 5% for 2022”.
- Teachers Insurance and Annuity Association. “Is TIAA a Not-for-Profit Company?”
- Teachers Insurance and Annuity Association. “TIAA Financial Services New York City - Financial Center”.
- Teachers Insurance and Annuity Association. “146 TIAA Offices in the United States”.
- Teachers Insurance and Annuity Association. “Who We Are”.
- Nuveen. “About Nuveen”.
- Refinitiv. “U.S. Lipper Fund Awards Winners & Market Views”.
- Teachers Insurance and Annuity Association. “Awards & Recognition”.
- Government Publishing Office. “Congressional Record Volume 154, Number 80”.
- Teachers Insurance and Annuity Association. “TIAA-CREF to Purchase Nuveen Investments”.
- Teachers Insurance and Annuity Association. “TIAA-CREF Acquires Full Ownership of TIAA Henderson Real Estate”.
- Teachers Insurance and Annuity Association. “TIAA Announces Future Leadership of New Bank Post-Acquisition of EverBank Financial Corp”.
- Teachers Insurance and Annuity Association. “TIAA Completes Acquisition of EverBank”.
- Teachers Insurance and Annuity Association. “TIAA Real Estate Account Marks 20 Years”.
- Teachers Insurance and Annuity Association. “Who We Are”.
- Fortune. “TIAA CEO Thasunda Brown Duckett on the Diversified Portfolio of Life”.
- Teachers Insurance and Annuity Association. “Thasunda Brown Duckett”.
- Fortune. “Most Powerful Women”.
- American Banker. “Most Powerful Women in Banking: No. 7, JPMorgan Chase’s Thasunda Duckett”.
- Black Enterprise. “Women of Power: Most Powerful Corporate Women Talk the Value of Mentorship”.
- Teachers Insurance and Annuity Association. “CREF for All”.
- Teachers Insurance and Annuity Association. “How TIAA-CREF Funded Plans Differ From a Typical 401(k) Plan”, Page 3.
- Teachers Insurance and Annuity Association. “Personal Annuities: Fixed Annuity”.
- Teachers Insurance and Annuity Association. “Personal Annuities: Variable Annuity”.
- Teachers Insurance and Annuity Association. “Making Transfers and Withdrawals From the TIAA Traditional Annuity”.
- Teachers Insurance and Annuity Association. “What Is an IRA? Everything You Need To Know”.
- Teachers Insurance and Annuity Association. “TIAA-CREF Lifecycle Target Date Funds”.
- Teachers Insurance and Annuity Association. “Giving Back”.
