Our TIAA MyChoice MYGA Annuity Review (Overall)
The TIAA MyChoice MYGA is a good fixed annuity from an exceptionally strong insurance company, but its lack of ordinary penalty-free withdrawals is a major drawback. We would compare it when its guaranteed rate is competitive and you are certain you will not need the money before the selected term ends.
TIAA MyChoice MYGA is available as a traditional IRA or Roth IRA. You can choose a three-, five-, or seven-year guaranteed interest period and split your money among multiple terms. Each term requires a minimum deposit of $5,000.
Here is the catch: Unlike many MYGAs that allow you to withdraw up to 10% annually without a surrender charge, TIAA generally charges you for ordinary withdrawals during the guarantee period. Exceptions include eligible required minimum distributions, annuitization, and death under the contract’s rules.
We do like what happens when the term ends. If you do nothing, your money moves to a liquid account instead of automatically starting another multi-year surrender period. That is a consumer-friendly feature.
- Product type: Flexible-premium deferred fixed annuity, also called a multi-year guaranteed annuity or MYGA.
- Insurance company: Teachers Insurance and Annuity Association of America, commonly known as TIAA.
- Account options: Traditional IRA or Roth IRA.
- Guarantee periods: Three, five, or seven years, subject to availability.
- Minimum deposit: $5,000 per guarantee period.
- Additional deposits: Allowed, subject to the $5,000 minimum per guarantee period and applicable IRA rules.
- Ordinary free withdrawals: No general annual free-withdrawal allowance during a guarantee period. Contract exceptions apply.
- Fees: No service charges or maintenance fees, according to TIAA’s disclosure.
- After the guarantee period: Money moves to the Liquid Interim Account if no other option is selected.
- Lifetime income: Available through annuitization under the contract’s rules.
TIAA MyChoice MYGA Alternatives
Before buying TIAA MyChoice MYGA, compare its guaranteed rate with other fixed annuities from insurance companies rated A- or better. If you need access to your money, compare MYGAs that allow annual penalty-free withdrawals. Call us at (770) 755-1565 or use the tool below for a free comparison.
Our Professional Opinion on the TIAA MyChoice MYGA
TIAA is an excellent annuity company with an A++ (Superior) financial strength rating from AM Best, the agency’s highest rating.
We like TIAA MyChoice MYGA for someone who wants a guaranteed rate from an exceptionally strong insurer and does not need liquidity during the selected term. Its three-, five-, and seven-year choices make it possible to match the guarantee period to your retirement plans.
We also like that you can divide your money among different guarantee periods within the annuity. For example, you could put money into three-, five-, and seven-year terms so that the guarantees end at different times. Each term requires at least $5,000.
However, the lack of ordinary free withdrawals stinks. Many competing MYGAs allow you to withdraw up to 10% annually without a surrender charge. With TIAA MyChoice MYGA, an ordinary withdrawal during a guarantee period generally triggers a surrender charge unless an exception applies.
That does not make TIAA a bad choice for everyone. If you do not need access to the money and TIAA offers a competitive rate, the lack of a free-withdrawal feature may not matter to you. But if you want the option to withdraw interest or take money out for an unexpected expense, compare other contracts before committing.
One of our favorite features is what happens when a term ends. If you do nothing, the money moves to TIAA’s Liquid Interim Account, where it remains accessible without surrender charges. We prefer that to an annuity that automatically locks your money into another multi-year surrender period because you missed a short deadline.
TIAA also allows you to convert the annuity into lifetime income through annuitization. We would compare the actual payment against other income annuities before making that decision. Once payments begin, the annuitization election is generally irreversible.
Our bottom line: TIAA MyChoice MYGA is worth comparing when you want a fixed rate from a top-rated company and can leave the money alone. If you need penalty-free access during the term, we would look at other MYGAs.
What We Like
- Excellent insurance company: TIAA has an A++ AM Best rating, exceeding our A- minimum.
- Guaranteed interest: The interest rate is guaranteed for the three-, five-, or seven-year period selected.
- Multiple term choices: You can divide your money among different guarantee periods rather than putting the entire deposit into one term.
- Low minimum per term: Each guarantee period requires a minimum of $5,000.
- Traditional and Roth IRA options: You can select the IRA type that fits your retirement money, subject to eligibility and funding rules.
- No service or maintenance fees: TIAA states that MyChoice MYGA IRAs do not have service charges or maintenance fees.
- Liquid default at maturity: If you do not choose another option when a term ends, the money moves to the Liquid Interim Account without a new surrender charge period.
- Death and RMD exceptions: TIAA describes surrender-charge waivers for death and eligible required minimum distributions under the contract’s rules.
What We Don’t Like
- No ordinary annual free withdrawal: Unlike many MYGAs, TIAA generally applies a surrender charge to ordinary withdrawals during the guarantee period.
- IRA-only structure: The MyChoice MYGA described by TIAA is offered as a traditional or Roth IRA, so it is not the same as a non-qualified annuity purchased with ordinary after-tax savings outside an IRA.
- Early withdrawal charges: Surrender charges begin at 8% in the first year and decline according to the selected term.
- One insurance group: Splitting money among three TIAA terms creates different maturity dates, but all three are still backed by the same insurer.
- Lifetime income requires annuitization: Turning the balance into retirement income is different from using a guaranteed lifetime withdrawal benefit that can preserve access to a remaining account value.
- Liquid account rate can change: Once money moves to the Liquid Interim Account, the rate is not locked for another three, five, or seven years unless you select an available new guarantee period.
How TIAA MyChoice MYGA Earns Interest
You open a traditional IRA or Roth IRA and select an available three-, five-, or seven-year guarantee period. TIAA sets the interest rate when it receives your funds, and that rate is guaranteed for the selected period.
The minimum is $5,000 for each guarantee period. You can choose one term or divide your money among multiple terms. Interest compounds while it remains in the annuity.
Compare TIAA’s offer with current fixed annuity rates for the same term. We recommend comparing insurers rated A- or better, then reviewing liquidity and other contract features alongside the interest rate.
How the TIAA MYGA Ladder Works
A ladder means dividing your money among guarantee periods that end at different times. Instead of waiting for your entire annuity to mature on one date, you have portions reaching the end of their terms at different intervals.
For example, you could place $50,000 in a three-year term, $50,000 in a five-year term, and $50,000 in a seven-year term. Each portion earns the rate available when TIAA receives the funds and follows its own guarantee period.
As each term ends, you can decide what to do with that portion. You might withdraw it, select another available guarantee period, or leave it in the Liquid Interim Account while you consider your options.
There is an important limitation: Splitting money among TIAA’s terms does not split it among insurance companies. If you want to reduce your exposure to one insurer, compare placing portions with different insurance companies and review your state’s guaranty association limits.
Withdrawals and Surrender Charges
TIAA MyChoice MYGA is designed for money you can leave in place for the selected guarantee period. Ordinary withdrawals before that period ends are generally subject to a surrender charge.
This is different from many MYGAs that offer a 10% annual free-withdrawal provision. If you want to withdraw interest or take money out each year, do not assume you can do so without a charge.
TIAA describes surrender-charge exceptions for eligible required minimum distributions, annuitization, and death. Its brochure states that the RMD exception is based on the value of the MyChoice annuity itself, not other aggregated IRA balances. Confirm the calculation and your contract’s rules before making a withdrawal.
Surrender Charge Schedule
| Year of Withdrawal | 3-Year Term | 5-Year Term | 7-Year Term |
|---|---|---|---|
| Year 1 | 8% | 8% | 8% |
| Year 2 | 7% | 7% | 7% |
| Year 3 | 6% | 6% | 6% |
| Year 4 | 0% | 5% | 5% |
| Year 5 | 0% | 4% | 4% |
| Year 6 | 0% | 0% | 3% |
| Year 7 | 0% | 0% | 2% |
| Year 8 and later | 0% | 0% | 0% |
Based on TIAA’s product brochure. Review the contract and applicable state provisions before purchasing.
For example, a $10,000 ordinary withdrawal during the first year of a guarantee period would generally incur an 8% surrender charge, or $800. The amount you receive and any tax consequences depend on your circumstances and the contract’s rules.
What Happens When a Guarantee Period Ends?
TIAA says it will notify you as your guarantee period approaches its end. During the election window in the final month of the term, you can select a new available guarantee period, withdraw or transfer the money without surrender charges, or consider converting the balance to income.
If you do nothing, the money moves to TIAA’s Liquid Interim Account. It does not automatically enter another three-, five-, or seven-year surrender period. The Liquid Interim Account remains accessible without surrender charges.
The account receives the interest rate in effect for the month the term ends through the end of the applicable declaration year. TIAA declares a new rate each March. The rate can change and may be different from the rate you earned during your initial guarantee period.
We like this feature because it gives you time to compare your next move. That said, do not leave the money there indefinitely without checking the rate. Compare your options and decide whether another guaranteed term, a different insurer, or access to the money better fits your plans.
Traditional IRA and Roth IRA Options
TIAA offers MyChoice MYGA as a traditional IRA or Roth IRA. You may be able to fund it with an eligible transfer, rollover, or new IRA contribution, subject to the applicable rules.
The IRA already provides its own tax advantages. The reason to consider this annuity inside an IRA is the guaranteed rate and contract features, not an extra layer of tax deferral.
Because MyChoice MYGA is offered as an IRA, it is not the same as purchasing a non-qualified annuity with ordinary after-tax money outside a retirement account. Confirm that your existing account and planned transaction are eligible before moving funds.
What Happens When You Die?
Before income payments begin, TIAA describes a death benefit under the annuity’s terms and states that surrender charges are waived upon the owner’s death. Your beneficiary choices and distribution options depend on the contract and the IRA rules that apply.
Make sure your beneficiary designation is current. If your spouse is your beneficiary, ask TIAA about the available spouse options, including whether and how the IRA or annuity may be continued. Do not assume the same continuation rules apply to every contract.
If your main goal is leaving a larger amount to your family, compare life insurance or an annuity specifically designed with an enhanced death benefit. A fixed annuity is primarily designed to grow your savings at a guaranteed rate.
Can TIAA MyChoice MYGA Provide Lifetime Income?
Yes. TIAA allows you to convert some or all of the annuity balance into income payments through annuitization, subject to the contract’s rules. Depending on the option selected, the payments can continue for your lifetime.
Annuitization is a major decision. Once the selected income payments begin, the decision is generally irreversible. The amount your spouse or other beneficiaries may receive depends on the payment option you choose.
Before converting the balance, compare TIAA’s actual payment with other lifetime income options. An annuity with a guaranteed lifetime withdrawal benefit may provide lifetime withdrawals under its rules while preserving any remaining account value, subject to its contract terms and charges.
Contact us for a custom income heat map based on your age, state, deposit, and income start date. We can compare guaranteed income from multiple insurance companies before you make a permanent decision.
How TIAA MyChoice MYGA Compares With Other Annuities
- Other MYGAs: Compare the rate for the same term, insurer strength, annual withdrawal allowance, death benefit, and renewal provisions. TIAA’s lack of an ordinary free-withdrawal allowance is an important difference.
- Fixed indexed annuities: A fixed indexed annuity offers interest linked to an index under its crediting rules, but the interest earned is uncertain. TIAA MyChoice MYGA provides a known rate for the selected guarantee period.
- Lifetime income annuities: If you need a guaranteed paycheck for life, compare actual income payments and available death benefits. Do not select an income annuity based only on the issuing company’s name.
- RILAs: A registered index-linked annuity can expose you to market losses while limiting some upside. We generally prefer a 0% floor when protecting retirement savings from market losses is the goal.
- Variable annuities: Variable annuity investment options can lose value and may carry ongoing expenses. MyChoice MYGA offers a fixed rate for the selected term rather than direct stock market exposure.
Who Should Consider TIAA MyChoice MYGA?
TIAA MyChoice MYGA may be worth comparing if you want a fixed rate inside a traditional or Roth IRA, value TIAA’s financial strength, and can leave the money untouched during the selected term.
It may also fit someone who wants to divide retirement money among several guarantee periods and likes having a liquid account available when each term ends.
We would consider it when TIAA’s rate is competitive with other A- or better-rated insurers and the lack of ordinary free withdrawals does not conflict with your plans.
Who Should Look Elsewhere?
Look elsewhere if you want to withdraw interest or access a portion of your money each year without a surrender charge. Many competing MYGAs offer annual free withdrawals, so there is no reason to give up liquidity you expect to need.
Also consider another product if you want a non-qualified annuity outside an IRA, need a guaranteed lifetime withdrawal benefit, or want to spread your savings among several insurers. Dividing your money among TIAA’s terms creates different maturity dates, but it does not diversify the insurance company backing them.
Our Final Verdict
TIAA MyChoice MYGA is a good annuity from an excellent insurance company, but we do not like its limited liquidity. The guaranteed terms, $5,000 minimum per term, and liquid account at maturity are appealing. The lack of ordinary penalty-free withdrawals during the guarantee period is the feature that would make us hesitate.
We would consider it if the rate is competitive and you do not need the money before the term ends. If you want annual access, compare TIAA with an A- or better-rated MYGA that provides a free-withdrawal allowance.
Contact The Annuity Expert for a free comparison and quote. We can help you compare guaranteed rates, insurance companies, liquidity, and term lengths so you can choose the annuity that fits your retirement plans. Call (770) 755-1565 or complete the form below.
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