What Is the Teachers Insurance Annuity Association (TIAA)?

The Teachers Insurance and Annuity Association (TIAA) is a financial organization that provides investment and insurance services for those working for organizations in the nonprofit industry in academic, research, medical, government, and cultural fields.

TIAA has a history that dates back to the late Andrew Carnegie, whose Carnegie Foundation for the Advancement of Teaching created the initial organization in order to service the pension needs of professors.

The financial services company was founded in 1918 with a $1 million endowment from the Carnegie Foundation. It went by the name TIAA-CREF, short for Teachers Insurance and Annuity Association-College Retirement Equities Fund, until 2016 when it rebranded under the shortened name of TIAA.

Understanding the Teachers Insurance Annuity Association (TIAA)

TIAA was founded as a nonprofit, which is still part of its charter. However, Congress revoked its tax-exempt status in the Taxpayer Relief Act of 1997. It is now structured as a nonprofit organization that has taxable subsidiaries, and all profits are returned to policyholders. TIAA offers retirement products, 529 college savings plans, managed investment accounts, savings products, and brokerage accounts.

Distributions to policyholders of the TIAA Traditional account are based on a yearly determination by the TIAA board. The main office is in New York, and as of 2024, there are 133 offices in the U.S.

As of 2024, TIAA has nearly 5 million active and retired employee accounts at more than 15,000 institutions, with $1.2 trillion under management. Its investment manager, Nuveen, is the No.1-ranked asset manager of real assets in farmland as of 2024. It was ranked the No.1 Best Overall Large Fund company by the Refinitiv Lipper Fund Awards for six years in a row, from 2013 to 2018. It also won the Lipper Best Mixed Assets Large Fund Group award for five consecutive years, from 2016 to 2020.

Adding the College Retirement Equities Fund (CREF)

While the creation of TIAA in 1918 as a means of providing guaranteed lifetime income and insurance was a groundbreaking new resource for teachers and educators, it was the establishment of the College Retirement Equities Fund (CREF) in 1952 that started the company on the road to becoming a diversified financial services firm.

Citing rapidly increasingly life expectancies, CREF allowed individuals the opportunity to add equity investments to their personal portfolios through a variable annuity product. It was designed to use the higher expected returns of stocks to help stretch out the retirement income streams of workers.

Fortune magazine described CREF in 1952 as “the biggest development in the insurance investment business since the passage of the Social Security Act in 1935.” TIAA dropped CREF from its name in 2016.

TIAA Acquisitions

In the past decade, TIAA has made some acquisitions to grow its portfolio and product offerings.

• In April 2014, TIAA announced it would acquire Nuveen Investments in a deal valued at $6.25 billion.
• In April 2015, TIAA announced that it had acquired full ownership of TIAA Henderson Real Estate, buying out its joint venture partner, Henderson Global Investors, for £80 million.
• In August 2016, TIAA agreed to purchase EverBank Financial Corp. for $2.5 billion in cash. The deal was completed in June 2017.

TIAA has demonstrated a history of accepting investment strategies before the strategies became mainstream. In 1979, the company was one of the first to utilize a broad portfolio of international stocks as part of its investment strategy. In 1990, it added the CREF Social Choice Account to its lineup, giving customers a socially responsible investing option. In 1992, it introduced the Rollover IRA. In 1995, TIAA offered individuals the ability to invest in directly owned real estate properties. In 1998, the company entered the 529 marketplace.

On May 1, 2021, Thasunda Brown Duckett became TIAA’s president and chief executive officer (CEO), making her one of only two Black women heading Fortune 500 companies. Previously, she was the CEO of Chase Consumer Banking.

Duckett was named one of Fortune’s Most Powerful Women in 2021. American Banker magazine named her the 7th Most Powerful Woman in Banking in 2019. Black Enterprise magazine included her on its Most Powerful Women in Corporate America list in 2015.

TIAA Retirement Products

TIAA offers a variety of retirement products. Among the most popular are:

TIAA-CREF Traditional Plan

This employer-sponsored plan is a defined-contribution plan like a 401(k), and there are significant differences between the two when it comes to their structure, funding, investments, and payouts. The TIAA-CREF Traditional plan can be funded with either fixed or variable annuities, and its emphasis is on providing lifetime income at retirement rather than tax-exempt wealth accumulation. There are eight different variable CREF structures:

1. Stock Account
2. Growth Account
3. Global Equities Account
4. Equity Index Account
5. Social Choice Account
6. Bond Market Account
7. Inflation-Linked Bond Account
8. Money Market Account

TIAA plans aren’t as concerned with the amount of money saved, which is intended to supplement other retirement income; instead, they look to future annual income generated by the accumulated money. The funds are annuitized to provide guaranteed lifetime annual income. In that sense, the TIAA traditional plan functions more like a defined-benefit pension plan than a 401(k).

TIAA Personal Annuities

You can also purchase a personal annuity directly from TIAA, which offers both the fixed and variable kinds. A fixed annuity grows at a slow but steady rate as you save, even during financial downturns. There are no mandatory withdrawals prior to age 90, and the money in your annuity grows tax-deferred. A variety of time periods are available.

A variable annuity offers a chance for greater growth through investments but is subject to the vagaries of the market. There are virtually no contribution limits, allowing you to continue investing retirement money after you have maxed out your 401(k), 403(b), or individual retirement account (IRA).

TIAA offers more than 60+ investment choices, and your money grows tax-deferred. You can invest or withdraw funds at any time, and both you and your spouse can receive payments in retirement. At retirement, you can choose to generate a set amount of annual lifetime income or take the money in a lump-sum payment. You never pay a surrender charge.

TIAA IRAs

TIAA offers traditional and Roth IRAs, and it also allows you to roll over other retirement accounts—401(k), 403(b), or IRA plans—into a new or existing TIAA IRA. Rollovers can also go the other way: from a TIAA plan to a regular retirement account. Traditional IRAs provide a tax break on the money you deposit, but you must pay taxes on the money when you withdraw it. Roth IRAs involve after-tax contributions, meaning that you don’t pay taxes on withdrawals. TIAA also has SEP and SIMPLE IRAs for small businesses.

TIAA Target-Date Funds

Target-date funds are labeled “lifecycle” funds by TIAA and allow you to invest in mutual funds. You pick a retirement date, and the fund automatically adjusts its mix of high-risk and low-risk investments over time, with the latter increasing as you come closer to your retirement date.

The Bottom Line

The Teachers Insurance and Annuity Association (TIAA) is a for-profit financial organization that provides pension, insurance, and investment services, mainly for teachers and their families. The mission of the organization, founded more than 100 years ago, is "helping those who help others find confidence in retirement."

TIAA serves over five million active and retired employees participating at more than 15,000 institutions. Today, TIAA's reach extends well beyond education, being the leading provider of financial services also in the research, medical, cultural, and governmental fields.