The Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York, is taking steps to allay participants' concerns about the loss last month of its tax-favored status.
TIAA-CREF can no longer be a tax-exempt entity according to the tax law recently signed by President Clinton, despite heavy lobbying efforts.
On its World Wide Web home page, the giant institution is informing participants that at worst, the change means it probably will have to cut the interest it credits to their accounts by no more than 0.25% to 0.50% annually.
"However, TIAA's dividend rates are expected to remain among the highest of any insurance company," it notes.
TIAA currently credits a 7.25% rate annually on premiums to retirement annuities, made available through employer-sponsored retirement plans, and 6.75% to supplemental retirement annuities, sold directly to individuals to build additional tax-deferred savings in addition to employer-sponsored retirement plans.
Moreover, the institution also is attempting to dispel the notion that participants will see their monthly income cut by between 3% to 5%.
That, TIAA-CREF officials said, was an estimate based on 1996 data "and assumed no action by TIAA to minimize the tax.
"In 1998, when the tax is expected to take effect, this percentage could be less," TIAA-CREF officials pointed out.
