There are two important differences between mutual funds and annuities when they are offered under a retirement plan.
A mutual fund is a pool of securities, such as stocks and bonds, managed by an investment company.
An annuity is an insurance contract with one or more fixed-rate and variable investment options.
As for income options, annuities offer you the opportunity for lifetime income with or without guaranteed payments for a fixed time period*. Or you can decide to receive income for a certain number of years or take a cash withdrawal (depending on your plan’s provisions). Mutual funds offer systematic withdrawals.
Otherwise, mutual funds and annuities are treated very similarly when offered as part of your employer’s retirement plan.
*Guarantees are subject to the claims-paying capability of the insurer. Payments from variable accounts will fluctuate based on investment performance.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www.tiaa-cref.org for details.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.