TIAA-CREF Offers Investor Tips on Best Use of Tax Returns and Stimulus Rebates

With the deadline for filing federal and state tax returns today, TIAA-CREF reminds investors that a rebate can be a great addition to your retirement savings. Also this year, many investors will be collecting additional tax rebates in May as part of an economic stimulus plan.

The average federal tax refund this year is $2,464, according to statistics compiled by the Internal Revenue Service through late March. In addition, under the economic stimulus plan, most taxpayers beginning next month will receive $600, with couples filing jointly receiving $1,200. Families with children may receive an additional $300 per child.

"There are smart ways to use your rebates and refunds," said Maliz Beams, Executive Vice President for Individual Client Services. "If you have credit card debt, pay that down first. Make sure you have enough in savings to cover your expenses for a few months if you lose your job. And if your employer offers a 401(k) plan, be sure to take advantage of it, especially if your employer offers a company match."

The following are suggestions from TIAA-CREF on how to put the money to work to help further your financial goals:

• Pay down consumer debt. One good use of the money is paying down or paying off credit card balances. Interest rates charged by many cards means consumers with balances often pay a much higher amount than their original purchase.
• Establish an emergency savings fund: An emergency fund equal to several months' salary can help prevent using a credit card or requiring a loan to pay for surprise repairs, health care costs or living expenses in the case of a job loss.
• Open a new IRA or fund an existing IRA: Individual Retirement Accounts, or IRAs, offer tax-advantaged investment for retirement. There are two types of IRAs available to investors that both offer tax advantages in allowing money to accumulate for use in retirement.
• A Traditional IRA allows investors to make potentially tax-deductible contributions that can also accumulate tax-deferred. Anyone with earned income who is under 70 ½ can make after-tax contributions to an IRA. Funds in an IRA accumulate tax-free until withdrawals are made. Although withdrawals before the age of 59 ½ are subject to a 10% federal tax penalty, exceptions are made for a first time home purchase, tuition costs or medical expenses (certain restrictions apply).

A Roth IRA enables investors to contribute after-tax dollars to a tax-deferred account. The advantage of a Roth IRA is that contributions can be withdrawn at any time, making the investment appealing for investors who may want access to the funds before retirement. Individuals who qualify can contribute up to $5,000 in 2008 in either a Traditional or Roth IRA, or $6,000 for investors 50 and over.

Investors interested in opening an IRA through TIAA-CREF can apply here, or call the TIAA-CREF enrollment hotline at 1 800 842-2888 between the hours of 8 a.m. to 10 p.m. eastern standard time Monday through Friday, or between 8 a.m. and 6 p.m. on Saturdays and Sundays.

TIAA-CREF also offers retirement planning and advice from retirement specialists that receive no sales commissions as part of their total compensation. Instead, they are paid through a salary plus incentive program that rewards client service excellence, rather than product promotion.

• Save for college tuition: A 529 plan offers a vehicle to save for higher education expenses. Contributions to a 529 plan can grow tax-deferred, and any distributions for qualified education expenses are not subject to federal taxes. In addition to the federal tax benefit, many states offer a state income tax deduction for contributions to their plans as well as state income-tax free withdrawals for qualified distributions (restrictions apply so be sure to carefully review the applicable disclosure booklet and consult with your tax advisor.)

Consider the investment objectives, risks, charges and expenses before investing in a 529 Plan. Please visit www.tiaa-cref.org for a Disclosure Booklet containing this information. Read it carefully.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

With regard to the 529 plans managed by TIAA-CREF Tuition Financing, Inc., please note that the issuing states, their agencies, Teachers Insurance and Annuity Association of America, and its affiliates do not insure any Account invested in the Managed Allocation Option or 100% Equity Option. There is no guarantee of principal or investment return in these accounts. Account values will fluctuate based upon a number of factors, including general market conditions.

Investors interested in 529 plans managed by TIAA-CREF Tuition Financing, Inc., a TIAA-CREF affiliate, can click here.

• Reward yourself now AND later- You don't need to view deciding what to do with the tax refunds as either a "save it" or "spend it" issue. If you have trouble saving money, perhaps reward yourself in the short run by spending some of the refund, while also giving yourself the long-term reward of paying down debt or saving for future retirement or education costs as described above.

About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields with more than $435 billion in combined assets under management (12/31/07).

The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed herein. Neither TIAA-CREF nor its affiliates provide tax advice. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

Investing involves risk, including possible loss of principal.

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161, or go to www.tiaa-cref.org for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.

Annuity products issued by TIAA (Teachers Insurance and Annuity Association), New York, NY. Advice and Planning Services is a division of TIAA-CREF Individual & Institutional Services, LLC.

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