Money market amendment considerations

A U.S. Securities and Exchange Commission (SEC) amendment, which will take effect on October 14, 2016, has important financial implications for retirement plan participants and individual investors that own nongovernment money market funds. The amendment made to the Investment Advisors Act of 1940 (IA 1940) replaces the stable net asset value (NAV) for money market funds with a “floating” NAV.

In this article, Milliman consultant Jeff Marzinsky explains the SEC’s reasons for amending IA 1940. He also discusses how the amendment affects investors and retirement plan sponsors and provides steps people should consider to prepare for the new regulation.