Wrap Fees
Expenses paid to the issuer of the wrap contract. (See also expense ratio.)
Book Value Withdrawals
Benefit payments made at book value. (They are also known as qualified withdrawals or ordinary withdrawals.) Most stable value investment contracts allow book value withdrawals only for participant-initiated withdrawals.
Credit Quality
A measure of the financial soundness of an institution, indicating its ability to honor its financial obligations in a timely manner. NRSROs assign quality ratings on banks, insurance companies, and other entities based on a number of criteria, such as their financial health, industry outlook, balance sheet and management quality. A credit quality rating may also be […]
Employer-Initiated Event
Plan changes or certain other related events that are in the control of the employer (including, but not limited to, a plan’s termination, layoffs, or changes in a plan’s design), that may trigger participant withdrawals or transfers. These withdrawals or transfers are either not covered at book value or receive limited book value coverage by stable value investment contracts. (See also book value […]
Governmental Accounting Standards Board (GASB)
GASB is a private, not-for-profit, independent organization whose primary purpose is to develop generally accepted accounting principles (GAAP) for local and state governments within the United States. The GASB is subject to oversight by the Financial Accounting Foundation (FAF), which selects the members of the GASB and the Financial Accounting Standards Board (FASB). The GASB issued Statement No. […]
Liquidity
Generally, liquidity is the degree to which an investment can be easily sold or converted into cash, especially without affecting the investment’s price. In a stable value context, it means a participant’s ability to access funds without market value risk or other penalty.
OCC
See Comptroller of the Currency, Office of.
Reinvestment Risk
The risk there will be a difference between the original coupon yield on an investment and the rates available when interest income is reinvested.
Statement of Position (SOP) 94-4-1
At the request of Financial Accounting Standards Board (FASB), the American Institute of Certified Public Accountants (AICPA) issued SOP 94-4-1. This document defines the rules under which book value accounting may be used for the investment contracts issued to non-governmental defined contribution plans. This guidance was reaffirmed in FASB Staff Position (FSP) AAG INV-1 for the use of book value accounting for investment contracts in 2004.
