SVIA

Glossary

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Immunization

Managing a portfolio to a set maturity date such that the investment manager seeks to manage the value of the portfolio assets to equal the value of the corresponding liabilities at maturity.

Impaired Securities

A security, the principal and/or interest of which has not been paid in accordance with its contractual terms, e.g., has been forced to make accelerated payments, has failed to make payments when due, has reduced either the principal or interest terms from the contractual terms, or, in a stable value investment contracts, no longer meets the required investment guidelines.

Index

With respect to the bond market, a group of fixed income securities that represent a segment of the bond market, e.g., the Citi 3-Month Treasury Bill Index, 3-Year Constant Maturity Treasury Index, or the Barclays U.S. Aggregate Bond Index. These indices are often used as benchmarks against which the performance of an investment portfolio may be measured.

Individually Managed Account

An investment account, typically preferred by plan sponsors with larger plans, in which the assets are owned by and managed for the specific plan’s participants and are generally not commingled with the assets of other investors. With respect to a stable value investment option, when compared to commingled funds, individually managed accounts may allow for a degree of customization.

Interest

The payment or cost for using money, usually expressed as a percentage rate per period of time. With respect to stable value investment contracts, interest refers to the amount paid or credited by the issuer to the contract-holder expressed as an effective annual yield. (See also crediting rate.)

Interest Rate Responsiveness

The degree to which a stable value investment option's yield (or an investment contract’s crediting rate) moves in conjunction with the changes in the overall market level of interest rates. A stable value investment option’s returns typically tend to follow changes in current interest rates, but with a lag.

Interest Rate Risk

The risk that changes in interest rates will affect the return on an investment, either positively or negatively. This effect may be due to realized or unrealized gains or losses on the investment's market value, to changes in the reinvestment rate on interest income, or to interest rates triggering prepayment or extension of principal.

Internal Revenue Code (IRC)

The Internal Revenue Code is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). It is organized topically, into subtitles and sections, covering income tax (see Income tax in the United States),payroll taxesestate taxesgift taxes, and excise taxes; as well as procedure and administration. Its implementing agency is the Internal Revenue Service. IRC code governing tax-deferred employer-sponsored retirement savings plans include 401(k), 457, 403(b) as well as tuition assistance programs such as 529 plans.

Internal Revenue Service (IRS)

The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue. The IRS is responsible for collecting taxes and the interpretation and enforcement of the Internal Revenue Code. The IRS is responsible for the interpretation and enforcement of all tax-deferred savings plans, which include employer-sponsored defined contribution plans that include 401(k) plans, 403(b) plans and 457 plans as well as tuition assistance programs such as 529 plans.

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Investment Contract

Any of a variety of stable value contracts including bank investment contracts, traditional GICs, separate account GICs, and synthetic GICs. Within a stable value investment option, such contracts are benefit-responsive, meaning they permit, subject to their terms and the plan’s rules, participant initiated transactions at book value. Investment contracts may have a fixed or floating interest rate, which may not be less than 0%. Investment contracts may have a stated final maturity (such as a traditional GIC) or may have no stated final maturity (such as a separate account GIC or synthetic GIC). (See also guaranteed investment contract and wrap contract.)

Investment Guidelines

Guidelines established between a plan sponsor or trustee (and/or a wrap contract issuer) and an investment manager that dictate the investment parameters and risk exposures that the investment manager may assume in the investment account. In fixed income portfolios, the guidelines typically address permissible asset classes and/or securities, sector allocation limits, issuer diversification, and minimum credit quality constraints.

Investment Options

One or more investment portfolios (whether mutual funds, commingled funds, separately managed accounts or other investment vehicles) offered within a defined contribution plan, into which participant and employer contributions may be directed. This may include equity options, bond options, balanced options, target date or risk-based options, an employer stock option, a stable value option, a money market option, or other types of options.

Investor

See participant.