Moody’s Investors Service, Inc.
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Plan Sponsor
The entity, usually an employer, that has established a retirement plan, selected the type of plan and investment options, and determined the method of funding plan benefits.
Short-Term Investment Fund (STIF)
A short-term investment vehicle, typically with similar objectives as a money market fund, typically managed by the plan’s custodian or trustee bank.
Transfers
Movement by a plan participant of assets from one investment option to another option within the plan. (See also participant-directed cash flow.)
Benchmark
See index.
Commingled Investment Trust (CIT)
See pooled fund.
Defined Contribution Plan
A tax-qualified retirement plan under which the amount of the participant’s benefit will vary depending upon the amount of employer (or plan sponsor) and/or employee contributions made to the participant’s account and the investment earnings or losses thereon. Most defined contribution plans that include employee contributions (e.g., 401(k) plans) permit participants to direct the investment of their accounts.
Fees
See expense ratio.
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.