Are there waiting periods and other restrictions that affect withdrawals from stable value funds?
Stable value funds do not have waiting periods or surrender charges for participants. In fact, the accounting rules for stable value funds do not permit these types of restrictions on participant-driven transactions. Most stable value funds have equity wash provisions that restrict transfers from stable value funds directly to competing funds. Competing funds are typically money market funds or short-duration bond funds. The restriction requires transfers from stable value to sit in an equity fund for a set period of time, usually 90 days before the transfer is invested in a competing fund. Equity wash requirements serve to minimize arbitrage, which negatively impacts investors who choose to remain in the stable value fund. In cases where a plan sponsor wishes to terminate its participation in a commingled stable value fund, a 12-month put or waiting period may be imposed to protect remaining investors by ensuring an orderly liquidation of the departing fund’s proportionate share of th
