What Is a Retirement Reserves Money Fund?
The Retirement Reserves Money Fund is an investment option for some employer sponsored 401k retirement plan. If this fund is an available option in your employer's retirement plan, you should understand the features of this fund. It could be a useful tool in your 401k planning.
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History
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The Retirement Reserves Money Fund was started in 1982 as the Merrill Lynch Retirement Reserves Money Fund. In 2006 Merrill Lynch combined their investment management resources with Blackrock. In 2009 the fund was renamed to the current Retirement Reserves Money Fund.
Function
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The Retirement Reserves Money Fund is a money market mutual funds. Money market funds keep the fund share price and invest in short term debt paper to earn interest for the fund shareholders. The Retirement Reserves Money Fund is only available through 401k type retirement plans that include Black Rock managed mutual funds.
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Effects
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The Retirement Reserves Money Fund would be a retirement plan option that will not lose any value. However, during 2009 and 2010 short term interest rates fell so low that many money market funds were paying little or no interest. In the first half of 2010, the Retirement Reserves Money Fund was paying zero interest.
Potential
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The Retirement Reserve Money Fund can be useful in a retirement plan in a couple of different ways. The fund can be used as a safe, short term parking place for retirement plan money when the bond and stock markets are falling in value. The Money Fund will also be an appropriate choice for a portion of retirement assets when interest rates are rising. The fund will be the first asset to earn the new, higher rates.
Significance
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Bank of America now owns Merrill Lynch, which shares investment management resources with Blackrock. These are large well regard financial institutions and any retirement plan affiliated with one of these companies may offer the Retirement Reserves Money Fund as an investment option. Other retirement plans may also use this fund. In 2009, Schwab Retirement Plan Services began offering this Money Fund.
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References
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