Regulatory Updates

Proxy Vote Changes for Index Funds Proposed in House

Representatives Bill Huizenga (R-MI) and Blaine Luetkemeyer (R-MO) have introduced HR 8521, the Investor Democracy is Expected (INDEX) Act. The bill mirrors S. 4241, which was introduced and announced in May. The bill would require investment advisors of passively managed funds to vote proxies in accordance with the fund investors’ instructions—not at the adviser’s discretion. The adviser would be responsible for passing through the proxies, collecting the instructions, and voting according to the investors’ wishes. Except for routine matters, the investment adviser could not vote on the proportion of shares for which voting instructions were not received. The proposal provides for a safe harbor whereby investment advisers would not be in violation of duties by choosing not to solicit voting instructions or voting the particular proxy.

A passively managed fund is a qualified fund that:

  • is designed to track, or that is derived from an index of securities or a portion of an index.
  • allocates not less than 40 percent of the total fund assets that is designed to track or that is derived from an index of securities or a portion thereof.
  • discloses whether the qualified fund is a passive or index fund following an investment strategy that is passive or based on an index of securities.

The term qualified fund includes 401(a), 457(b), and 403(b) plans.

Regulatory Updates

IRS Releases Draft Forms 1099-R and 5498 for 2023 Tax Year

IRS Releases Draft Forms 1099-R and 5498 for 2023 Tax Year

The IRS has posted draft versions of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and Form 5498, IRA Contribution Information for tax year 2023.