Products April 14, 2014

TIAA-CREF to Acquire Nuveen Investments

April 14, 2014 (PLANSPONSOR.com) – Financial services provider TIAA-CREF announced an agreement to acquire Nuveen Investments, a diversified investment management company.
Reported by

The transaction will provide clients with additional investment choices and access to new products, according to the firms. Enhanced investment capabilities from the combination of TIAA-CREF and Nuveen will span both traditional and alternative investments (see “Nuveen Introduces Alternative Investments Unit”) comprising a diversified range of assets including equities, taxable and tax-exempt fixed income and credit strategies, commodities, real estate and real assets.

Nuveen has approximately $221 billion in assets under management. The addition of Nuveen brings TIAA-CREF’s total assets under management to approximately $800 billion. In 2013, Institutional Investor listed TIAA-CREF at number 20 on the list of the top 300 money managers; the addition of Nuveen will push it close to the top 10.

Get more!  Sign up for PLANSPONSOR newsletters.

In 2012, TIAA-CREF acquired a majority stake in GreenWood Resources, Inc., a timberland investment management organization (see “TIAA-CREF Acquires Stake in Timber Asset Manager”).

TIAA-CREF is acquiring Nuveen from an investor group led by Madison Dearborn Partners, a private equity investment firm, for an enterprise value of $6.25 billion, inclusive of Nuveen’s outstanding debt. Nuveen will operate as a separate subsidiary within TIAA-CREF’s Asset Management business, retaining its current multi-boutique business model and continuing to support its investment affiliates through scaled distribution, marketing and administrative services. John Amboian will remain the chief executive officer of Nuveen, and Nuveen’s current leadership and key investment team will stay in place.

As part of its business, Nuveen provides defined contribution investment only (DCIO) services (see “Nuveen Expands DCIO Efforts”).

“We are pleased to bring our clients around the globe access to new investments and strategies through our partnership with an experienced, market-tested investment firm like Nuveen,” says Robert Leary, executive vice president, TIAA-CREF, and president, TIAA-CREF Asset Management. “In addition, Nuveen’s strong distribution network will give us growth and scaled presence in several important channels through relationships built around experienced investment managers with strong track records.” Leary was named head of the asset management business in May last year (see “TIAA-CREF Names Head of Asset Management”).

The boards of directors at both TIAA and Nuveen each have unanimously approved the transaction. The acquisition is expected to be complete by year-end 2014, subject to customary closing conditions.

Compliance April 14, 2014

Multinationals May Have to Register Non-U.S. Retirement Plans

April 14 2014 (PLANSPONSOR.com) – Multinational employers that sponsor non-U.S. retirement plans may have new requirements under the Foreign Account Tax Compliance Act (FATCA).
Reported by

An alert from the Chicago-based law firm Winston & Strawn notes these employers may be required to register those plans with the U.S. Internal Revenue Service (IRS) as foreign financial institutions (FFIs) by April 25. They may also need to comply with certain FATCA withholding and reporting obligations starting on July 1.

Sherene Awad Jodrey, an associate with Winston & Strawn, notes in the alert FATCA is a U.S. federal law designed to enforce the IRS policy of taxing U.S. taxpayers on all worldwide income. She explains that under FATCA, an FFI subject to the reporting and withholding obligations is defined extremely broadly and includes non-U.S. retirement plans, subject to certain exemptions. If a non-U.S. retirement plan qualifies as an FFI, it is required to register as such with the IRS by the April 25 deadline and agree to report a range of information about U.S. taxpayer participants in the plan. This includes personal identification information, account balance information and withdrawal records, which are subject to each participant’s consent to such disclosure.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

If a U.S. taxpayer participant with an account balance of at least $50,000 in the plan refuses to allow the FFI to report this information to the IRS, the FFI is instead required to report these non-consenting participants to the IRS and withhold a 30% tax on certain payments from the plan to the participant. Reporting for the period July 1 to December 31, 2014, is due by March 31, 2015. Going forward, March 31 will be the reporting deadline for the entire prior year.

She adds that if a plan that is required to register as an FFI fails to register or otherwise fails to comply with its reporting and withholding obligations under FATCA, the plan will be subject to a 30% withholding tax on any U.S. source income paid to the plan. “U.S. source income” would mean any income earned from assets invested in U.S.-based stocks, bonds, mutual funds, or other investment vehicles.


Plans that qualify as exempt from the FFI registration include:

  • “Broad participation” retirement funds;
  • “Narrow participation” retirement funds;
  • Treaty-qualified retirement funds;
  • Funds similar to U.S. qualified plans;
  • Investment vehicles used exclusively for retirement funds: and
  • Pension funds of governmental and international organization employers.

 

The exemptions and how to claim them are described further in the alert.

Jodrey concludes that given the approaching deadlines for FATCA compliance, companies with overseas operations that sponsor retirement plans abroad should take time to assess whether those plan are required to register as FFIs, as well as comply with applicable reporting and withholding obligations.

More information about FATCA can be found here and here.

«