Money-market reforms are finally here - and they're creating headaches for mom-and-pop investors.

At least one local investor wrote checks on his money-market account, only to have the check bounce.

Be aware that your asset manager or brokerage may be changing the name, account number, or type of money-market fund you've invested in because of new laws that take effect Oct. 14.

After the 2008 financial crisis, the Securities and Exchange Commission adopted new rules to make money-market funds more resilient by reducing interest rate, credit and liquidity risks.

The key rules:

There are now three categories of money-market funds, retail, government, and institutional. Retail and government funds seek a stable $1 net asset value (NAV), but institutional funds are required to have floating NAVs, as mutual funds do.

To comply, many firms didn't want to keep retail clients in riskier "prime" money-market funds. So they switched retail investors into less-risky "government" money-market funds that have a $1 fixed NAV.

The difference between the two is important.

Prime money-market funds invest in CDs, commercial paper and corporate notes, and the NAV can float.

Government and U.S. Treasury money-market funds, meanwhile, invest in low-risk government securities such as Treasury bills. The NAV also remains fixed.

Vanguard and Fidelity, for example, have moved many customers out of prime money-market funds and into "government" money-market funds, particularly for the settlement of trades.

Michael Davis, a 40-year investor with Vanguard, found that out the hard way - by writing a check on his longtime prime money-market account.

Vanguard had switched him into the Vanguard Federal Money Market. But he was still writing checks on the prior prime money-market account.

T. Rowe Price, on the other hand, made the process simple for him, Davis said. The Baltimore-based investment firm switched the underlying investments in his old prime money-market fund to government holdings to comply with the new laws, then changed the name of the fund to a "federal" fund.

T. Rowe Price kept Davis' account number the same, so he could continue writing checks from his old checkbook.

"It made infinitely more sense than what Vanguard did," he said.

When the Vanguard money-market check he wrote bounced, Davis said, "I had to move money from my one account into another, and start writing checks on the new account. It was laborious and time-consuming." As a result of the new rules, he and his wife now have three money-market funds.

Call or email your broker about whether your money-market fund name and account number have changed as the new rules go into effect.

Instead of a money-market fund, some investors may switch altogether, into an exchange traded fund.

Guggenheim Enhanced Short Duration ETF (GSY) aims to outperform the Barclays Capital 1-3 Month U.S. Treasury Bill Index. It invests in a wider array of offerings, including bank loans. The expense ratio is 0.25 percent, and its current yield is 1.13 percent.

"It's a good choice for a short-term investor who wants more yield," said Anne Walsh, assistant chief investment officer-fixed income at Guggenheim. She oversees more than $140 billion in fixed-income investments, including a new ETF called Guggenheim Total Return Bond ETF (GTO).

Investors' conundrum today: They want yield but are chasing it via bond funds that replicate the Barclays Aggregate indexes. Nearly half of the $37 trillion U.S. fixed-income market is invested via indexes, Walsh said.

"There's an enormous amount of opportunity for active managers like ourselves," she added. "For those who are just naively investing alongside the Barclays Agg, they're taking more risk in their portfolio" than they may realize if and when the bull market in bonds ends.

Guggenheim's house view is that the Federal Reserve will raise rates by 0.25 percent in December.

Tax reciprocity ending?

Take heed of Gov. Christie's desire that New Jersey withdraw from Pennsylvania's reciprocal personal income tax agreement, noted Gary Bingel, partner-in-charge of EisnerAmper's state and local tax group.

"It may impact many citizens who work in Philadelphia, but reside in New Jersey and cross the bridge to get to and from work," he said.

The change would affect Bucks County commuters working in New Jersey, and South Jersey commuters to Philly, who are "typically lower wage earners," he added.

When the agreement was entered into in the 1970s, wage-tax rates were similar, at just under 3 percent.

Today, New Jersey's rate is a graduated tax of 1.24 percent up to 9 percent; Pennsylvania's is a flat rate of 3.07 percent, he said.

However, the agreement only applies to wages, not to partnerships, K-1 income from an S-Corp, or to stock options, Bingel said.

215-854-2808 @erinarvedlund