collective investment trust

A collective investment trust (“CIT”) is a longstanding vehicle used by banks and trust companies to commingle the assets of qualified retirement trusts for investment.  In recent years, CITs are enjoying a resurgence for defined contribution plans as an alternative to mutual funds in a 401(k) plan line up. The primary reason for the new popularity of CITs is that they often have a lower expense ratio than mutual funds as a result of being free from the extensive regulatory requirements imposed on mutual funds under the securities laws.  But there are many other differences between CITs and mutual funds that plan fiduciaries should understand when adding an investment option structured as a CIT to their 401(k) plan line up.  This blog provides a number of examples of issues that plan fiduciaries who are not familiar with CITs could miss.
Continue Reading