Is a collective investment trust a security?
CITs are excluded from the definition of a registered security and an investment company under various securities laws, but are subject to the Office of the Comptroller of the Currency (OCC) Regulation 12 CFR 9.18, state banking rules or both.
What is the benefit of a collective investment trust?
What are the advantages of CITs for advisors, consultants, and plan sponsors? May lower fees. By ensuring access to CITs, advisors can support plan sponsors and participants by maximizing every dollar the participant puts aside for retirement. A streamlined process.
Are CITs registered?
Fact: While CITs are exempt from registration with the Securities and Exchange Commission (SEC) these funds are subject to a variety of federal and state laws and regulations.
What are common collective trusts?
A Common Collective Trust (CCT) is a vehicle usually operated by a bank or trust company. It is a product sold primarily to employee benefit plans such as 401(k) plans. The CCT holds a variety of individual investments within the trust that can include: Mutual funds. Bond or money market investments and other types.
Do CITs pay dividends?
Unlike mutual funds, CITs are not required to pay out interest, dividends, and realized capital gains to investors because only tax-qualified investors may invest in CITs.
Are CITs mutual funds?
CITs. Collective Investment Trusts are quite similar to mutual funds. However, they are only available to tax-qualified retirement plans like the Electrical Workers Local No. 26 Individual Account Plan.
Can 457b plans use CITs?
Today, many types of retirement plans, including 401(k), 457(b), and defined benefit retirement plans, are permitted to invest in CITs.
What is a group trust?
A group trust is an arrangement under which qualified retirement plan trusts, individual retirement accounts and certain other tax exempt retirement plans or accounts pool their assets for investment, usually for the purpose of achieving diversification of investments.
What happens to dividends in a collective investment trust?
Because collective trust funds are only available as retirement plan investments, they do not pay out dividends or capital gains. In other words, any profit or loss to the fund is reflected in the daily share price. The exception to this are stable value trusts.