Collective Investment Trusts (CITs)

What is a collective investment trust (CIT)?

Collective investment trusts (CITs) are regulated institutional-only pooled investment vehicles maintained by a bank or trust company acting as a fiduciary. CITs allow certain qualified retirement plans to pool plan assets in a diversified investment vehicle with a specific philosophy and strategy. While CITs may pursue investment strategies comparable to those of mutual funds, they are structured exclusively for certain institutional and qualified-plan investors and are governed by a written declaration of trust rather than a prospectus. As compared to mutual funds, CITs generally have lower operating costs, fewer investment restrictions, and a highly adaptable industry infrastructure. Unlike mutual funds, CITs are not registered under the Investment Company Act of 1940, and interests in a CIT are not registered under the Securities Act of 1933. CITs are regulated primarily under the frameworks of banking and retirement laws.

Eligible Investors1

CIT-Eligible Plans

  • Pension and profit-sharing plans qualified under Internal Revenue Code Section 401(a)
  • Corporate qualified retirement plans
  • Taft-Hartley plans (union or multi-employer plans)
  • Profit-sharing and cash balance plans
  • Governmental plans under Internal Revenue Code Section 414(d) or 457(b)
  • Insurance separate accounts consisting solely of assets in qualified retirement plans

Plans Not Currently Eligible for CITs

  • Individual retirement accounts (IRAs)
  • Voluntary employee beneficiary association plans
  • Internal Revenue Code Section 403(b) plans
  • Internal Revenue Code Section 457(f) plans
  • Endowments
  • Foundations
  • Non-qualified deferred compensation plans
  • Other post-employment benefit plans (OPEB): non-pension benefits paid to employees during their retirement years

1 This may not be an exhaustive list and may change from time to time depending upon regulations and other factors.

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