CITs Light on Fees, but Not on Regulation
By Jason Levy
January 2, 2025
The House of Representatives, the Senate and retirement policy experts, including Boston College's Center for Retirement Research, agree: 403(b) retirement plans should have access to collective investment trusts, because they are strictly regulated, transparent and often confer meaningful cost savings and increased protections to retirement investors.
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CITs are subject to strict regulatory oversight. Because they can be offered only to retirement plans, virtually all CITs accept investments from plans that are subject to the Employee Retirement Income Security Act — a critical feature ignored by the Versanture article.
If an Erisa plan invests in a CIT, the CIT, its trustee and its investment manager are subject to the law's full array of fiduciary duties, described by appellate courts as "the highest known to the law."
They are also required to comply with Erisa's strict "prohibited transaction" rules and must make fulsome disclosures concerning the fees and other amounts charged to benefit plan investors or otherwise received by them.
