Head of Retirement Distribution Rob Barnett explains why Collective Investment Trusts (CITs) are an option deserving of a fresh look from advisers for use in defined contribution (DC) and defined benefit (DB) plans in this article reprint from the June 15, 2020 edition of PLANADVISER.com. The COVID-19 pandemic has taken a tremendous economic toll on businesses and individuals, forcing people to evaluate critical issues, including how well their retirement plan can weather this storm.
Collective Investment Trusts (CITs) are gaining traction and eligible investors are combining these assets into a single investment portfolio, or fund. These tax-exempt, pooled investment vehicles are typically sponsored and maintained by a bank or trust company acting as trustee. Often, they are used to pursue a set of stated investment objectives and strategies.In recent years, CITs have seen tremendous growth and are becoming a bigger part of the retirement puzzle.
The collective investment trust (CIT) is no longer the retirement industry’s best-kept secret. CITs are pooled, tax-exempt investment vehicles sponsored and administered by a bank or trust company that also acts as the trustee. CITs comingle assets from eligible investors into one private investment portfolio with a specific strategy. Currently, CITs are available for defined contribution (DC) and defined benefit (DB) plans, excluding most 403(b), 457(b) and 457(f) plans.