Defined Contribution

Thwarted by Congress’ failure to let them offer collective investment trusts, executives of some 403(b) plans could offer a CIT-like investment thanks to laws and regulations already on the books.

However, and it’s a big however, the process for offering this type of pooled investment vehicle — a group trust — by investment managers can be challenging for 403(b) plans because it requires cooperation from record keepers, custodians and trust companies as well as convincing investment committees and educating participants.

To qualify, sponsors that invest in group-trust investment managers must beware of guidelines contained in several no-action letters from the Securities and Exchange Commission to avoid running afoul of prohibitions in securities laws that Congress didn’t address in the SECURE 2.0 retirement package.