What are CITs? 

Collective Investment Trusts (CITs) pooled investment funds, similar to mutual funds, but they are tax exempt and only available to certain qualified retirement plans like 401(k)s. CITs combine assets from multiple investors to invest in a diversified portfolio, managed by an investment manager who is overseen and monitored by a trustee. They often have lower fees than mutual funds, making them a cost-effective option for retirement savings. 

Why are CITs relevant now?

CITs have been around for nearly 100 years. Due to their flexibility, regulatory compliance, and low-cost fee structure, CITs have grown in popularity in recent years. In fact, they’ve become one of the fastest-growing investment vehicles in the defined contribution (DC) plan space, and we expect this trend to continue.

$5.6 trillion

In CIT assets as of year-end 2023, up from $2.5 trillion in 2015

45.7%

Market share for target date CITs compared to 47% for mutual funds* 

Why consider CITs in a retirement plan? 

CITs offer many potential benefits for your employer clients and their employees, including: 

  • Pricing flexibility and structural cost advantages 
  • A range of cost-effective investment options  
  • Greater tax efficiency than mutual funds  
  • Adjustable fee structures based on invested assets  
  • The fiduciary oversight of a sponsoring trustee, such as a bank or trust company 

What are the differences between CITs and mutual funds?

 Collective Investment Trusts (CITs) Mutual Funds 
Availability 
Only to certain retirement plans (e.g., 401(k)s) 
Available to the general public 
Regulation 
Regulated by the Office of the Comptroller of the Currency (OCC), State Banking Regulator, and Department of Labor (DOL) 
Regulated by the Securities and Exchange Commission (SEC) 
ERISA Fiduciary Standards 
Yes 
No 
Fees 
Generally lower fees and may be negotiable 
Typically higher fees 
Transparency 
Less frequent reporting 
Regular, detailed reporting 
Investment Strategy 
Similar to mutual funds, but often more flexible 
Diverse strategies, but more standardized 
Liquidity 
Less liquid, may have restrictions on withdrawals 
Highly liquid, easy to buy and sell 
Tax Efficiency 
Generally more tax-efficient 
Can be less tax-efficient 

Which retirement plans can use CITs? 

CITs are available for defined contribution (DC) and defined benefit (DB) plans, excluding most 403(b), 457(b), and 457(f) plans. They are not currently allowed for individual retirement accounts (IRAs). 

Who oversees CITs? 

Various government agencies oversee CITs. The Office of the Comptroller of the Currency and/or state banking regulators serve as the primary oversight for CITs. The sponsoring trustee of a CIT – a bank or trust company – is bound by the fiduciary standard under the Employee Retirement Income Security Act of 1974 (ERISA) and must act in participants’ best interest. 

CITs Available 

*When choosing to view a factsheet below, you will be redirected to an external website. 

Equity

Target date fund series2,4

Target risk series