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Senate Banking Committee urged to reject new bill allowing collective investment trusts in 403(b)s

Six investor advocacy groups are opposing CITs in 403(b)s because some plans are not governed by ERISA, so eliminating SEC’s regulatory oversight is detrimental, in a letter to the Senate committee.

By Lynn Cavanaugh | November 18, 2024 at 11:24 AM
Credit: Rudzhan/Adobe Stock

Following a push by the Senate Banking, Housing and Urban Affairs Committee to allow 403(b) plans to invest using collective investment trusts (CITs), six investor advocacy groups sent a letter to the committee, expressing that they “strongly oppose” the Empowering Main Street in America Act of 2024.

CITs are tax-exempt, pooled investment vehicles similar to mutual funds that are maintained by a bank or trust company exclusively for qualified plans, including 401(k)s and certain types of government plans. CITs and mutual funds account for 47% of all target-date strategy assets as of year-end 2022, according to Morningstar,  which predicts CITs are on pace to overtake mutual funds as the most popular target-date vehicle in the next two years.

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