Two issues need to be addressed with a 403(b) plan’s purchase of the collective trust interests of the sort that are typically sold to 401(k) plans: Code Section 403(b) only permits investments in mutual funds and annuity contracts. The CIT interests purchased by 401(a) plans, however, are typically “unitized” non-mutual fund interests. Even if one could overcome the legal and logistical challenges to making them work for the IRS 403(b) rules, there is a serious securities law problem.
Continue Reading A 403(b) Collective Trust? A Note of Caution…..