One of the most unique, flexible, and underutilized investment platforms in the 401(a) marketplace is the insurance company variable “pooled separate account” (the “PSA”). It may be the least understood investment platform, being buried in group annuity contracts….Why they are worth a look is because of the current discussions on MEPs and their alternatives, and the growing popularity of collective trusts. (They) can give plans access to well-priced investments, along with access to large numbers of unrelated funds and fund managers, which otherwise would not be available to them.
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Collective Trust
A 403(b) Collective Trust? A Note of Caution…..
By Robert Toth on
Posted in 403(b), B/D-IA Issues
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. …
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