Could a collective trust fund of a bank hold individual group annuity contracts?

[Guest vantagepension]

Could a collective trust fund of a bank hold individual group annuity contracts for seperate employer groups? Essentially pooling several group annuity contracts under one collective trust fund. thanks

[Kirk Maldonado]

I seem to recall reading an SEC No-Action letter that described a bank that had such an arrangement.

[Guest vantagepension]

The no-action letter sounds like the SEC review the investment and felt it was ok? Not sure why a collective trust fund could not have this as an underlying investment but thought I would send this out to see if anyone is familar with this arrangement. Do you remember where you saw the no action letter?

[Kirk Maldonado]

It was in the CCH Federal Securities Law Reporter listing of no-action letters.

Chances are good that it was very old, because most of the no-action letters on these types of investments are between 5 and 25 years old.

[david rigby]

SEC staff No-action letters can be found here, but there is not much history.

http://www.sec.gov/interps.shtml

As Kirk notes, CCH or BNA research services are the most likely source of older documents. When I searched BNA for "group annuity contract bank", I got 21 hits.

BTW, the original post stated "individual group annuity contracts". Terminology seems awkward. I presume it refers to "more than one" GA contract.

[Guest vantagepension]

you are righ Pax...my wording was awkward but that is what I was referring to...more than one GA contract under a collective trust fund.

[Theresa Lynn]

I got 211 hits on RIA's Checkpoint, including six No-Action Letters dated 1991 to 2003, for the same search. The 8/10 1998 letter to Mass Mutual tends to read as if this would be okay..

They are:

SEC No-Action: Lincoln National Life Insurance and Lincoln Financial Advisors--January 30, 2003

SEC No-Action: Massachusetts Mutual Life Insurance Company--August 10, 1998

SEC No-Action: State Street Bank & Trust Company--August 1, 1996

SEC No-Action: Mutual of America Life Insurance Co.--June 17, 1993

SEC No-Action: Zenith Electronics Corp.--May 28, 1993

SEC No-Action: Zenith Electronics Corp.--February 4, 1991

[alanm]

I think the bank can hold in a common collective trust the different group annuity contracts. The DOL has issued several opinions that are flexible enough to allow it.

Opinion 94-31A is one and 96-23A says: "when a plan indirectly retains investments services by investing in a pooled investment vehicle, the assets of the vehicle should be viewed as plan assets and managed assets.......the same result would occur without using the vehicle of the trust. REgulation 2510.3-101(g) provides that: where plan assets are held jointly with others, the plans identifiable property shall be treated as the sole property of the separate entity."

The key element is the sub-accounting to cleary identify who has what.

Also PTCE 84-24 is also applicable.