Is the unitization of a target-date fund in a 403(b) permissible?

[Guest BenefitsGal5]

Custodial accounts that are investe solely in mutual funds are one of the permisisble funding arrangements in a 403(b) plan. If a target date fund in the 403(b) plan is unitized may it still be considered a mutual fund?

[TLGeer]

Custodial accounts that are investe solely in mutual funds are one of the permisisble funding arrangements in a 403(b) plan. If a target date fund in the 403(b) plan is unitized may it still be considered a mutual fund?

The custodial account content requirement is that the investment be in a regulated investment company. That is, registered with the SEC as such.

If the plan has a retirement income account, it can invest in a wider variety of vehicles. However, a hard answer would require looking at the detailed facts.

Tom Geer

[Guest BenefitsGal5]

The custodial account content requirement is that the investment be in a regulated investment company. That is, registered with the SEC as such.

If the plan has a retirement income account, it can invest in a wider variety of vehicles. However, a hard answer would require looking at the detailed facts.

Tom Geer

Are you suggesting that if the plan has a retirement income account (RIA), and if the target date fund is moved to the RIA, then the target-date fund can be unitized? Are you also suggesting that if the target date fund remains in the custodial accounts that it cannot be unitized?

[TLGeer]

The custodial account content requirement is that the investment be in a regulated investment company. That is, registered with the SEC as such.

If the plan has a retirement income account, it can invest in a wider variety of vehicles. However, a hard answer would require looking at the detailed facts.

Tom Geer

Are you suggesting that if the plan has a retirement income account (RIA), and if the target date fund is moved to the RIA, then the target-date fund can be unitized? Are you also suggesting that if the target date fund remains in the custodial accounts that it cannot be unitized?

Actually, I was trying hard not to say anything definitive. Is the target date fund a regulated investment company, registered as such with the SEC? In the alternative, is it a bank collective investment fund or a managed pool of assets with a target date management style? It could, in theory, be a pooled separate account of an insurance company held under a life insurance policy or some variation of a master trust. Is it? The term "fund" has too many meanings to be the basis for real-world advice.

Tom