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A 403(b) Collective Trust? A Note of Caution
Robert J. Toth, Jr., via NTSA Net Nov. 18, 2015
"Two issues need to be addressed regarding a 403(b) plan's purchase of the CITs of the sort that are typically sold to 401(k) plans.... Code Section 403(b) only permits investments in mutual funds and annuity contracts.... [T]he problem is that the typical CIT is NOT a mutual fund registered under the Investment Company Act of 1940, and the interest which is being purchased is therefore not a mutual fund share ... [E]ven if you could do share accounting and overcome the legal and logistical challenges of making this work for the Section 403(b) rules ... 403(b) investments do not qualify for the exemptions from registration under the Investment Company Act or the Securities Act of 1933, while 401(a) plans do enjoy that exemption."
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