Collective Investment Trust Agreement

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CITs are becoming more and more popular and may be of interest to some qualified plans. However, if you are assessing whether an investment is actually in the best interests of your members and beneficiaries, you should consider all the facts and consult with your independent experts, including investment and legal experts. PARTICIPATION AND ELIGIBILITY: Collective Investment Schemes (CITs) accept investments from plan participants by: (1) benefit plans for skilled workers in accordance with Sections 401(a) and 501(a) of the 1986 Internal Income Code; (2) certain plans maintained by a public employer; and (3) certain group units or separate accounts of insurance companies consisting exclusively of assets of the above types of plans. An investment in a CIT can only be made if all the conditions for participation are met and the investment has been approved by the sponsor of the plan or another designated agent empowered to direct the planned investments. Neuberger Berman Investment Advisers LLC is a registered investment consultant. IFCs are specifically designed by a bank to improve its effective investment management by collecting assets from different accounts in a fund managed by a chosen investment strategy and a chosen investment objective. By combining various fiduciary assets into a single account, the bank is usually able to significantly reduce its operating and management costs. The designated investment strategy structure is designed to maximize investment performance. The primary objective of a collective investment fund is to reduce costs by using economies of scale by combining profit-sharing funds and pensions.

Pooled funds are consolidated into a master trust account – in law, FICs are constituted in trust – controlled by the bank or trust company acting as trustee or executor. However, many financial institutions use investment companies or investment fund companies as sub-advisors to manage portfolios. Because of the diversity of investment vehicles that exist today for retirement plans, including investment funds, CITs and segregated institutional accounts (ASIs), it is more difficult and important than ever for planners to understand the different vehicles and make informed decisions. There are many factors that need to be assessed by planners to determine which options meet the needs of plan participants and their beneficiaries. Plan size: Plan size can be an important thought and even a limiting factor: investment funds are often better able to meet the needs of smaller plans that do not have the assets to meet the minimum investment requirements required for ICT (often $10 million, but vary). On the other hand, very large plans may have the scale and interest of seeking the adaptation of an ISA if trustees deem it appropriate to meet the needs of their plan.. . . .

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