CIT's Rising in Retirement Plans

The landscape of retirement planning is witnessing a significant shift as Collective Investment Trusts (CITs) gain popularity among small to midsize retirement plans. Recent research from Sway Research highlights this trend, revealing that CITs, particularly favored by plans with assets under fifty million dollars, offer a compelling alternative to traditional mutual funds due to their lower fees and streamlined regulatory framework.

Understanding the Appeal of CITs

CITs are appealing for several reasons:

  • Cost-Effectiveness: They typically have lower administrative and management costs compared to mutual funds. This cost efficiency is especially beneficial for smaller plans where fee minimization is crucial.
  • Simplified Regulatory Oversight: Unlike mutual funds that are regulated by the Securities and Exchange Commission under the Investment Advisers Act of 1940, CITs are overseen by the Department of the Treasury’s Office of the Comptroller of the Currency. This difference can lead to fewer regulatory burdens.

Emerging Trends in Retirement Plan Investments

Data from Sway Research underscores the growing preference for CITs in smaller retirement plans:

  • 22% of CIT sales come from plans with assets less than fifty million dollars.
  • 23% of sales are attributed to plans with assets between fifty and one hundred million dollars.
  • There has been a significant increase in Defined Contribution Investment Only (DCIO) gross sales in CITs since 2019, highlighting their growing role in retirement portfolios.

Strategic Implications for Plan Sponsors and Participants

The shift towards CITs suggests that plan sponsors are actively seeking more cost-effective and administratively simpler investment options. This trend is crucial for enhancing the value delivered to plan participants, allowing for potentially greater savings accumulation due to reduced expense ratios.

Plan Notice: Enhancing Communication for Smarter Investment Choices

At Plan Notice, we recognize the critical role of effective communication in the evolving retirement planning market. Our platform facilitates clear and timely communication for plan sponsors and advisors, providing up-to-date insights and tools to support informed investment decisions. By utilizing our resources, retirement plan sponsors can gain a deeper understanding of the benefits of CITs and assess their suitability for their specific plan needs.

As CITs continue to reshape the investment landscape of retirement plans, it is vital for plan sponsors and financial advisors to stay informed about these options. Understanding how CITs can benefit your plan, both from a cost and regulatory perspective, is essential.

For those interested in exploring how CITs can enhance your retirement plan offerings or seeking more information on this investment trend, Plan Notice is here to help. Contact us today to learn more about our services and how we can assist you in optimizing your retirement plan investments.

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