Mutual Fund Participation Agreement


    CITs, also known as pooled funds, pooled trust funds, mutual trust funds or mutual investment funds, are tax-exempt investment vehicles, bundled, managed by a bank or trust company (the trustee) exclusively for eligible pension plans exempt from federal income tax, including 401(k) plans, defined benefit plans, Taft Hartley plans and certain government plans. Like investment funds, they include an investment portfolio managed by a professional with a defined objective. Unlike investment funds, a large number of regulatory rules restrict the suitability of CIT investors. The table below is an overview of the types of investors that a CIT is likely to allow and those who may not. Once the decision has been made to include a CIT in the development of an investment plan, several practical steps will follow. The plan sponsor cooperates with its advisor or advisor with the bank or trust company acting as trustee to verify the documents, including a statement of confidence and a statement of funds. Plan sponsors then enter into an agreement often referred to as a “participation agreement” with the institution that offers the CIT and provide documents that validate the qualified status of the plan. The plan accountant must also execute certain documents with the trust company. Contrary to what is expressly stipulated in the applicable investment fund agreement, there are no fees paid to the seller, its related companies or other commercial agreements that benefit the seller or its related companies and that constitute a condition or incentive for the inclusion of an investment fund as an investment option for plan commanders in order to make them available to participants. Section 5.18 Benefits and agreements for workers. (a) None of the Employee Benefit Plans are sponsored by HRS.

    CITs have become a popular alternative to investment funds under qualified pension plans. Since 2012, the use of CIT has increased by 56% in DC plans, while the use of investment funds has decreased1, a trend we expect to continue. Investment strategy: Of course, an evaluation point should be the strategy itself: if it has an attractive track record, a solid process, an experienced manager, etc. From there, the sponsor of the plan can evaluate the vehicle by which the strategy is implemented: investment funds, CIT or ISA. In order for a plan to invest in a CIT, the plan sponsor must complete all necessary participation materials and other documents and return them to the cit agent and expressly authorize the investment of assets in such a CIT. If the trustee finds at any time that the plan is no longer eligible to participate in such a CIT, the plan`s investment in such a CIT shall be immediately withdrawn and returned to the plan. 15. As with all investment funds, insurance funds sometimes generate small inequalities between the different categories of shareholders.

    For example, insurance funds do not have to pay a Fee under Rule 24(f)-2 for shares sold in registered VA accounts and VLI accounts, but they are not required to pay these fees in connection with shares sold to their investment advisors or insurance accounts or to separate non-registered accounts. Owners of variable contracts awarded through registered accounts therefore bear a burden that they would not have to bear if the fund did not sell shares to other types of investors. . . .