Collective Investment Trust (CIT)

A collective investment trust is a fund a bank maintains to invest the assets of tax-exempt retirement plans together in one pool. Each participating plan holds a proportionate interest in everything the fund owns, the bank manages it, and a plan participant meets it as one line on a 401(k) investment menu, usually with a fund-style name and no ticker symbol beside it.

The naming deserves a moment, because three official sources use three different phrases for the same vehicle and none of them is the one on the menu. The Office of the Comptroller of the Currency's regulation, 12 CFR 9.18, is headed "Collective investment funds", and the OCC's examination handbook on the subject uses collective investment fund and the abbreviation CIF throughout. That regulation authorizes two kinds. The first, at 9.18(a)(1), which OCC examiners call an A1 fund, pools money the bank holds for individuals in personal fiduciary capacities, and is traditionally known as a common trust fund. The second, at 9.18(a)(2), the A2 fund, is "a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or other trusts that are exempt from Federal income tax", and that is the vehicle this page is about. The securities statutes use a third phrase, "collective trust fund maintained by a bank". The retirement industry, plan documents and fund sheets say collective investment trust, and federal agencies outside the OCC use it too: the Labor Department's March 2026 proposed rule on selecting plan investment options gives a collective investment trust as its example of an option that is not a registered mutual fund. That is the name a participant will see, which is why it is the name at the top of this page.

Two separate exemptions, not one, keep this vehicle outside the securities regime, and it is worth seeing both. Section 3(c)(11) of the Investment Company Act excludes from the definition of an investment company "any collective trust fund maintained by a bank consisting solely of assets of one or more of such trusts, government plans, or church plans, companies or accounts that are excluded from the definition of an investment company under paragraph (14) of this subsection", the "such trusts" being employees' stock bonus, pension or profit-sharing trusts qualified under section 401 of the tax code. Section 3(a)(2) of the Securities Act of 1933 then exempts the securities: "any interest or participation in a single trust fund, or in a collective trust fund maintained by a bank", issued in connection with a qualifying stock bonus, pension or profit-sharing plan. One exemption covers the fund, the other covers what is sold in it. Both are keyed to employer-sponsored plans, which is why the vehicle appears in a 401(k) menu rather than on a brokerage platform.

The consequence a participant can act on is that the disclosure document exists and can be demanded. There is no registered prospectus, no ticker and no daily quote in the newspaper, which is what makes these funds feel opaque. What there is instead is the written Plan. 12 CFR 9.18(b)(1) requires the bank to establish and maintain each fund in accordance with a written Plan approved by its board, and to "make a copy of the Plan available either for public inspection at its main office during all banking hours or on its Web site" and to "provide a written or electronic copy of the Plan to any person who requests it". The rule also lists what the Plan must cover, including investment powers and policies, allocation of income, profits and losses, "fees and expenses that will be charged to the fund and to participating accounts", the terms for admission and withdrawal, the basis and method of valuing assets, the minimum frequency of valuation, and the bases on which the bank may terminate the fund. A participant who cannot find a prospectus is not out of options; they are looking for the wrong document.

The rest of 9.18(b) is a short list of protections worth knowing by name. Each participating account must have "a proportionate interest in all the fund's assets", so nobody gets a better slice of the good holdings. The bank must have exclusive management of the fund, except as a prudent person might delegate. At least once every twelve months the bank must arrange an audit "by auditors responsible only to the board of directors of the bank" and prepare a financial report from it, and that report "must disclose the fund's fees and expenses". The report, or notice that it is available on request without charge, goes to each person who would ordinarily receive a regular periodic accounting, and the bank must provide a copy to any person on request for a reasonable charge.

Valuation is where the comparison with a mutual fund is most easily overstated. A registered open-end fund has to strike a net asset value every business day. The banking rule's floor is far lower: 9.18(b)(4)(i) requires the bank to value readily marketable assets at least once every three months and assets that are not readily marketable at least once a year. In practice a fund built for a daily-valued 401(k) menu is valued daily, because the plan's recordkeeping requires it, and the fund's actual frequency is one of the items the Plan has to state. The point is that daily valuation here is a feature of the particular fund rather than a legal minimum, so it is something to confirm rather than assume.

Who may participate is narrower than the marketing sometimes suggests. The A2 fund is limited to assets of tax-exempt retirement, pension, profit sharing, stock bonus and similar trusts, and the securities exemptions above are keyed to plans qualified under section 401, governmental plans and church plans. Individual retirement accounts are not on either list, which is the practical reason these funds do not appear in an IRA or a taxable brokerage account. On the tax side, A2 funds generally obtain their exempt status by qualifying as a group trust under Revenue Rulings 81-100 and 2011-1 and IRC section 401(a), and the OCC's handbook notes that a participating account admitted on that basis must incorporate the fund's Plan by reference into its own governing instrument. That is why a plan document sometimes points at a bank's Plan the participant has never seen.

A scope caveat on the regulation itself. 12 CFR 9.18 is the OCC's rule for national banks, extended to federal savings associations by cross-reference. Many of these funds are maintained by state-chartered trust companies under state law, and the OCC records that its rule "served as a model for subsequently enacted state statutes, many of which cross-reference 12 CFR 9.18". So the standards described here are the reference point for the category rather than a single federal rule that governs every such fund in the country.

A bank adopts a written Plan for the fund, its board approves it, and eligible retirement plans invest in the fund by buying units. Each participating plan holds a proportionate interest in every asset the fund owns. The bank manages the portfolio, values it on the schedule the Plan sets, charges the fees the Plan states, arranges an annual audit, and issues an annual financial report disclosing the fund's fees and expenses. A participant's own statement shows units and a unit value, not a share price from a public quotation.

A hypothetical of what a participant can actually do with this. Aisha's employer plan offers a large-cap option with no ticker and a fund sheet showing an expense of 0.03 percent a year. She has $120,000 in it, so the annual cost is $36 ($120,000 multiplied by 0.03 percent). Wanting to know what that 0.03 percent covers, what else may be charged to the fund and how often it is valued, she looks for a prospectus and finds none, because there is no registered offering to write one for. The document that answers all three questions is the bank's written Plan, which 12 CFR 9.18(b)(1) requires the bank to make available for public inspection at its main office or on its website and to provide in writing or electronically to any person who requests it. Her plan's recordkeeper or the bank can produce it, and the fund's annual financial report, which must disclose the fund's fees and expenses, is available on request as well.

Pros

• Pricing is negotiated between the bank and the plan rather than published to the retail market, which is one reason large plans use these funds, though it is a reason to compare rather than a guarantee of a lower fee.
• Every participating account holds a proportionate interest in all the fund's assets, a requirement written into the OCC's rule rather than left to contract.
• The fund is audited every twelve months by auditors answerable only to the bank's board, and the resulting financial report must disclose the fund's fees and expenses.
• The disclosure document is not merely on file: the bank must publish the Plan or make it available for public inspection, and must give a copy to anyone who asks.

Cons

• There is no registered prospectus, no ticker, no publicly quoted price and no independent fund-research coverage, so ordinary comparison tools do not reach these funds and a participant has to request documents instead.
• It cannot travel. Leaving the employer means leaving the fund, because the vehicle is only available inside eligible plans and cannot be rolled into an IRA as-is.
• The banking rule's valuation floor is quarterly for readily marketable assets and annual for everything else, so daily pricing is a feature of a particular fund rather than something the law guarantees.
• Investor protections come from banking regulation and, for most plans, from ERISA, not from the Investment Company Act, so the specific protections a reader may associate with a registered fund do not attach.
• Two funds with similar names can be built and priced differently, and without a prospectus the only way to tell is to read the Plan.