Collective Investment Funds and 403(b) Plans

Q. Collective investment funds (CIFs) are regulated by the Office of the Comptroller of the Currency; are they eligible investment vehicles for 403(b) plans?

A. A CIF, even though regulated by the Comptroller of the Currency, can also be formally organized and registered with the SEC as investment company (merely having a CUSIP doesn’t count, by the way). If this happens, the CIF can be used in a 403(b) plan. However, non-registered CIFs likely cannot be used, for two reasons. First, Code Section 403(b) only permit investments in mutual funds and annuity contracts, and a unitized CIF is neither one of these. Secondly, even if you wanted to “look through” the CIF to the underlying mutual fund to qualify under 403(b), this would require share accounting of the investments (which is a virtual impossibility). But even if you could do share accounting, the CIF would still likely be treated by the SEC as having to be registered as a mutual fund.