A bipartisan group of four Senators introduced a bill today that would allow 403(b) plans to include collective investment trusts (CITs) as part of their investment menu options.
Update Available – CITs in 403(b)s Saga Adds More Twists and Turns
Senators Katie Britt (R-AL), Raphael Warnock (D-GA), Dr. Bill Cassidy (R-LA), and Gary Peters (D-MI) introduced S. 4917, the Retirement Fairness for Charities and Educational Institutions Act, to enhance investment options for 403(b) retirement plans.
Similar to a 401(k), 403(b) plans are offered to employees of non-profit organizations, like public universities, hospitals, churches, and charities.
The bill would expand retirement savings opportunities for non-profit employees by allowing 403(b) plan participants to invest in collective investment trusts (CITs), tax-exempt investment vehicles that provide a diversified, pooled investment option—similar to a mutual fund. Under current law, unlike 401(k) plans, 403(b) plan sponsors are not able to use this stable, lower-cost investment option in their plan. This legislation would create parity between 403(b) and 401(k) retirement savings plans, benefitting over 15 million employees at hospitals, universities, charities, and other non-profit organizations.
“Americans serving in the non-profit sector should have the ability to access retirement resources that fit their needs,” Sen. Britt said. “Through the Retirement Fairness for Charities and Educational Institutions Act, Americans in the non-profit sector would be able to access the same investment options available to those in the private sector. It levels the playing field so that more hardworking Americans can access retirement sooner.”
“ICI hopes the Senate will join the House and swiftly pass this legislation so public sector and nonprofit employees participating in 403(b) plans can benefit from the same retirement saving products offered in 401(k)s.”
ICI President and CEO Eric J. Pan
The bill has widespread support, including from the American Retirement Association and the Investment Company Institute.
“This is an important next step in the American Retirement Association’s effort to enact this legislation that will give 15 million 403(b) plan participants throughout the country access to the same lower-cost CIT investments that are available to 401(k) plan participants,” ARA CEO Brian Graff said in an article posted on the NAPA website.
“ICI thanks Senators Britt, Warnock, Peters, and Cassidy for their bipartisan leadership on this important legislation,” said ICI President and CEO Eric J. Pan in a statement released today. “These professionally managed products help millions of Americans secure their financial future. ICI hopes the Senate will join the House and swiftly pass this legislation so public sector and nonprofit employees participating in 403(b) plans can benefit from the same retirement saving products offered in 401(k)s.”
Additional supporters of the legislation include the American Heart Association, American Council of Life Insurers, Habitat for Humanity, National Council of Nonprofits, Council on Foundations, Lutheran Services of America, United Way, and Securities Industry and Financial Markets Association.
The bill follows an amendment that was passed in the House of Representatives in March 2024 in an overwhelmingly bipartisan vote of 301-125, sponsored by Reps. Frank Lucas (R-OK), Bill Foster (D-IL), and Josh Gottheimer (D-NJ).
CITs were supposed to be allowed in 403(b) plans by way of 2022 SECURE 2.0 legislation, but that specific provision somehow didn’t make it into the wide-ranging retirement reform law. A SECURE 2.0 “fix” that would allow 403(b)s to invest in CITs was officially introduced in the House in May 2023 in the form of “The Retirement Fairness for Charities and Educational Institutions Act of 2023.”
The full text of the bill can be viewed HERE.
SEE ALSO:
• CITs in 403(b)s Clears Another Hurdle
• CITs Dominate Investment Strategies for 2023
• The Future of Mutual Funds Amidst CIT Growth
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
