Representative Frank Lucas, a Republican from Oklahoma. Photo: Al Drago/Bloomberg
There’s been a push by Congress to pass a bill to allow CITs – tax-exempt, pooled investment vehicles similar to mutual funds – as part of the investment lineup in 403(b) plans. On Tuesday, the House Committee on Financial Services advanced the Retirement Fairness for Charities and Educational Institutions Act of 2025, by a margin of 43-8.
The bill will provide a “level playing field” between participants of 401(k) and 403(b) plans by allowing nonprofit workers to invest in CITs, said Representative Frank Lucas (R-OK). This bill “would also allow nonprofit institutions like hospitals, public schools and charities that compete with the private sector for talent through their retirement plan offerings the ability to finally provide parity to retirement options,” he said.
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In February, Rep. Lucas, along Josh Gottheimer (D-NJ), Bill Foster (D-IL), and Andy Barr (R-KY) introduced the bill, which would allow 403(b) plans to include collective investment trusts (CITs) that can be cheaper and more flexible than mutual funds as part of their investment menu options, in the House. The bill, which was also reintroduced in the Senate in February by Senator Katie Britt (R-AL), after Congress was unable to enact previous versions of this bill.
There have been prior attempts by Congress to pass similar legislation, which follows unfinished business left over from the enactment of SECURE 2.0, which amended the Internal Revenue Code to allow 403(b)s to invest in CITs. However, changes needed under the securities law did not make it into the final bill when SECURE 2.0 was enacted in 2022.
However, at Tuesday’s hearing, Rep. Stephen Lynch (D-MA) disagreed that the bill creates a level playing field and argued that because not all 403(b) plans are covered by the Employee Retirement Income Security Act of 1974, it would push “riskier investments” onto 403(b) plan participants. Rep. Sylvia Garcia (D-TX) agreed, stating that more than half of 403(b) plans are not covered by ERISA.
Rep. Lynch did include an amendment that would “create parity of protection for retirees in 403(b) plans as compared to 401(k) retirees” by allowing CITs and unregistered insurance-based products to be sold only to 403(b) plans that are subject to ERISA. However, the committee ultimately rejected this amendment.
Related: Senate reintroduces bill to allow collective investment trusts in 403(b) plans
Many in the retirement industry have pushed for allowing 403(b) plans to invest in CITs, including the Investment Company Institute. “The new law will allow 403(b) plans, often used by people working in education, charitable organizations, and public service, to invest in collective investment trusts,” said ICI President and CEO Eric J. Pan.
“The margin of support [for the bill’s passage] reflects the broader, bipartisan support for this legislation – which provides the approximately 14.5 million American nonprofit workers who use a 403(b) plan to save for retirement access to the same often lower-cost and strictly-regulated investment vehicle that is available to other employer sponsored retirement plans, like 401(k) plans,” said Jason Levy, senior counsel, trust and administrative services, Great Gray Trust Company.
The bill “is a foundational step toward increasing access to cost-effective investment solutions in 403(b) retirement plans …,” said Colbert Narcisse, Chief Product and Business Development Officer, TIAA. “This bill is a key solution to ensuring every worker can achieve a financially secure retirement, while providing opportunities to deliver embedded lifetime income solutions so that workers are not at risk of outliving their retirement savings.”
The legislation is now cleared for full consideration by the House.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
