Bills to Allow CITs in 403(b) Plans Reintroduced in House, Senate

Once again, bills that would allow 403(b) plans to include collective investment trusts in their investment lineups were introduced in the House and Senate on Wednesday.

The Retirement Fairness for Charities and Education Institutions Act of 2025 seeks to amend federal securities laws to enhance 403(b) plans.. The House bill (H.R. 1013) and the Senate bill (S. 424) are identical.

Representative Frank Lucas, R-Oklahoma, is the sponsor of H.R. 1013, which was introduced in the House and referred to the House Committee on Financial Services. Representatives Josh Gottheimer, D-New Jersey, Bill Foster, D-Illinois, and Andy Barr, R-Kentucky, co-sponsored the bill.

Senator Katie Britt, R-Alabama, is the sponsor of S. 424, along with Senators Gary Peters, D-Michigan, Bill Cassidy, R-Louisiana, and Raphael Warnock, D-Georgia.

An earlier version of the bill was passed by the House in March 2024 and introduced in the Senate in August 2024. The bill was not acted on by the Senate by year-end.

The latest version of these bills propose amending the Investment Company Act of 1940, the Securities Act of 1933 and the Securities Exchange Act of 1934 to allow 403(b) plans and governmental plans to invest in CITs, which are generally lower-cost investment options available for inclusion in other defined contribution plans, including 401(k)s.

The SECURE 2.0 Act of 2022 amended Internal Revenue Code Section 403(b) to allow 403(b) plans with custodial accounts to invest in CITs. However, for CITs to be a permissible investment for 403(b) plans, securities laws need to be amended as well.

Allowing 403(b) plans to invest in CITs has been a years-long effort by many in the retirement industry who argue that CITs can be cheaper and more flexible than mutual funds, in part because the instruments are not securities and do not need to be registered with the Securities and Exchange Commission.

The Investment Company Institute released a statement supporting the congressional effort on Thursday.

“ICI thanks these dedicated members of Congress for their bipartisan leadership on this important legislation and continuing the fight for retirement savers in the 119th Congress,” said ICI CEO and President Eric J. Pan in the statement. “These professionally managed products help millions of Americans secure their financial future. ICI hopes Congress will move swiftly to pass this legislation so public sector and nonprofit employees participating in 403(b) plans can benefit from the same retirement savings products offered in 401(k)s.”