On Wednesday, Senator Katie Britt (R-AL) reintroduced The Retirement Fairness for Charities and Educational Institutions Act of 2025, which would allow 403(b) plans to include collective investment trusts (CITs) as part of their investment menu options. The bill is the latest attempt to pass the CIT legislation after Congress was unable to enact previous versions of this bill.
CITs are tax-exempt, pooled investment vehicles similar to mutual funds that are maintained by a bank or trust company exclusively for qualified plans, including 401(k)s and certain types of government plans. CITs and mutual funds account for 47% of all target-date strategy assets as of year-end 2022, according to Morningstar, which predicts CITs are on pace to overtake mutual funds as the most popular target-date vehicle in the next two years.
Recommended For You
There have been prior attempts by Congress to pass similar legislation, which follows unfinished business left over from the enactment of SECURE 2.0. The new federal legislation amended the Internal Revenue Code to allow 403(b)s to invest in CITs, but changes needed under the securities law did not make it into the final bill when SECURE 2.0 was enacted in December 2022.
Last September, there was a push by Congress, led by ranking Senate Banking, Housing and Urban Affairs Committee member Sen. Tim Scott (R-SC), to include the ability for 403(b) plans to use the low-cost CIT investment options that many 401(k) plans use today. He introduced the Empowering Main Street in America Act of 2024, which would expand 403(b) plan participants' investment options, so they have greater parity with those available in 401(k)s and other plans.
Last November, the American Retirement (ARA) spearheaded efforts to allow CITs in 403(b)s by launching a grassroots website that can be used by 403(b) plan administrators to contact Congress to advocate for CITs in 403(b)s.
Related: Collective investment trusts: House bill advances to allow lower-cost funds in 403(b)s
It was last March that the House first approved the Retirement Fairness for Charities and Educational Institutions Act to allow CITs in 403(b) plans. Also, a separate bill that would allow 401(b)s to include CITs was introduced in August by a bipartisan group of senators.
“ARA fully supports this legislation that will boost the retirement savings of hard-working employees at hospitals, universities, and other non-profit organizations,” said ARA CEO Brian Graff. “Under the bill, 15 million workers at these organizations throughout the country will now have access in their … 403(b) plan to the same lower-cost investments that are available to 401(k) plan participants.”
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
