Representative Frank Lucas, a Republican from Oklahoma. Photo: Al Drago/Bloomberg
Last week, Representatives Frank Lucas (R-OK), Josh Gottheimer (D-NJ), Bill Foster (D-IL), and Andy Barr (R-KY) introduced the Retirement Fairness for Charities and Educational Institutions Act of 2025 in the House of Representatives, which would allow 403(b) plans to include collective investment trusts (CITs) as part of their investment menu options. The bill, which was also reintroduced in the Senate last week, is another 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.
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“For too long, retirement options have unfairly disadvantaged public servants. While the required changes to our tax code for 401(b) retirement plans have already been made, we now need to implement the necessary changes to securities law,” said Congressman Lucas, who introduced the bill in the House. “This bipartisan bill aims to do exactly that and will allow for much needed consistency across retirement plans. Hardworking Americans deserve solutions like this to see their retirement savings thrive.”
Now, both the House and Senate are behind efforts to allow CITs in 403(b) plans, and two trade groups, Investment Company Institute (ICI) and the Insured Retirement Institute (IRI), jumped on the bandwagon last week.
ICI President and CEO Eric J. Pan released the following statement: “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. 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.”
The IRI sent letters last week to both the House and Senate, urging them to pass the bill: “As Congress considers this legislation to provide parity to teachers, hospital staff, members of the clergy, and employees of charities and other non-profit organizations to have the same opportunities to invest in cost-effective options and generate protected guaranteed lifetime income, we welcome the opportunity to work with you and your staff to advance this measure.”
“We are grateful for the leadership of the primary House and Senate sponsors … We look forward to working with them to pass this important retirement security legislation,” said Paul Richman, IRI Chief Government and Political Affairs Officer.
“For too long, retirement options have unfairly disadvantaged public servants. While the required changes to our tax code for 401(b) retirement plans have already been made, we now need to implement the necessary changes to securities law,” said Congressman Lucas, who introduced the bill in the House. “This bipartisan bill aims to do exactly that and will allow for much needed consistency across retirement plans. Hardworking Americans deserve solutions like this to see their retirement savings thrive.”
“It’s already way too expensive to retire in New Jersey, and those who work tirelessly to serve our communities shouldn’t be penalized when they do …I’m proud to introduce the bipartisan Retirement Fairness for Charities and Educational Institutions Act to Support our teachers, nurses and non-profit workers by giving them more power over their pocketbooks,” said Congressman Gottheimer.
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.
Related: Collective investment trusts in 403(b)s? CIT provider urges Congress to pass new bill
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.
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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.
