In a move to broaden the playing field for retirement savers, bipartisan legislation has been reintroduced in the U.S. Congress to allow 403(b) plans to invest in collective investment trusts (CITs). This change could provide millions of non-profit and public sector employees access to new investment options already available to participants in 401(k)s and other retirement plans.
The Retirement Fairness for Charities and Educational Institutions Act of 2025, introduced in both the House and Senate, would amend federal securities laws to permit 403(b) plans to include CITs as part of their investment menus. Currently, 403(b) plans are limited to mutual funds, while 401(k) and other qualified plans can already utilize the CIT structure.
The push to allow 403(b) plans access to CITs is not new. Previous attempts, such as the Empowering Main Street in America Act of 2024 and the Retirement Fairness for Charities and Educational Institutions Act introduced in 2024, have paved the way for the current legislative efforts.
The SECURE 2.0 Act of 2022 also amended the Internal Revenue Code to authorize the use of CITs in 403(b) plans, but changes to securities laws were still needed to make them a viable investment option.
Industry Support for CITs in 403(b)s
The new legislation has garnered widespread support from various industry organizations, including the American Retirement Association (ARA), the Investment Company Institute (ICI), and the Insured Retirement Institute (IRI).
These groups argue that allowing 403(b) plan participants access to CITs will help “millions of Americans secure their financial future” and put them on “parity with all other retirement plan participants who already have the opportunity to choose to invest in more cost-efficient investment options.”
Paul Richman, chief government and political affairs officer at the Insured Retirement Institute (IRI), stated that the changes proposed in the bill “will allow 403(b) plan providers increased flexibility to build more robust investment lineups for plan participants consisting of lower cost options that preserve principal and provide protected guaranteed lifetime income solutions.”
Pushback from Consumer Advocacy Groups
As the legislative process unfolds, it will be crucial for policymakers to carefully consider the balance between expanding investment options and maintaining appropriate investor protections.
Some consumer advocacy groups, such as Americans for Financial Reform (AFR), Consumer Action, and the Consumer Federation of America (CFA), have raised concerns about the potential risks associated with removing the Securities and Exchange Commission’s (SEC) oversight, particularly for 403(b) plans that are not governed by the Employee Retirement Income Security Act (ERISA).
These groups argue that by eliminating SEC regulation, the legislation could “open the door to unregistered financial products with hidden risks and costs being sold to some of the most vulnerable retirement savers.” They also express concerns about exposing more investors to the risks of “illiquid, opaque, high-risk and often predatory private markets.”
Nonetheless, the bipartisan nature of the current legislative efforts and the potential benefits for millions of retirement savers suggest that this issue may gain traction in the current Congress.
The House Financial Services Committee has already held a hearing on the topic and is seeking feedback from the public on the various legislative proposals, including the Retirement Fairness for Charities and Educational Institutions Act.
With momentum building around CIT legislation, the coming months will be critical in shaping the future of 403(b) investment flexibility—offering the potential for significant change, if implemented with the right guardrails.