Bill to Expand 403(b) Plan Menus With CITs Lands in Senate

By John Manganaro

News August 01, 2024 at 03:53 PM

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A bipartisan group of U.S. senators has introduced a bill that would allow 403(b) retirement plans to invest in collective investment trusts.

Dubbed the "Retirement Fairness for Charities and Educational Institutions Act," the legislation mirrors popular parts of a broader House bill that passed the lower chamber in March.

Sponsors of the Senate version of the legislation include Sens. Katie Britt, R-Ala.; Raphael Warnock, D-Ga.; Gary Peters, D-Mich.; and Bill Cassidy, R-La. The House bill also has four primary sponsors in Rep. Frank Lucas, R-Okla.; Rep. Andy Barr, R-Ky.; Rep. Bill Foster, D-Ill., and Rep. Josh Gottheimer, D-N.J.

As the bill's name indicates, 403(b) plans are commonly used by charities, educational institutions and other non-profits. The U.S. Department of Labor reports that there are about 9.9 million participants in 403(b)s with a combined $1.3 trillion in assets — not including participants in certain public-sector plans that do not report to the DOL.

While they mirror 401(k) plans in some important ways, 403(b) plans also are subject to a unique set of rules and requirements that, in the view of some critics, have hampered savers' ability to meet their retirement goals through full participation in the markets. Among these differences is the inability of 403(b)s to offer CITs or insurance-company separate accounts.

Among the industry supporters of the bill is the Investment Company Institute, which issued a statement after the legislation's introduction in the Senate.

"ICI hopes the Senate will join the House and swiftly pass this legislation so public sector and nonprofit employees participating in 403(b) plans can benefit from the same retirement saving products offered in 401(k)s," the statement reads.

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