More Progress for 403(b) Plan Participants: The House Passes Retirement Fairness for Charities and Educational Institutions Act

Retirement Fairness for Charities and Educational Institutions Act – Passed in House

On December 11, 2025, the U.S. House of Representatives passed the Retirement Fairness for Charities and Educational Institutions Act (Section 202 of the INVEST Act of 2025).  This bipartisan bill allows public school teachers, employees of hospitals, charities, and other individuals who rely on 403(b) plans to have the same access to strictly regulated collective investment trusts (“CITs”) that has been afforded to virtually all other employer-sponsored retirement plans, including 401(k) plans, governmental 457 plans, and the federal Thrift Savings Plan.  In addition to strict regulation and investor protections, CITs frequently engage SEC-registered investment managers who offer their strategies in the CIT at a lower cost than other similarly managed vehicles, such as mutual funds, which is why they are among the most widely offered investment products in 401(k) plans.

Great Gray strongly supports this bill and urges the Senate to swiftly pass it.  We believe that Americans, regardless of political party, should support this legislation, particularly once they understand key attributes about CITs and the bill:

1. CITs Offer Meaningful Cost Savings that Come with Strict Regulation and Investor Protections

CITs are subject to an overlapping body of laws, including state or federal banking laws, SEC antifraud rules, and common law trust and fiduciary duties.  Importantly, a CIT will be managed subject to the requirements of ERISA if it includes ERISA plan assets – even if they are commingled with non-ERISA 403(b) plan assets.  Thus, managers of such CITs for private sector and non-ERISA 403(b) ERISA plans will be subject to ERISA, including its fiduciary obligations – described by courts as “the highest known to the law.”  A 403(b) plan should be allowed to choose a lower cost CIT that is subject to ERISA over a higher cost mutual fund that is not subject to ERISA.

2. Public School Teachers Have Had Access to CITs for Decades Through 457(b) Plans

Providing public school teachers with access to CITs is not novel.  School teachers commonly participate in both a 403(b) plan and a 457(b) plan for their supplemental savings.  The 457(b) plan has had access to CITs for decades, whereas the 403(b) plan participants cannot access CITs.  That difference has added costs, not protections, to 403(b) plans and their participants.

Millions of hard-working public-school teachers and employees of hospitals, charities and other tax-exempt organizations use 403(b) plans to save for retirement.  It is essential that 403(b) plans that can meet the bill’s requirements gain access to CITs to provide these Americans with the opportunity for a more financially secure retirement.