A bipartisan group of House lawmakers have introduced a bill that would permit 403(b) plans to offer collective investment trusts.
The Retirement Fairness for Charities and Educational Institutions Act of 2023 would pick up where SECURE 2.0 — a comprehensive retirement security package Congress passed in December — left off by amending federal securities law to authorize the use of CITs and unregistered insurance company separate accounts within 403(b) plans. The bill was introduced Tuesday by Rep. Frank Lucas, R-Okla., Rep. Andy Barr, R-Ky., Rep. Bill Foster, D-Ill., and Rep. Josh Gottheimer, D-N.J.
While SECURE 2.0 included a measure that changed the tax code with respect to CITs and 403(b) plans, lawmakers couldn't agree on changing sections of securities laws that would have allowed 403(b) plans to offer CITs, which are already available to other types of defined contribution plans and some 403(b) church plans. The security laws need to be changed via legislation because CITs are bank products offered by a bank or trust company and governed by the Office of the Comptroller of the Currency and state banking regulators. CITs are considered unregistered securities.
Paul Richman, chief government and political affairs officer at the Insured Retirement Institute, welcomed the bill's introduction and said in a statement that it's a commonsense solution. "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," he said.