Should collective investment trusts be allowed in 403(b) plans? The Investment Company Institute (ICI) thinks so: 403(b) plans are an important component of the U.S. retirement system with $1.4 trillion in assets, according to the ICI.
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On Feb. 6, Senator Katie Britt (R-AL) reintroduced the Retirement Fairness for Charities and Educational Institutions Act of 2025, which would allow 403(b) plans to include collective investment trusts (CITs) as part of their investment menu options. The bill is the latest attempt to pass the CIT legislation after Congress was unable to enact previous versions of this bill.
Now, ICI President and CEO Eric J. Pan released the following statement last week:
“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 (CITs),” said ICI CEO and President Eric J. Pan.
“These professionally managed products help millions of Americans secure their financial future. ICI hopes Congress will move swiftly to pass this legislation so public sector and nonprofit employees participating in 403(b) plans can benefit from the same retirement savings products offered in 401(k)s.”
The ICI, a trade association representing mutual funds, exchange-traded funds and other regulated investment funds, is now applauding the bipartisan congressional efforts to help the 10.2 million participants in 403(b) plans secure their financial future.
CITs are tax-exempt, professionally managed 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.
If the new law is passed, CITs would be available to nurses, educators, and other nonprofit workers in their employer-sponsored 403(b) retirement plan.
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.
