H.R. 1013 — Retirement Fairness for Charities and Educational Institutions Act of 2025
Executive Summary
H.R. 1013 aims to level the playing field between private-sector 401(k) plans and public-sector/non-profit 403(b) plans by amending federal securities laws to allow 403(b) plans to invest in low-cost collective investment trusts (CITs) and unregistered insurance contracts. Under current law, 403(b) plans—primarily used by teachers, charity workers, and public educational institutions—are prohibited from accessing these lower-cost investment vehicles. The bill passed the Financial Services Committee with strong bipartisan support (43-8), though a faction of Democrats opposed the measure over concerns that it strips away essential SEC oversight and exposes vulnerable public-sector workers to unregistered financial products.
Arguments For
- Parity and Fairness: Eliminates an outdated statutory discrepancy, allowing teachers, clergy, and non-profit workers to access the same low-cost, high-yield investment vehicles (like CITs) that corporate employees have used for years in their 401(k)s.
- Cost Savings: Collective Investment Trusts (CITs) typically have lower administrative and marketing fees than mutual funds. Allowing 403(b) plans to use them will compound retirement savings faster for public-sector workers.
Likely Supporters
Arguments Against
- Investor Protection Risks: Opponents argue the bill removes critical SEC safeguards and disclosure requirements, exposing teachers and non-profit workers to opaque, unregistered products like variable annuities.
- Predatory Sales Concerns: Minority views highlight that the legislation could allow unregistered financial professionals to aggressively market complex, high-risk financial products to vulnerable public-sector workers without standard federal oversight.
Likely Opponents
📋 Key Provisions
- Amends the Investment Company Act of 1940 to exempt 403(b) plans from the definition of an investment company, provided the plan is subject to ERISA or is a governmental plan.
- Requires employers making the 403(b) plan available to agree to serve as a fiduciary with respect to the selection of the plan's investments.
- Amends the Securities Act of 1933 to exempt interests in qualifying 403(b) plans from SEC registration requirements, mirroring existing exemptions for 401(k) plans.
- Amends the Securities Exchange Act of 1934 to align the treatment of 403(b) plans with other exempted retirement plans, allowing them to utilize unregistered insurance contracts and CITs.
Supporting Views on Legislation
Under current law, 403(b) retirement plans for charities and public educational institutions are prohibited from investing in low-cost collective investment trusts (CITs) and unregistered insurance contracts, unlike comparable 401(k) plans. This bill amends federal securities laws to level the playing field, granting 403(b) plan participants access to the same low-cost investment options available to 401(k) participants.
⚖️ Dissenting views on legislation
Committee on Financial Services: Minority views argue that the bill removes meaningful safeguards for teachers and non-profit workers by allowing unregistered financial professionals to sell unregistered products, such as CITs and variable annuities, to 403(b) plans. Opponents contend this exposes vulnerable public-sector workers to inordinate risks and strips away essential SEC oversight and disclosures.
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Verification Guide
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Requires the employer to agree to serve as a fiduciary for the plan's investment selection.
"agrees to serve as a fiduciary"
Mandates that the plan must be subject to Title I of ERISA or be a governmental plan.
"subject to title I of the Employee Retirement"
Amends the Securities Act of 1933 to exempt qualifying 403(b) plans.
"a plan which meets the requirements of section 403(b)"