Retirement Fairness for Charities and Educational Institutions Act of 2025

The bill would amend three federal securities laws — the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934 — to extend existing registration exemptions to qualifying 403(b) retirement plans. Under current law, those exemptions allow collective investment trusts (pooled assets held by a bank or trust company) and insurance company separate accounts to hold assets from 401(k) and other qualified plans without triggering securities registration requirements. The bill would add 403(b) plans to those exemptions, enabling the same investment vehicles to serve nonprofit, public school, and church plan participants.

To qualify, a 403(b) plan must meet at least one of three conditions: it is subject to Title I of ERISA, the sponsoring employer agrees to serve as a fiduciary for investment selection, or it is a governmental plan. An additional safeguard applies to governmental 403(b) plans: the employer, plan fiduciary, or their representative must review and approve each investment alternative before it is offered to participants. The bill would not mandate that any 403(b) plan use these new investment vehicles — it would only remove the legal barrier that currently prevents them from doing so.

Employees participating in 403(b) plans at nonprofit organizations, public schools, and churches who would gain access to new investment options; employers sponsoring those plans, who may need to assume fiduciary responsibilities for investment selection; banks and trust companies that manage collective investment trusts; and insurance companies offering separate accounts.

Collective investment trusts typically carry lower fees than comparable retail mutual funds, so access to them can meaningfully improve long-term retirement outcomes. Teachers, hospital workers, and nonprofit employees covered by 403(b) plans have been excluded from these lower-cost vehicles. The bill's fiduciary conditions mean employers who want their plans to qualify must formally accept oversight responsibilities for investment choices.

The bill is largely self-executing: once enacted, the statutory amendments would immediately extend the relevant securities-law exemptions to qualifying 403(b) plans, allowing banks and insurance companies to offer collective investment trusts and separate accounts to those plans without separate SEC registration. No new rulemaking is explicitly required. In practice, financial institutions would need to update their product offerings and plan documents, and employers taking on fiduciary roles would need to establish governance processes for reviewing and approving investment alternatives before making them available to participants.