Technical corrections only. v2 renumbers the main section from 4102 to 2, adds U.S.C. citations for clarity, and includes a minor wording adjustment in the description of certain trusts under the Investment Company Act of 1940. These changes do not alter the substantive policy of the bill.
Retirement Fairness for Charities and Educational Institutions Act of 2025
- Sponsor
- Rep. Lucas, Frank D. [R-OK-3]
- Committees
- Financial Services Committee (primary)
- Last action
- Nov 28, 2025
Bottom line
The bill seeks to enhance 403(b) retirement plans by broadening their investment options, potentially leading to lower costs and better returns for participants in non-profit and educational sectors.
What it actually does
This bill amends federal securities laws to expand investment options for 403(b) retirement plans, primarily those offered by charities, public schools, and other non-profit organizations. It allows certain 403(b) plans to invest in collective trust funds and separate accounts, which were previously largely restricted to 401(k) plans and governmental plans, thereby providing access to potentially lower-cost and more diversified investment vehicles. The changes aim to align 403(b) plans more closely with 401(k) plans in terms of investment flexibility, particularly for plans with employer fiduciary oversight.
Proponents argue
Proponents argue that this bill levels the playing field between 403(b) and 401(k) plans, giving employees of non-profits and educational institutions access to the same institutional, lower-cost investment options (like collective investment trusts) that are available to private sector workers. They contend that this will improve retirement outcomes for millions of workers by reducing fees and increasing investment diversification, without compromising investor protections due to the required fiduciary oversight.
Opponents contend
Critics might argue that expanding investment options, even with fiduciary oversight, could introduce new complexities or risks for plan sponsors and participants who may not have the same level of sophistication as those managing larger 401(k) plans. Some might also express concern that while aiming for lower costs, the new options could still involve fees that are not fully transparent or understood by all participants, or that the fiduciary requirement might be burdensome for smaller non-profits.
The bill is short and relatively focused, making it accessible for an informed reader to understand its core changes within a reasonable timeframe.
Section 2(a), 2(b), 2(c), and 2(d) amending the Investment Company Act of 1940, Securities Act of 1933, and Securities Exchange Act of 1934.
Expanding Investment Options for 403(b) Plans
This provision modifies several federal securities laws to allow certain 403(b) retirement plans to invest in collective trust funds and separate accounts. Previously, these investment vehicles were largely exempt from securities registration requirements only for 401(k) plans and governmental plans. The bill extends these exemptions to 403(b) plans if they are subject to ERISA, or if the employer acts as a fiduciary for investment selection, or if they are governmental 403(b) plans with employer/fiduciary review of investment alternatives. This change aims to provide 403(b) plans with access to institutional investment options that often come with lower fees and greater diversification.
Supporters argue
Supporters argue this provision is crucial for modernizing 403(b) plans, ensuring that those who work for non-profits and schools have the same opportunities for efficient retirement savings as those in the private sector. They emphasize that the fiduciary requirements embedded in the bill protect participants by ensuring responsible oversight of investment choices.
Critics contend
Some might argue that while the intent is good, the added fiduciary responsibilities for employers, especially smaller non-profits, could be a burden. There could also be concerns about the complexity of these new investment options and whether all plan participants will fully understand them, even with oversight.
Tradeoffs
The bill balances the desire to provide broader, potentially lower-cost investment options for 403(b) plans with the need to maintain investor protections. It does this by requiring specific fiduciary oversight for plans utilizing these new exemptions, which could be seen as a benefit or a burden depending on the employer's capacity.
Conditions for 403(b) plans to access new investment exemptions.
Section 2(a)(D)(iv)(I) of the Investment Company Act of 1940 amendment, and similar clauses in the Securities Act and Securities Exchange Act amendments.
Why it matters:This is standard legislative drafting practice when amending specific sections of existing laws, rather than an attempt to obscure.
Case for: Supporters argue these conditions are essential safeguards, ensuring that only 403(b) plans with adequate oversight (ERISA, employer fiduciary, or governmental plan review) can access the expanded investment options, thereby protecting participants.
Case against: Some might argue that the conditions, particularly the employer fiduciary requirement, could be a barrier for smaller non-profits or those less equipped to take on such responsibilities, potentially limiting the reach of the bill's intended benefits.
Estimated impact: These conditions determine which of the millions of 403(b) plan participants and thousands of sponsoring organizations will directly benefit from the expanded investment options.