Pending Bill Brings CITs Closer to Reality for 403(b) Plans
By Elizabeth Harris
July 2, 2025
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CITs have been available to 401(k) plans and other retirement plans, such as 457 plans, for some time. But the Retirement Fairness for Charities and Educational Institutions Act of 2025, H.R. 1013, introduced by Representative Frank Lucas, R-Oklahoma, earlier this year is meant to create parity between 401(k) and 403(b) plans in permitting nonprofit employees to invest in CITs which some expect to offer both greater savings and the potential for more investment options.
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Jason Key, head of consultant relations at TIAA anticipates that widespread adoption of CITs within 403(b) plans could both improve investment menu choices and reduce investment management fees. CITs, which are bank products rather than securities, are created exclusively for institutional investors, which eliminates specific marketing, distribution and compliance costs. And Key, based in Charlotte, North Carolina, estimates those savings could result in a 10% or more overall reduction in investment management fees paid by plan participants. He also sees how some institutional investment solutions designed for the employer-plan market may be better suited for distribution in a CIT structure, rather than a mutual fund and is watching how some new investment offerings developed only as CITs. For instance, he notes that recent Target Date Funds developed with guaranteed lifetime income are CITs and therefore currently unavailable to 403(b) plans.
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