403(b)s May Be Closer to Getting CITs
By Elizabeth Harris
September 12, 2025
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Collective investment trusts 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, permitting nonprofit employees in the latter to invest in CITs, which some expect to offer both greater savings and, potentially, 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 are bank products, not securities, and are created exclusively for institutional investors; this eliminates specific marketing, distribution and compliance costs.
Key estimates that those savings could result in a 10% or more overall reduction in investment management fees paid by plan participants. He says some institutional investment solutions designed for the employer-plan market may be better suited for distribution in a CIT structure than in a mutual fund and is watching how some new investment offerings—e.g., target-date funds with guaranteed lifetime income—have developed as CITs only and are thus unavailable to 403(b) plans.​​​
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