Bank trusts could include 403(b) assets

Summary#

The Retirement Fairness for Charities and Educational Institutions Act of 2025 would amend the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934. Its stated goal is to enhance 403(b) retirement plans; the bill does not guarantee that plans will offer new investments. The supplied status says the bill is still in progress and is not law.

  • It would change how federal securities laws apply to certain 403(b) plans and investments connected to them.
  • It would let bank-maintained collective trust funds (pooled investment funds) include assets from qualifying 403(b) plans, subject to conditions.
  • A 403(b) plan would qualify under the bill if it is subject to ERISA (a federal employee-benefit law), the employer agrees to act as a fiduciary for selecting investment options, or it is a government plan. For government plans, each option must also be reviewed and approved before being offered.
  • It would also change securities-law treatment for certain separate accounts funded by eligible plans.

What it means for you#

  • 403(b) plan participants: Your plan might have access to investments through a bank collective trust. The bill does not require your employer or plan to offer one, or require you to invest in one.
  • Employers: An employer whose plan relies on the employer-fiduciary route must agree to act as a fiduciary for selecting the plan’s investment options. The bill does not impose that duty on every employer offering a 403(b) plan.
  • Government plan employers and fiduciaries: They, or someone acting for the employer, must review and approve each investment option before offering it to participants.
  • Banks and investment providers: The bill would allow certain bank collective trusts and separate accounts to include qualifying 403(b) plan assets, subject to the bill’s conditions.
  • Taxpayers and the public: The bill does not directly change contribution limits, tax rules, retirement benefits, or government spending.

Money#

No cost estimate is in the available material.

  • The bill does not state an appropriation, government staffing cost, fee, or expected savings.
  • It does not estimate any costs or returns for employers, plan participants, banks, or other investment providers.

What is unclear#

  • The current versions of the three amended Acts were not supplied, so I could not verify precisely what securities-law treatment already applies or how much of the bill’s wording is new.
  • The bill does not require plans to offer collective trusts or set rules for which specific investments they may offer beyond the stated eligibility and review conditions.
  • It does not set out how plan eligibility or the required government-plan review and approval would be documented or monitored.
  • The bill does not explain how its changes would interact with other rules or investment options available to 403(b) plans.

Case for#

  • The bill appears intended to make bank collective trusts available to more qualifying 403(b) plans.
  • A possible argument for the bill is that pooled funds could give participants another investment option without requiring every plan to use it.
  • The conditions for qualifying plans, including employer fiduciary responsibility in one route and advance review for government plans, provide some checks on which plans and options are covered.

Case against#

  • The bill changes securities-law exclusions and exemptions, but the supplied material does not show precisely how those changes compare with current law or what protections may change as a result.
  • The bill does not require plans to offer a collective trust or explain how participants would learn about the costs and risks of any newly available option.
  • The government-plan review condition is specific, while the bill does not impose the same advance review wording on plans qualifying through the ERISA or employer-fiduciary routes.