The push to pass legislation allowing collective investment trusts (CITs) in 403(b) plans couldn’t get over the finish line in 2024. Despite general bipartisan support, the bill was not passed and, as we learned in School House Rock, will have to start the process over again.
CITs are available in 401(k) plans and are not regulated by the SEC, oftentimes allowing them to be offered at a lower cost. The push to extend their availability to 403(b) plans has continued for years. SECURE 2.0 included provisions allowing CITs in 403(b) plans, but did not include necessary changes to securities law to become effective. This year was the closest we have come to securing the additional changes needed, but it was not enough in the end. Legislation will be reintroduced in 2025, and passage (at some point) seems inevitable. However, the new administration will have many priorities ahead of this, so it is unlikely to receive any sense of urgency early in the new term. Still, it may gain traction later in the year.
We continue to believe it is not a matter of ‘if’ but ‘when’ for this legislation to pass. When it does pass, we are prepared to discuss the impact on 403(b) retirement plans with our clients.
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