Legislation has been introduced in the House that would expand the options for how 403(b) plan funds can be invested. Rep. Jimmy Panetta (D-CA) introduced H.R. 2741 on April 21.
Panetta introduced similar legislation, the Public Service Retirement Fairness Act (H.R. 6257), about a year ago, on March 12, 2020. He intended that measure to “level the playing field” so that public sector and non-profit retirement-savings programs have the same access to investments as other retirement plans. In the Senate, Ron Portman (R-OH) on May 13, 2019 had introduced the Retirement Security and Savings Act of 2019 (S. 1431), a measure that included a provision that also would have amended Section 403(b) to change the way 403(b) funds could be invested.
“Teachers and other employees at public education K-12 institutions, nonprofit hospitals, charitable organizations, and other nonprofit employees have access to 403(b) defined-contribution retirement-savings plans to save money for the future,” said Panetta in a 2020 press release. “403(b) plans are similar to 401(k) plans offered in the private sector but they have a major drawback in that they cannot invest in collective investment trusts (CITs),” he said. Panetta argued that “There is no reason why 403(b) defined-contribution plans cannot invest in CITs,” which he said “typically have lower costs and more flexibility than the types of annuity contracts and mutual funds that the 403(b) plans are limited to investing in.” His bill would have allowed 403(b) plans to offer such investments.
H.R. 6257 was not passed before the 116th Congress went out of session. Like its 2020 predecessor, the 2021 reintroduction was referred to two House committees: Financial Services and Ways & Means.
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