119-HR-1013 Corporate Impact Analysis

Summary

What the bill does: Amends securities-law exemptions (Securities Act §3(a)(2); Exchange Act §3(a)(12), §12(g); Investment Company Act §3(c)(11)) so 403(b) plans can use CITs and certain insurance separate accounts, subject to fiduciary conditions (ERISA coverage, employer fiduciary agreement, or governmental-plan investment approval). [5]Library of Congress — H.R.1013 bill text (Introduced) — Congress.gov[1]Library of Congress — H.R.1013 overview/summary — Congress.gov

• Scale: About $1.5 trillion in 403(b) assets could be affected; DC plan assets total roughly $13 trillion (Q2 2025). [3]NTSA (American Retirement Association) — NTSA summary of ICI data: $1.5T in 403…[6]PR Newswire / ICI — ICI press release: U.S. retirement assets $45.8T (Q2 2025)
• Context: SECURE 2.0 amended the Internal Revenue Code to allow 403(b) investments in CITs, but securities-law barriers remain—this bill addresses that gap. [2]Mercer — Mercer: House OKs bill to let 403(b) plans invest in collective trusts…[7]NAPA (ARA) — NAPA: SECURE 2.0 allows 403(b) CITs in IRC, but securities laws st…
• Analytical lens: Institutional, cost/compliance focus—mapping fee, liability, and operational impacts; no advocacy.

Economic Effects

Direct cost/benefit channels for plan sponsors, providers, and participants.

• Fee compression potential from CIT access: Target‑date strategies are rapidly shifting to CIT vehicles that typically price below equivalent mutual funds; in 2023, CITs captured 67% of target‑date net flows and reached about half the market, with multiple sources reporting CITs overtaking mutual funds by 2024–2025. Lower unit costs raise participant net returns and increase pressure on incumbent mutual‑fund share classes. [8]Morningstar — Morningstar 2024 Target‑Date Strategy Landscape — CITs poised to/…[9]InvestmentNews — InvestmentNews: CITs overtake mutual funds in target‑date asse…
• Large addressable base: ICI data indicate ~$1.5T in 403(b) assets (Q2 2025), implying that even modest fee reductions produce material aggregate savings for participants over time. [3]NTSA (American Retirement Association) — NTSA summary of ICI data: $1.5T in 403…
• Baseline cost dispersion today: GAO finds 403(b) administrative fees range from 0.0008%–2.01% of assets and investment option fees from 0.01%–2.37%, indicating substantial room for rationalization through fiduciary oversight and scale pricing. [4]U.S. Government Accountability Office — GAO (2022): 403(b) investment options,…
• Sponsor compliance costs/liability: To use the new exemptions, many non‑ERISA sponsors would have to accept fiduciary responsibility for menu selection and monitoring, triggering ERISA‑style prudence processes (IPS, vendor due diligence, benchmarking) and ongoing disclosure/reporting—raising governance costs but also improving oversight. [10]U.S. Department of Labor — DOL: Meeting Your Fiduciary Responsibilities
• Provider competitive dynamics: Bank trustees and managers positioned in CITs gain access to a 403(b) channel previously constrained by securities law; mutual‑fund complexes may face share migration but can retain strategies via CIT wrappers. Recordkeepers may benefit from menu consolidation but incur build‑out/integration work. [2]Mercer — Mercer: House OKs bill to let 403(b) plans invest in collective trusts…[11]Office of the Comptroller of the Currency — OCC overview: Collective Investment…
• Capital‑markets/treasury effects: The measure is structural (eligibility/exemptions), not fiscal; no evident direct federal outlays or tax‑expenditure changes are identified at this stage. (No CBO score posted as of Nov 30, 2025.) [12]Library of Congress — H.R.1013 all information — Congress.gov

Social Effects

Distributional consequences across workforce segments and plan types.

• K‑12 teachers and small nonprofits: Research shows higher fees and fragmented vendor landscapes in many non‑ERISA 403(b) settings; stronger fiduciary oversight and access to institutionally priced CITs could narrow outcome gaps vs. large ERISA 401(k) plans. [4]U.S. Government Accountability Office — GAO (2022): 403(b) investment options,…
• Participants’ outcomes and literacy: Even small fee differences compound materially; DOL illustrates a 1 percentage‑point fee gap can reduce balances ~28% over 35 years. Enhanced oversight plus lower fees can improve retirement adequacy, especially for long‑tenured educators. [13]U.S. Department of Labor — DOL: A Look at 401(k) Plan Fees (compounding impact…
• Disclosure and comprehension: GAO urges DOL to update participant materials for 403(b)s and specifically notes challenges identifying and understanding CIT disclosures; participant education and transparency mechanisms will need to keep pace. [14]U.S. Government Accountability Office — GAO (2023): DOL should update 403(b) ed…[15]U.S. Government Accountability Office — GAO (2025): DOL should update guidance…
• Plan governance shifts: Governmental and nonprofit employers agreeing to fiduciary status may centralize menus (single recordkeeper/core lineup), reducing vendor clutter and fees but limiting individual vendor choice—a trade‑off supported in case law and GAO/state experiences. [16]Web search · turn 11 #2[4]U.S. Government Accountability Office — GAO (2022): 403(b) investment options,…

Environmental Effects

Direct environmental impacts are de minimis for a securities‑law eligibility change.

• No direct effect on emissions, resource use, or land impacts; any ESG tilt remains a plan‑level investment policy decision rather than a statutory requirement.

Temporal Analysis

Short‑run implementation vs. long‑run market structure.

• Short term (0–2 years after enactment): Plan document amendments; RFPs for trustees/recordkeepers; mapping of target‑date and index options to CIT share classes; adoption of fiduciary processes by governmental/non‑ERISA sponsors to satisfy the exemption conditions. Transitional frictions include blackout windows and participant communications. CIT units generally are not portable to IRAs, so rollover mapping must be planned. [17]Neuberger Berman — Neuberger Berman: CITs — What you need to know (includes IRA…
• Medium to long term (3–10 years): Continued fee compression in default options (target‑date CITs), consolidation of vendor menus, and wider use of bank‑maintained pooled vehicles regulated under 12 CFR 9.18; net benefits accrue through lower ongoing costs if fiduciary monitoring is effective. [8]Morningstar — Morningstar 2024 Target‑Date Strategy Landscape — CITs poised to/…[18]Legal Information Institute (Cornell) — 12 CFR 9.18 — Collective investment fun…

Unintended Consequences and Risks

• Disclosure asymmetry: GAO highlights gaps in DOL materials for 403(b) participants and specific challenges with CIT disclosure in target‑date structures; plans may need to supplement with plain‑English fact sheets and web portals. [14]U.S. Government Accountability Office — GAO (2023): DOL should update 403(b) ed…[15]U.S. Government Accountability Office — GAO (2025): DOL should update guidance…
• Fiduciary litigation exposure: By affirmatively taking on investment‑menu fiduciary duty, sponsors increase exposure to excessive‑fee and imprudence claims; Supreme Court precedent underscores ongoing monitoring obligations irrespective of participant choice breadth. [20]Legal Information Institute (Cornell) — Hughes v. Northwestern University (2022…
• Operational/valuation: OCC rules require written plans, periodic valuations, audits, and conflict‑of‑interest controls for bank‑maintained funds; noncompliance risks (by trustees or service providers) become more salient as usage scales. [18]Legal Information Institute (Cornell) — 12 CFR 9.18 — Collective investment fun…
• Market concentration: Target‑date assets are concentrated among a few managers; migration to CITs could entrench incumbents unless sponsors actively benchmark and negotiate fees. [8]Morningstar — Morningstar 2024 Target‑Date Strategy Landscape — CITs poised to/…

Assessment

Policy judgment grounded in cost, compliance, and competitive dynamics.

• Overall stance: Neutral.
• Rationale: Evidence points to participant‑level cost savings potential and institutional menu parity with 401(k)s, offset by new fiduciary/compliance burdens for many 403(b) sponsors, disclosure/portability limitations of CITs, and elevated litigation risk if governance is weak. [8]Morningstar — Morningstar 2024 Target‑Date Strategy Landscape — CITs poised to/…[4]U.S. Government Accountability Office — GAO (2022): 403(b) investment options,…[10]U.S. Department of Labor — DOL: Meeting Your Fiduciary Responsibilities[17]Neuberger Berman — Neuberger Berman: CITs — What you need to know (includes IRA…[20]Legal Information Institute (Cornell) — Hughes v. Northwestern University (2022…

Key Sources Used

Authoritative legislative, regulatory, and empirical references.

• Bill text and status: Congress.gov. [5]Library of Congress — H.R.1013 bill text (Introduced) — Congress.gov[1]Library of Congress — H.R.1013 overview/summary — Congress.gov[21]Library of Congress — H.R.1013 all actions — Congress.gov
• SECURE 2.0 interplay and securities‑law gap: Mercer; NAPA. [2]Mercer — Mercer: House OKs bill to let 403(b) plans invest in collective trusts…[7]NAPA (ARA) — NAPA: SECURE 2.0 allows 403(b) CITs in IRC, but securities laws st…
• Market size and flows: ICI/NTSA; InvestmentNews; Morningstar. [3]NTSA (American Retirement Association) — NTSA summary of ICI data: $1.5T in 403…[6]PR Newswire / ICI — ICI press release: U.S. retirement assets $45.8T (Q2 2025)[9]InvestmentNews — InvestmentNews: CITs overtake mutual funds in target‑date asse…[8]Morningstar — Morningstar 2024 Target‑Date Strategy Landscape — CITs poised to/…
• Fee dispersion and oversight: GAO; DOL fiduciary guidance; OCC rules for CITs. [4]U.S. Government Accountability Office — GAO (2022): 403(b) investment options,…[10]U.S. Department of Labor — DOL: Meeting Your Fiduciary Responsibilities[18]Legal Information Institute (Cornell) — 12 CFR 9.18 — Collective investment fun…
• Transparency/portability of CITs: Neuberger Berman; NYSDCP explainer; NCTR. [17]Neuberger Berman — Neuberger Berman: CITs — What you need to know (includes IRA…[19]New York State Deferred Compensation Plan — NYSDCP explainer: Understanding Col…[22]Web search · turn 14 #5
• Litigation landscape: Hughes v. Northwestern University. [20]Legal Information Institute (Cornell) — Hughes v. Northwestern University (2022…