119-HR-1013 Investigative Journalist Impact Analysis

Summary

H.R. 1013 (Retirement Fairness for Charities and Educational Institutions Act of 2025) would amend the Securities Act, Exchange Act, and Investment Company Act so 403(b) plans can use collective investment trusts (CITs) and certain insurance separate accounts, provided the plan is ERISA‑covered, the employer agrees to fiduciary selection of investments, or analogous review occurs for governmental plans. This addresses a long‑standing securities‑law gap left after SECURE 2.0’s tax‑code changes. Expected effects: lower investment fees where adopted, broader access to target‑date CITs, but added fiduciary duties and disclosure/compliance work—especially for sponsors that previously relied on the 403(b) safe harbor from ERISA. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions[5]Mercer — House OKs bill to let 403(b) plans invest in collective trusts

• Economic: Potential fee reductions (via lower‑cost institutional vehicles), competitive pressure on mutual funds, and new compliance costs for employers that must assume fiduciary roles to access CITs. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…[4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…[6]Legal Information Institute (e-CFR) / DOL — 29 CFR 2550.404a-5—Fiduciary requir…
• Social: Benefits likely accrue most to participants in ERISA‑governed or fiduciary‑affirming plans; K‑12 and small nonprofits may face capacity constraints. High fees and uneven oversight in parts of the 403(b) market make design and monitoring choices decisive. [7]U.S. Government Accountability Office — GAO-23-105620: 403(b) Retirement Plans—…
• Environmental: No direct effects; any indirect impact would stem from plan sponsors’ investment menu choices rather than the bill itself. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions
• Risk profile: Less public disclosure for CITs vs. mutual funds; portability limits for CIT units; and potential erosion of the non‑ERISA safe harbor if employers take on fiduciary selection to qualify. [2]Congressional Research Service / Congress.gov — CRS In Focus: 403(b) Pension Pl…[8]U.S. Department of Labor — DOL Field Assistance Bulletin 2007-02—ERISA coverage…

Economic Effects

What changes most is the investment vehicle set available to 403(b) plans and the governance conditions to use them.

• Lower investment fees where adopted: GAO documents wide 403(b) fee dispersion—recordkeeping/admin fees from 0.0008% to 2.01% and investment option fees from 0.01% to 2.37%. Opening access to institutional vehicles (CITs and separate accounts) can compress costs for plans able to adopt them. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…
• Market structure and flows: CITs have rapidly gained share in target‑date strategies and were poised to overtake mutual funds by 2024, reflecting lower average price points and bespoke pricing—implications for mutual fund revenues and pricing dynamics if 403(b) assets gain access. [4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…
• Operational and compliance spend: To meet the bill’s conditions, some sponsors must explicitly accept fiduciary responsibility for investment selection, triggering ERISA‑style disclosures (404a‑5) and, for large ERISA 403(b)s, annual Form 5500 audits—costs that do not arise in non‑ERISA safe‑harbor arrangements. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions[6]Legal Information Institute (e-CFR) / DOL — 29 CFR 2550.404a-5—Fiduciary requir…[9]U.S. Department of Labor — DOL Field Assistance Bulletin 2009-02—Annual reporti…
• Bank‑maintained vehicles and oversight: CITs are bank collective funds regulated under OCC rules (12 CFR 9.18) and operate outside 1940‑Act registration; cost advantages often derive from that structure, but oversight is by banking regulators rather than the SEC. [10]Legal Information Institute / OCC — 12 CFR 9.18—Collective Investment Funds (OC…
• Scale effects and pricing power: Industry data show larger DC plans leverage institutional structures (CITs/separate accounts) to push fees lower; enabling that structure in 403(b)s could extend similar economies of scale to large universities and hospital systems. [11]Callan LLC — Callan DC Fee Index—Institutional structures (CITs, separate accou…
• Example magnitude (illustrative, not a forecast): GAO shows small fee differences materially affect balances over time; a 20–40 bp reduction on assets that migrate to CITs would accumulate meaningfully for participants who remain invested for decades. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…

Social Effects

Impacts depend on plan type, sponsor capacity, and existing oversight.

• Teachers and nonprofit workers: GAO highlights persistent high fees and limited oversight in parts of the K‑12/public‑education 403(b) market. If sponsors consolidate menus and exercise fiduciary review to access CITs, participants can benefit from lower costs; several states achieved sizable fee cuts (e.g., ~1.2 percentage points) via stronger oversight and consolidation. [7]U.S. Government Accountability Office — GAO-23-105620: 403(b) Retirement Plans—…
• Uneven capacity: Large ERISA‑covered sponsors (major health systems, private universities) are positioned to adopt CITs quickly; small nonprofits may lack governance bandwidth, muting benefits unless they centralize and accept fiduciary duties. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…
• Participant protections: ERISA 404a‑5 disclosures follow the investment option regardless of registration status, but non‑ERISA arrangements lack these protections—so gains depend on whether sponsors move into ERISA/fiduciary status to qualify for the bill’s exemptions. [6]Legal Information Institute (e-CFR) / DOL — 29 CFR 2550.404a-5—Fiduciary requir…
• Portability and transparency trade‑offs: CRS notes CITs are less publicly transparent than mutual funds and generally cannot be rolled over to IRAs, which can complicate job changes or terminations. [2]Congressional Research Service / Congress.gov — CRS In Focus: 403(b) Pension Pl…

Environmental Effects

Direct environmental impacts are negligible.

The bill does not mandate or prohibit any environmental criteria; it merely expands the set of permissible investment vehicles. Any environmental effect would be second‑order—arising from sponsors’ menu design (for example, choosing ESG‑screened CITs)—and not from the statutory change itself. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions

Temporal Analysis

Different effects will unfold on different timelines.

• Immediate (0–12 months after enactment): Limited change as recordkeepers and sponsors update platforms and investment policies; early adopters likely among ERISA‑covered large sponsors with existing CIT relationships. [4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…
• Medium term (1–3 years): Wider availability of target‑date CITs in 403(b)s; incremental fee compression where sponsors assume fiduciary selection and add institutional vehicles; mutual funds may cut fees on 403(b) share classes to defend assets. [4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…
• Long term (3–10 years): If adoption is broad, cumulative participant wealth effects from lower fees can be material; distribution of gains will mirror governance capacity—strongest where fiduciary oversight is robust; weakest where non‑ERISA vendors remain fragmented. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…[7]U.S. Government Accountability Office — GAO-23-105620: 403(b) Retirement Plans—…
• Legislative status as of November 30, 2025: House Financial Services Committee ordered H.R. 1013 reported on May 20, 2025 (43–8); further action would determine timing of any real‑world effects. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions

Unintended Consequences and Risks

Documented risks and credible trade‑offs include:

Assessment

Bottom‑line analytical stance (not advocacy): neutral.

If implemented with strong fiduciary governance, H.R. 1013 is likely to lower average investment costs for many 403(b) participants and align 403(b) menus with mainstream DC practice (notably target‑date CITs). But benefits will be uneven and contingent on sponsors’ willingness and capacity to assume fiduciary roles; absent that, the status quo of high fees and fragmented vendor landscapes would persist. Net impact: neutral pending adoption patterns and enforcement. [4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…[3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…[7]U.S. Government Accountability Office — GAO-23-105620: 403(b) Retirement Plans—…

Sourcing and Status Notes

Key materials used and how they inform this assessment:

• Bill text and status (H.R. 1013; S. 424) establish scope, conditions for exemptions, and current legislative stage. [1]Congress.gov — H.R.1013 — 119th Congress: Text, status, and actions[13]Congress.gov — S.424 — 119th Congress: Text and status
• CRS brief summarizes what changes, why CITs/separate accounts matter, and notes limits (transparency, IRA portability). [2]Congressional Research Service / Congress.gov — CRS In Focus: 403(b) Pension Pl…
• GAO reports quantify fee dispersion and document oversight gaps and fee reductions when states consolidate and vet options. [3]U.S. Government Accountability Office — GAO-22-104439: Defined Contribution Pla…[7]U.S. Government Accountability Office — GAO-23-105620: 403(b) Retirement Plans—…
• Regulatory sources define how CITs are overseen (OCC), what ERISA requires in participant disclosures (404a‑5), and when employer actions trigger ERISA coverage for 403(b)s (DOL FABs). [10]Legal Information Institute / OCC — 12 CFR 9.18—Collective Investment Funds (OC…[6]Legal Information Institute (e-CFR) / DOL — 29 CFR 2550.404a-5—Fiduciary requir…[8]U.S. Department of Labor — DOL Field Assistance Bulletin 2007-02—ERISA coverage…[12]U.S. Department of Labor — DOL Field Assistance Bulletin 2010-01—Q&A on 403(b)…
• Market context from Morningstar shows CIT dominance in target‑date space, relevant to expected flows if 403(b)s gain access. [4]Morningstar — Morningstar: CITs Poised to Overtake Mutual Funds in Target-Date…
• Implementation economics: industry evidence on institutional structures reducing DC fees informs expected direction of cost impacts. [11]Callan LLC — Callan DC Fee Index—Institutional structures (CITs, separate accou…

Key Metrics

Scale and context for potential impacts.