The U.S. House Committee on Financial Services discussed, during a Tuesday markup session, a bill that would allow 403(b) plans to invest in collective investment trusts.

The committee voted 43 to 8 to advance H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act of 2025. Representative Frank Lucas, R-Oklahoma, introduced H.R. 1013 in February, an act he argued would provide a “level playing field” between participants of 401(k) and 403(b) plans by allowing nonprofit workers to invest in CITs.

Many in the retirement industry have pushed for allowing 403(b) plans to invest in CITs, as they can be cheaper and more flexible than mutual funds, in part because the instruments are not securities and do not need to be registered with the Securities and Exchange Commission. Instead, CITs are considered a bank product and regulated by the Office of the Comptroller of the Currency.

At Tuesday’s hearing, Representative Stephen Lynch, D-Massachusetts, disagreed that the bill creates a level playing field and argued that because not all 403(b) plans are covered by the Employee Retirement Income Security Act of 1974, it would push “riskier investments” onto 403(b) plan participants.

Lynch introduced an amendment that would “create parity of protection for retirees in 403(b) plans as compared to 401(k) retirees” by allowing CITs and unregistered insurance-based products to be sold only to 403(b) plans that are subject to ERISA. The committee ultimately rejected this amendment.

Representative Ann Wagner, R-Missouri, defended the bill as introduced, arguing that it already requires an ERISA fiduciary, a state or local government entity, or an employer to take on fiduciary responsibility to oversee the plan.

“This does, indeed, align the treatment of 403(b) plans with what already works for 401(k)s,” Wagner said.

Lynch had argued that the bill does not level the playing field for retirees, but rather for product providers trying to sell the CIT products.

Representative Sylvia Garcia, D-Texas, agreed with Lynch that the bill puts 403(b) plan participants at risk, as she said more than half of 403(b) plans are not covered by ERISA.

“All in all, this bill would carve out over $1.1 trillion of retirement funds from federal oversight,” Garcia said. “This would constitute the single largest deregulatory action seen in years, and I must add that a hugely deregulatory action like this deserves a thorough scrutiny by this committee, as … we have not held a single hearing on this subject.”

Garcia said she would welcome a “detailed examination” into the products and practices that 401(k) plans use and follow, and said, “only after such serious inquiry should we offer [deregulating] 403(b) plans to be warranted.”

However, Lucas reiterated that nothing in the underlying bill mandates the inclusion of CITs in 403(b) plans, but merely provides access to these products under the full discretion of 403(b) plan sponsors. He said by excluding non-ERISA plans, the amendment would cause state and local governments, including public school teachers, to be singled out as employees without access to low-cost investments.

Lucas added that while CITs are not regulated by the SEC, the SEC would still regulate fraud and bring enforcement actions based on misleading information. In addition, he said the SEC would have full authority to regulate investment managers of these investments.