House Passes Retirement Fairness for Charities and Educational Institutions Act to Expand 403(b) Plan Options

NewsWK — Lawmakers in Washington took a major step for non-profit employees, teachers, and faith-based workers. Specifically, the U.S. House of Representatives approved legislation to modernize retirement accounts for public and charitable employees. As a result, teachers, healthcare workers, and ministry staff may soon access lower-cost investment options. Previously, only corporate workers enjoyed these financial tools for years.

What Is the Retirement Fairness for Charities and Educational Institutions Act?

The Retirement Fairness for Charities and Educational Institutions Act updates federal securities rules governing 403(b) plans. Specifically, this bill allows non-profit employers to offer lower-cost Collective Investment Trusts. Consequently, public school teachers, charity staff, and church workers can access modern investment vehicles. Previously, federal rules restricted these options to private-sector 401(k) accounts.

Currently, federal securities laws treat 403(b) retirement plans differently than standard corporate 401(k) plans. Because of old regulations, non-profit institutions face strict limits on the financial products they offer. However, the new legislation removes these outdated restrictions. Representative Frank Lucas, a Republican from Oklahoma, authored the bill alongside bipartisan co-sponsors. Furthermore, Representatives Josh Gottheimer, Bill Foster, and Andy Barr joined Lucas to introduce the reform measure. Additionally, dozens of lawmakers from both parties co-sponsored the legislation in the House.

How Would 403b Securities Laws Change Under HR 1013?

Under HR 1013, lawmakers amend core provisions of federal securities regulations to modernize retirement rules. Specifically, the bill updates the Investment Company Act of 1940 and the Securities Act of 1933. It also modifies the Securities Exchange Act of 1934. Furthermore, the legislation adjusts the Internal Revenue Code and the Employee Retirement Income Security Act.

These technical amendments directly permit 403(b) plans to utilize Collective Investment Trusts, commonly called CITs. In addition, the legislation allows these plan sponsors to offer insurance company separate accounts. Private-sector 401(k) plans have long used CITs to lower fund management fees for participating employees. Therefore, updating 403b securities laws allows charities and educational institutions to pool investments more efficiently. Ultimately, lower management fees mean workers keep a larger share of their investment gains over time.

What Does HR 1013 Mean for Non-Profit Workers Across the Nation?

For millions of non-profit employees, HR 1013 directly impacts long-term retirement savings. Workers at local schools, non-profit hospitals, health clinics, and charities often pay higher 403(b) administrative fees. By opening access to lower-cost investment options, this bill helps workers preserve more retirement wealth.

Teachers, church employees, and local charity staff work hard to serve their communities every day. However, traditional 403(b) plans frequently lag behind corporate retirement programs in investment flexibility. For example, many non-profit plans relied heavily on annuity contracts or higher-cost mutual funds.

Specifically, the proposed changes benefit several key groups across the country:

• Public school teachers and administrators saving through school district plans.
• Staff members at local non-profit educational institutions and universities.
• Employees at community health clinics, non-profit hospitals, and social service agencies.
• Clergy and ministry team members serving in local churches and religious groups.

Lower expense ratios compound over decades of saving. Therefore, even a small fee reduction can yield tens of thousands of dollars in extra retirement savings.

How Did the House Vote on This 403b Retirement Plan Legislation?

The House of Representatives passed the 403b retirement plan legislation on November 11, 2026. The measure earned strong bipartisan support, with a final roll call vote of 295 yeas to 128 nays. Specifically, all voting House Republicans and dozens of House Democrats joined to pass the measure.

First, the legislative process for the bill began in the House Financial Services Committee. On May 20, 2025, committee members voted 43-8 to advance the bill to the House floor. During final floor consideration, Republicans voted unanimously in favor with 211 yeas and zero nays. Meanwhile, seven Republican members did not vote. In contrast, House Democrats split on the measure, casting 83 yeas and 128 nays. Additionally, three Democrats did not vote, while one independent lawmaker voted in favor.

Supporters argue that non-profit employees deserve the exact same investment tools available to private enterprise workers. Nevertheless, the overwhelming majority agreed that regulatory parity brings necessary fairness to charitable institutions.

What Are the Next Steps for the Reform Bill?

The Retirement Fairness for Charities and Educational Institutions Act now moves to the United States Senate. To become federal law, the Senate must approve the engrossed bill first. Next, lawmakers will send it to the President for a signature. Until both chambers pass identical text, existing rules for 403(b) accounts remain unchanged.

CITs remained off-limits due to technical definitions within securities statutes.

Meanwhile, corporate 401(k) plans rapidly adopted CITs over the past two decades to cut costs. Consequently, non-profit workers remained locked out of those savings. Financial reform advocates long argued that this regulatory disparity penalized public servants and charitable staff. Now that the House passed HR 1013, proponents hope the Senate acts swiftly. Ultimately, Senate approval would deliver fee parity to America’s non-profit workforce.

Related: House Advances HR 1013 Retirement Fairness for Charities and Educational Institutions Act to Lower Fees for Non-Profit Workers

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