A bill has been introduced in the U.S. House of Representatives that would make it possible for 403(b) plans to invest in a broader array of forms of investment than they can currently.
The Public Service Retirement Fairness Act, introduced by Rep. Jimmy Panetta (D-CA), would allow 403(b)s to invest in collective investment trusts (CITs), as private-sector 401(k)s can. A press release from Panetta’s office called it “a major drawback” that 403(b)s cannot now do so. “There is no reason why 403(b) defined-contribution plans cannot invest in CITs,” Panetta argues.
“CITs are collectively managed investment vehicles that 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,” Panetta notes. “Due to compound interest, these higher fees add up over time, potentially costing teachers and other public-service oriented professionals thousands of dollars in retirement savings.”
"Teachers and other public-service-oriented employees deserve flexibility when it comes to investing in their retirement,” says Panetta, adding that the bill could “level the playing field for these employees, and others who have committed their careers to public service,” and could increase their retirement savings “by thousands of dollars."
The bill has bipartisan support; co-sponsors include Reps.Andy Barr (R-KY), Brendan Boyle (D-PA), Madeleine Dean (D-PA), Ron Estes (R-KS) and Darin LaHood (R-IL).
