New Bill Tweaks Retirement Plans for Charities and Schools: More Investment Choices, But Employers Now On the Hook

The "Retirement Fairness for Charities and Educational Institutions Act of 2025" is making some key changes to 403(b) retirement plans, the kind often used by teachers, non-profit workers, and other public service employees. Basically, it's shaking up where your retirement money can be invested and who's responsible for making sure those investments are solid.

New Investment Options on the Table

This bill opens the door for 403(b) plans to put money into "collective trust funds." Think of these as bigger, shared investment pools that can sometimes offer more diverse options than what's traditionally been available. This could mean better returns, but it also means looking carefully at what those funds are actually investing in. The bill specifically amends the Investment Company Act of 1940 to allow this change (SEC. 4102).

The Boss Is Now a "Fiduciary" (For Real)

Here's the catch, and it's a big one: To get access to these new investment options, employers offering 403(b) plans must act as "fiduciaries." That's a legal term meaning they have a duty to act in the best financial interest of their employees (SEC. 4102). Before, some governmental 403(b) plans didn't have this requirement as clearly spelled out. This puts more responsibility on the employer to vet investment choices and make sure they're not just throwing your money into something risky.

• Example: Imagine a school district that previously just offered a few basic retirement fund options. Now, they can include collective trust funds, but they're legally on the hook to make sure those funds are well-managed and suitable for their teachers' retirement savings. If they don't do their homework, they could face legal trouble.

Less Red Tape (Maybe)

The bill also eases up on some registration requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934 (SEC. 4102). This could make it easier and cheaper for organizations to offer these expanded 403(b) plans. However, it also means a bit less regulatory oversight, so that fiduciary duty on the employer becomes even more crucial.

The Bottom Line

This bill is a mixed bag. It could give employees in charities and educational institutions more ways to grow their retirement savings. But it hinges on employers stepping up and taking their fiduciary responsibility seriously. It's worth watching how this plays out and, if you're in a 403(b) plan, asking some pointed questions about how your employer is handling these new responsibilities.