Make CITs available to Educators and Nonprofit Workers
There are 14.5 million teachers, nurses and non profit employees who can’t take advantage of the retirement benefits that private sector workers receive through their 401k. But Congress has an opportunity to fix this by passing the Retirement Fairness for Charities and Educational Institutions Act. Tell Congress: Let’s take care of those who take care of us!
Tell Congress to Pass the Retirement Fairness for Charities and Educational Institutions Act
What are CITs?
CITs are pooled, tax-exempt investment vehicles sponsored and administered by a bank or trust company that also acts as the trustee. CITs comingle assets from eligible investors into one private investment portfolio with a specific strategy.
Don’t all retirement plans have access to CITs?
No. Currently, 403(b) plans—commonly offered to teachers and nonprofit employees—do not have access to collective investment trusts (CITs), which are available to those with 401(k) plans.
Many types of retirement plans (e.g., 401(k)s, 457(b)s, and TSPs) are permitted to invest in CITs. Oftentimes, these plans choose to invest in CITs due to their flexibility and generally lower fees than comparable mutual funds, allowing plan participants to increase their retirement savings, while benefitting from stringent regulatory requirements that are designed specifically to protect retirement plan participants.
Who does this impact?
Workers who benefit from 403(b) plans are employees in the nonprofit sector, including:
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- educators
- healthcare professionals
- employees of nonprofit organizations, such as charitable foundations, social service agencies, and religious institutions.
How many people could this benefit?
14.5 million American workers in the nonprofit sector currently participate in 403(b) plans.
According to recent data, the total assets held in CITs across retirement plans amounted to approximately $4.6 trillion, representing a significant portion of total 401(k) plan assets, with their usage growing rapidly compared to traditional mutual funds.
What Can You Do?
Tell Your Congressperson to Support the Retirement Fairness for Charities and Educational Institutions Before the End of the Year
The Retirement Fairness for Charities and Educational Institutions Act would address this inequity by allowing 403(b) plans to include CITs as an investment option. This legislation passed in the House earlier this year. It’s not too late to pass the Senate version (S. 4917) to ensure that our neighbors and friends who work for nonprofits and schools have access to the same financial tools as private sector workers.
Take Action! Click below to send an email to your representatives in Congress.
Thank you for showing up for those workers who show up for so many!
For more information on CITs:
Visit the American Retirement Association’s CIT Materials page.