INVEST Act Advances to Enhance 403(b) Retirement Plan Options
The bipartisan Incentivizing New Ventures and Economic Strength Through Capital Formation Act (INVEST Act) is advancing to the U.S. House of Representatives.
This 64-page bill aims to enhance retirement and investment options by enabling 403(b) plans, primarily used by teachers and nonprofit employees, to invest in collective investment trusts (CITs) like 401(k) plans. The legislation also permits electronic delivery of investor documents and broadens retail investors' access to private funds.
Key provisions include authorizing annuity options via unregistered insurance company separate accounts to enhance retirement income security for nonprofit workers, and reconsidering the definition of accredited investors to potentially include certified financial planners. The bill is championed by House Financial Services Committee leaders across party lines, reflecting strong bipartisan support.
Significant industry groups such as the American Retirement Association endorse the bill, highlighting its potential to reduce costs and improve diversification for 403(b) plan participants. CITs, which have lower fees than mutual funds, could save retirement savers substantial amounts over time, facilitating better financial outcomes and cost efficiencies.
The Insured Retirement Institute notes that similar low-cost institutional investment options are widely available in 401(k)s, governmental 457(b)s, and the federal Thrift Savings Plan, emphasizing the push for parity between 403(b) and other retirement plans. With over $1.9 trillion in target-date assets currently in CITs, the legislation aims to make these benefits accessible to a broader workforce segment.
If passed by the House, the bill will proceed to the Senate for further consideration. This legislative effort reflects ongoing regulatory and market developments focused on expanding retirement security, lowering fees, and improving investment options within the U.S. retirement system, particularly for nonprofit sector workers.