Are There Legislative Efforts Pending That Could Permit CITs in 457(b) Plans?

Q: I read in an Ask the Experts column that Collective Investment Trusts are not a permissible investment in private tax-exempt 457(b) plans. Is there any bill in Congress to change that, similar to the pending bill to allow CITs in 403(b) plans?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: The legislation you are thinking of is likely the Retirement Fairness for Charities and Educational Institutions Act, which passed the House in late 2025 as part of the broader INVEST Act, and is currently being considered by the Senate. This legislation would, among other things, allow CITs as 403(b) plan investment options. However, there is no pending legislation or regulatory action to allow CITs in private tax-exempt plans to the best of the Experts’ knowledge. The issue is that private tax-exempt 457(b) plans are required to be unfunded. By definition, a CIT is a funded trust. This generally makes tax-exempt 457(b) plans incompatible with CITs.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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