H.R.1013 - Retirement Fairness for Charities and Educational Institutions Act of 2025 (119th Congress)
Summary
H.R.1013, the Retirement Fairness for Charities and Educational Institutions Act of 2025, aims to amend federal securities laws to enhance 403(b) plans. The bill focuses on modifying sections of the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934. These amendments primarily concern the regulatory framework surrounding retirement plans offered by charities and educational institutions.
The bill seeks to clarify and expand the types of plans and accounts that are exempt from certain securities regulations, particularly concerning employer responsibilities and fiduciary duties. It introduces provisions requiring employers to serve as fiduciaries and review investment alternatives, aiming to provide greater protection for plan participants.
Ultimately, the goal is to improve the attractiveness and security of 403(b) plans, encouraging greater participation and better retirement outcomes for employees of charities and educational institutions.
Expected Effects
The primary effect of H.R.1013 will be to alter the regulatory landscape for 403(b) retirement plans, especially those offered by charities and educational institutions. This will change the responsibilities of employers and fiduciaries in managing these plans.
Specifically, employers may need to take on a more active role in selecting and reviewing investment options. This could lead to changes in the types of investment products offered and how they are managed, potentially affecting the returns and security of retirement savings for employees.
These changes could also encourage greater participation in 403(b) plans if they are perceived as more secure and better managed.
Potential Benefits
- Enhanced Security for Retirement Savings: The bill aims to provide greater protection for retirement savings by requiring employers to serve as fiduciaries and review investment alternatives.
- Increased Employer Oversight: The bill mandates employer oversight of investment options, potentially leading to more prudent investment choices.
- Greater Clarity in Regulations: The amendments seek to clarify the regulatory framework surrounding 403(b) plans, reducing ambiguity and potential for misinterpretation.
- Potential for Improved Returns: With increased oversight and fiduciary responsibility, the bill could lead to better investment performance and higher returns for plan participants.
- Encourages Participation: By making 403(b) plans more secure and attractive, the bill could encourage greater participation among employees of charities and educational institutions.
Most Benefited Areas:
Potential Disadvantages
- Increased Burden on Employers: The requirement for employers to serve as fiduciaries and review investment alternatives could place an additional administrative and financial burden on these organizations.
- Potential for Litigation: Increased fiduciary responsibility could expose employers to greater risk of litigation if investment performance is not satisfactory.
- Limited Investment Options: The requirement for employer approval could limit the range of investment options available to plan participants.
- Complexity and Confusion: The amendments to securities laws could create additional complexity and confusion for employers and plan administrators.
- Unintended Consequences: Changes to regulations could have unintended consequences that negatively impact the performance or accessibility of 403(b) plans.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution, as it aims to improve the retirement security of individuals working for charities and educational institutions. The general welfare clause (Preamble) allows Congress to enact laws that promote the well-being of the citizenry.
Furthermore, the bill does not appear to infringe upon any specific constitutional rights or limitations. It primarily deals with financial regulations and fiduciary responsibilities related to retirement plans.
However, the extent of federal oversight and regulation could be debated in terms of the balance between federal power and individual or state autonomy, although this bill does not appear to overstep any specific constitutional boundaries.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).