S. 424 — Retirement Fairness for Charities and Educational Institutions Act of 2025

This section amends the Investment Company Act of 1940, Securities Act of 1933, and Securities Exchange Act of 1934 to expand exemptions from the investment company definition, securities registration requirements, and Exchange Act registration for certain 403(b) plans (i.e., tax-sheltered retirement plans for employees of public schools, tax-exempt organizations, and churches). Specifically, it (1) rewrites ICA section 3(c)(11) to exempt qualifying 403(b) custodial accounts, governmental plans under Securities Act section 3(a)(2)(C), collective trust funds holding solely assets from certain qualified trusts, governmental/church plans, or 403(b) plans, and insurance separate accounts derived from qualifying plan contributions; (2) inserts into Securities Act section 3(a)(2) an exemption for 403(b) plans and makes conforming changes to distinguish annuity-funded plans; and (3) inserts parallel exemptions into Exchange Act sections 3(a)(12)(C) and 12(g)(2)(H) with conforming adjustments. To qualify, an exempt 403(b) plan must be subject to title I of ERISA, have the employer agree to serve as fiduciary for participant investment selection, or be a governmental plan (as defined in IRC section 414(d)), with the employer, plan fiduciary, or designee required to review and approve each investment option in governmental plans prior to offering it to participants. (Thus, the changes enable expanded investment menus in non-ERISA and governmental 403(b) plans without full securities law compliance.)