Joseph Chalom, CLU, RICP, LUTCF, LACP, NAIFA-Florida President-Elect
What Is The Big Deal About Advocacy?
Most readers of this publication are well acquainted that NAIFA’s core mission is political advocacy.
In fact you probably hear it so often that your advocacy nerve may feel a bit numb. In the past three years you have heard and read about the endless meetings that the National Association of Insurance and Financial Advisors Government Relations Team and Executive Leaders had with the Department of Labor regarding the Department of Labor’s Fiduciary Rule culminating in jointly sponsored legal action, resulting in vacating of the rule.
This year the same team at NAIFA met with the Securities and Exchange Commission, as they are drafting a best interest rule. Once again NAIFA proudly represented the thousands of members across the country working to protect both advisors and their clients from potentially harmful regulations.
Now, NAIFA is advocating for you once again. This time it is about the new 20% pass thru tax deduction born from the Tax Cuts and Jobs Act signed into law in December, 2017. This portion of the act referred to as the 199A deduction is complex. The Internal Revenue Service is in the process of drafting the regulation. The relevant element of this section is that the deduction is phased out subject to an income cap. However certain professions are exempt from the phase out. Currently insurance agents are not included in the definition of people who provide financial services. However, those that are engaged in managing wealth for clients are included in the definition. This means that currently insurance agents are at risk of not being eligible for the 20% 199A deduction if they exceed the income cap. Insurance agents may want to pay close attention to developments on the 199A deduction. You may be happy to know that NAIFA in conjunction with partner organizations submitted a letter to Congress on your behalf stating that insurance agents should be included in the 199A financial services exemption.
So what is the big deal about advocacy? Well it may mean the difference between continuing the ability to continue tax free growth of cash value life insurance, tax free death benefit, mitigating advisor liability when working with the public or the ability to be eligible for tax deductions.
When you think of it isn’t nice to have someone looking out for you? Perhaps, NAIFA membership is the best business decision you ever made!