Retirement Savings: SECURE Act Passed by House, Now in the Senate
By Dani Kehoe, Counsel to NAIFA
Recess week is now over and as is usual with Congressional recesses, “new news” was sparse last week. But we’re expecting to learn more about the fate of our issues this week. There were a couple of key developments, though (on NFIP and estate tax). Below is a summary of where we are and where we expect to go this week.
Retirement Savings: We’re in a holding pattern in the Senate on the House-passed SECURE Act (H.R..1994). Senators appear to be impressed with the 417-3 House vote, and so far we know of only one “hold” on the unanimous consent (UC) request to pass it (“as is”—i.e., without any changes) in the Senate. That hold is by Sen. Ted Cruz (R-TX), and GOP Senate insiders say they think he can be persuaded to lift the hold.
Of course, “think he can be persuaded” is not the same thing as “he will release his hold.” We won’t know until this upcoming week at the soonest (and it could take longer than that) whether Sen. Cruz will relent and let SECURE go forward under the UC request. We also don’t know for sure that other objections will not develop—so far, no one else has objected (Sen. Pat Toomey (R-PA) has some concerns, but has not formally objected to the UC request to pass SECURE), but that could change. Again, we’ll know more about this after Senators get back to Washington this week.
We are also being told that Senate GOP leadership has informed the Finance Committee (the committee with jurisdiction over the bill) that there will be no time for a floor debate (and thus no Senator will have the ability to offer amendments). In short, we’ve been told: “it’s SECURE or nothing.” These Hill folks are even newly skeptical about any possibility for negotiating changes to craft a package to add to a must-pass bill (debt ceiling or the fiscal-year-ending government spending bill) later this summer/fall. This—like all else Congressional—is subject to change, but for the moment, the retirement community (definitely including NAIFA) is focused on eliminating the Cruz hold on SECURE and making sure no other new holds emerge.
This week may tell the tale of whether SECURE can pass the Senate any time soon. Or, it may take longer. Either way, you can be sure we’ll keep you informed.
Taxes: House tax writers are working on a tax extenders package. Last week a “trial balloon” was floated. It was a $40 billion package that would include about $17 billion in two-year extensions of tax rules that expired in 2017 and 2018 (none are tax reform (Tax Cuts and Jobs Act/TCJA) provisions. The package also includes some additional disaster relief and an expansion of the earned income tax credit (EITC). The package would not be fully paid for but would be partially offset by accelerating the expiration of the TCJA’s estate tax rules (to 2023 from 2025).
Insiders say the Senate will reject the “trial balloon” due to the estate tax offset. But it could move in the House (leaving resolution of the Senate objection to the estate tax offset—which is scored as a revenue raiser at about $25 billion—to negotiations when the bill gets to the Senate).
A tax extenders bill will run into the same political issues (partisanship, no time for floor debate (amendments) in the Senate, etc.) as the retirement savings bill has encountered. But the lobbying to do an extenders package is intense (as is the lobbying to pass SECURE/RESA). So there is some possibility that lawmakers will find a way to move the package. Whether at the end of the day an extenders bill will include the estate tax offset is still an open question—and another issue on which we promise to keep you updated.
Health: As noted last week, the leaders of the Senate Health, Education, Labor & Pensions (HELP) Committee, Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA), offered a new bipartisan health reform plan. It contains some new, troublesome compensation disclosure requirements. It also addresses “surprise billing” concerns, along with other issues on which the two parties can find common ground (e.g., cost resolution issues, emergency air services, biologics, access to generics, gag clauses, access to claims data, health data modernization, and vaccination education).
The disclosure provisions would apply to both group, and individual health insurance sales, and—generally—would require extensive disclosure of both direct (e.g., commissions) and indirect compensation paid to brokers/agents. It also requires disclosure of any fiduciary relationship involved. The requirements go well beyond the disclosure required by ERISA for welfare plans.
NAIFA has expressed concern to the HELP Committee and will follow up with more detailed comments about the redundancy and questionable effectiveness of the disclosure requirements.
NAIFA supports the “surprise billing” section of the Alexander-Murray proposal. Other: NFIP/SEC: The House passed, by unanimous consent during a two-minute pro forma session last week, a measure to extend the National Flood Insurance Program’s (NFIP’s) authorization and funding for two more weeks. The NFIP extension to September 30 is expected to pass as part of a disaster relief package that the Senate has already passed, and the House is expected to pass this week.
The Securities and Exchange Commission (SEC) plans to
vote on its proposed Regulation Best Interest (Reg BI) on June 5. Little has
leaked out about what changes the SEC will make to the proposed Reg BI, but
some insiders are speculating that the new Reg BI will not eliminate the
proposed reg’s ban on the use of the term “advisor/adviser” (by other than
registered investment advisors) by individuals—but will allow entities that
have the term in their names (like NAIFA) to continue to use their current
names despite the word “advisor” being in the name. At this point, this is no
more than “gossip,” but it does give us hope. You know we’ll let you know as
soon as we see the newest version of Reg BI.