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Advisor Today has the largest circulation among
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June 2021 Issue:


Biden Budget Calls for $2.4 Trillion in Tax Increases

The $6 trillion Fiscal Year (FY) 2022 budget proposal offered by President Biden on May 28 includes a call for approximately $2.4 trillion (over 15 years) in new taxes. The tax proposals are aimed at “the rich” (those earning more than $400,000/year) and at corporations.

The tax proposals include an assumption that the 2017 tax reform law’s tax cuts will be allowed to expire, as current law is scheduled to require, at the end of 2025. That would mean expiration of the 20 percent deduction for non-corporate business income (the Section 199A deduction) as well as current law (lower) income tax rates. 

Other tax proposals in the Biden budget proposal include:

  • An increase in the corporate tax rate from 21 percent to 28 percent.
  • An increase in the top individual income tax rate from 37 percent to 39.6 percent.
  • A change in the capital gains tax rate that would impose tax on capital gains (i.e., investment gains) at the same rate as the taxpayer’s income tax rate for high-income taxpayers—this means that for those in the top tax bracket, the top capital gains rate would go to 37 percent (if current law rates are not changed) or 39.6 percent (if the Biden proposal to hike the top rate is enacted). The proposal has an effective date of May 28, 2021. It would only apply to taxpayers with adjusted gross incomes (AGI) of $1 million, on gains that exceed $1 million. Those amounts would be indexed for inflation.
  • Gift and estate taxes would go up—the Biden proposal would make gifts taxable at the time they are given and bequests taxable at the time of death, under carryover basis rules. That changes the current law rule that makes bequests and gifts taxable when/if the gain on them is realized (i.e., generally, when the asset is sold), under a step-up in basis rule. Under step-up rules, the tax due would be calculated on the difference in value of the asset as of the date of the gift/death and the asset’s value as of the date the heir/donee sells it. Under the carryover basis rule, the tax would often increase because it would be calculated on the difference between the asset’s value as of the date the donor/decedent acquired it and the date the donee/heir received it. This could be a big tax increase for those impacted, and a foundational change in tax rules that currently do not require tax until/unless an asset is sold (gain is realized).
  • Assets in trusts would also be subject to new, tax-increasing rules. Generally, tax would be required when an asset is placed in trust (with exceptions for spouses and charities), and assets could not remain in a trust without incurring tax liability on increases in the assets’ value for more than 90 years.

There is also a provision in the Biden budget proposal that could impact NAIFA members who are Subchapter S business owners. Under that provision, the net investment income tax (NIIT) rules would be “rationalized” so that tax paid under SECA (the Self-Employed Contributions Act) versus taxes paid under Subchapter S rules could not be manipulated to reduce employment tax liability.

Another Biden budget tax proposal is a provision that would make permanent the Affordable Care Act (ACA) premium tax credit (PTC). The PTC rules require employers that offer health insurance to their employees to provide health insurance to their terminated employees, and then apply for a tax credit from the federal government to cover that cost. This provision was enacted as a temporary rule in March in the American Rescue Plan. The Biden budget also proposes enhancements to child and dependent care tax credits and to the earned income tax credit.

The Biden budget also calls for a federal paid sick and family leave program, paid for out of the federal government’s general revenues. In addition, the Biden budget calls for enactment of the PRO Act, including its adverse worker classification rule.

Prospects: The GOP is united in opposition to these Biden tax proposals. And, since Democrats have no margin for disagreement among themselves in the Senate, and very little (only four votes) in the House, chances are that these tax proposals will be scaled back if not rejected entirely. But, even the most conservative of Democratic lawmakers have said they’d consider some tax increases—e.g., a corporate tax rate hike to 25 percent, although not to 28 percent. So, the tax battles have a good chance for resulting in at least some tax increases if this legislation moves over the next few months. 

It appears unlikely at this juncture that the PRO Act, with its adverse worker classification rule, will be approved this year. Chances for a federal paid leave program are better, but still not good. In short, neither seems likely to be enacted into law this year.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations at dboyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations at mhedge@naifa.org 


Senators, President Biden Negotiate New Infrastructure Package

Senators—first Republicans and now a bipartisan group—and President Biden are trying to negotiate a bipartisan agreement on an infrastructure (road, rail, bridges, etc.) package. There are a number of tax issues in play in these negotiations.

Generally, the negotiations are focused on just what constitutes “infrastructure” (new spending on infrastructure is something strongly supported by both Democrats and Republicans). The GOP wants to limit “infrastructure” to money for roads, bridges, rail, and rural broadband access. The President and most Congressional Democrats want “infrastructure” expanded to include “human” support, like the paid sick and family leave program proposals offered by a number of lawmakers and included in President Biden’s Fiscal Year (FY 2022) budget proposal.

Another key element in the negotiations is the size of the legislation. A number of Republicans say they are willing to support a package of up to around $1 trillion, while President Biden is pushing for a $1.7 trillion package. There are also disagreements about whether the overall size of the package is the target, or whether “new spending” is what matters to each side.

Perhaps the most difficult issue is whether/how to pay for an infrastructure package. The GOP is resisting any new taxes—they prefer “user fees” (i.e., a miles-used or gas tax) and/or reallocation of as yet-unspent coronavirus relief law funds. President Biden, supported by many Congressional Democrats, is insisting on at least some new revenue from taxes. His most recent offer to the Senate GOP was a substitution of a 15 percent minimum tax on corporations with over $2 billion in book income for his proposed 28 percent corporate income tax rate hike. So far, each of these ideas has been rejected.

The parties to the negotiation have also changed. Initially, they were with a group of Republicans led by Sen. Shelley Moore Capito (R-WV) and the Administration. Those talks broke down on June 8. President Biden is now talking to a different, bipartisan group of about 20 Senators. And, both House and Senate relevant committees are working on a Surface Transportation reauthorization bill. That bill could become “home” to the larger infrastructure package sought by President Biden and Congressional Democrats.

So far, none of these negotiations include the tax proposals designed to offset the cost of “human infrastructure.” Those tax proposals include a hike in the top individual income tax rate, an increase in the capital gains tax rate, and a repeal of the estate tax’s step-up in basis rule combined with a rule that would make inheritances taxable as of the decedent’s death rather than when the inherited asset is sold. All of these proposals are still on the table for a future bill or, they could be revived in the new bipartisan negotiations.

Prospects: Currently, prospects for a bipartisan infrastructure bill look dim. But frequently, difficult negotiations look like they’re on the verge of failure right before negotiators find a breakthrough and agree to a compromise. Still, right now it looks like a bipartisan bill may be out of reach. If the current negotiations fail, Democrats will move on to a different process—probably reconciliation—to move these proposals through the legislative process. It seems probable that negotiations will end—either in success or failure—by the time Congress breaks for the July 4 recess.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations at dboyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations at mhedge@naifa.org


Cardin and Portman Introduce New Retirement Savings Package

On May 24, Sens. Ben Cardin (D-MD) and Rob Portman (R-OH) introduced S.1770, a package of almost 60 new retirement savings provisions. The measure is similar to the House Ways & Means Committee approved Neal-Brady bill, H.R.2954.

Among the provisions in the Cardin-Portman legislation are:

  • Automatic enrollment in employer-sponsored plans, subject to a participant opt-out option, at a three percent of compensation level that increases by one percent per year until it reaches ten percent, to a maximum of 15 percent, at the plan sponsor’s choice.
  • New automatic enrollment safe harbor (the “Secure Deferral Arrangement” or SDA) that would be in addition to the existing safe harbor—generally, the new SDA would apply to after-tax contributions as well as to tax-excludible contributions. The minimum deferral amount would start at six percent in the first year and phase up to ten percent by the fifth year. Employers would be required to make matching contributions at a rate of 100 percent of employee deferrals on the first two percent of pay; 50 percent on deferrals on two to four percent of pay; and 20 percent on deferrals over four percent of pay. Matching contributions on after-tax or elective contributions above ten percent of pay would not be permitted. Small employers adopting the SDA would qualify for a new tax credit on matching contributions up to two percent of pay for five years. The SDA also contains notice and reporting rules.
  • Expansion of nonelective contribution limits of up to ten percent of pay for SIMPLE plans.
  • An increased start-up retirement plan credit for small employers—the Cardin-Portman bill increases the credit to 75 percent while the Neal-Brady bill increases it to 100 percent.
  • A new three-year $500 annual tax credit for small employer plans with an automatic re-enrollment provision.
  • A provision that makes the cost of qualified retirement planning services tax-free, so long as such services are provided under nondiscrimination rules that make them available to substantially all of the plan’s participants.
  • Clarification that 403(b) plans may participate in a Pooled Employer Plan (PEP), and that the start-up credit would apply for PEP plan participants.
  • Authority to allow plan participants to designate as Roth contributions the matching contributions made on their behalf by employer sponsors.
  • Modification of the electronic notice and disclosure requirements to require an on-paper benefits statement to plan participants once per year; other notice and disclosure requirements (e.g., quarterly reports) could be delivered electronically (subject to a participant’s request for such notice and disclosure on paper).
  • Modification of the family attribution rules.
  • Authority to plan sponsors to rely on participants’ self-certification of the occurrence of any of the seven permitted reasons for hardship withdrawals.
  • Authority to 403(b) plans to invest in collective trust funds.
  • An increase in the required minimum distribution (RMD) age from 72 to 75 as of 2022—the House bill phases in the RMD age increase until it reaches age 75 in 2032. Cardin-Portman also creates an exemption from RMD rules for individuals with aggregate account balances of $100,000 or less.
  • An increase in the IRA catch-up contribution limit, and indexing of it—the increase is to $10,000 for those age 60 and over (the House bill limits the catch-up contribution to ages 62, 63 and 64, and eliminates catch-up contributions as of age 65).
  • Clarification that the early withdrawal penalty tax applicable to IRAs does not apply to interest earned on IRA account balances, or to excess IRA contributions.
  • Permission for an employer to make matching contributions based on a participant’s qualified student loan payments.
  • Eligibility for participation in an employer-sponsored retirement savings plan for long-term part-time employees after two years of service (down from three years under current law).
  • Modification of annuity RMD rules to allow automatic increases in certain annuity payments (generally, those payments that increase by less than five percent/year).
  • Clarification that lump sum distributions from annuity contracts can be treated as lump-sum distributions from the plan.
  • Direction that Treasury issue regulations making it clear that employees who have had a break in service can make elective deferrals with respect to severance pay and back pay.
  • Direction to the Treasury to issue regulations that would allow inclusion of indexed and variable qualifying longevity annuities (QLACs).
  • An increase in the limit on QLACs premiums from $135,000 to $200,000, indexed.
  • Extension of rules governing direct contributions to charities from IRAs to 401(a), 457(b) and 403(b) plans, SEPs and SIMPLE IRAs.
  • Clarification of diversification rules applicable to insurance-dedicated ETF (and other) retirement plan investment options.
  • A reduction in the RMD excise tax from 50 percent to 25 percent, and to ten percent if the failure to take an RMD was inadvertent and corrected in a timely manner.
  • Direction to the Treasury to review notice and disclosure requirements, and report to Congress on them.
  • Authority to self-correct without a penalty tax inadvertent plan errors.
  • Harmonization of 401(k) and 403(b) hardship distribution rules.
  • Clarification of ESOP rules regarding qualified securities.
  • Streamlined notice and disclosure, controlled group, and early distribution penalty rules.

Cardin-Portman also eliminates the indexing of variable rate premiums payable to the Pension Benefits Guaranty Corporation (PBGC), and freezes the PBGC variable premium rate at 2018 levels ($38 per $1,000 of unfunded vested benefits); directs Treasury to update mortality tables for pension plans; permits Roth IRA amounts to be rolled over into employer-sponsored plans; and makes other technical changes to retirement plan rules.

Prospects: There are many provisions in S.1770 that overlap with provisions in H.R.2954, but the details of how those provisions work vary. Plus, there are provisions in the House bill that are not in Cardin-Portman. Likewise, there are provisions in Cardin-Portman that are not in Neal-Brady. Further, there are proposals from other Senators that will likely be in the Senate version of the bill that ultimately gets a vote by the full Senate. So, much work remains to be done before a final version of the generation-two retirement savings bill finishes its journey through the legislative process. However, odds are good that a retirement savings bill will successfully cross the finish line, probably late this year or perhaps next year.

NAIFA Staff Contact: Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org


Bipartisan Emergency Withdrawal Bill Introduced

  1. Jim Lankford (R-OK) and Michael Bennet (D-CO) have introduced S.1870, a bill that would allow retirement plans to permit participants to take penalty-tax free pre-retirement withdrawals of up to $1,000 for emergency needs. The emergency withdrawals could also be taken from IRAs. NAIFA supports the bill.

S.1870 would permit, but not require, plan sponsors to include in their plans a provision that would allow participants to self-certify that they have an emergency need that requires a withdrawal from their retirement savings account. There is a hard cap of $1,000 on the permissible withdrawal, and plan participants could take such a withdrawal only once in a year. Additional withdrawals would be permitted in subsequent years, again only one per year, up to the $1,000 cap. Participants could re-contribute the amounts withdrawn under rules like IRA rollover rules.

Any amounts withdrawn under this new rule would be subject to regular income tax, at the plan participant’s usual rate. However, the withdrawals would not count as early (pre-retirement, prior to age 59 ½) withdrawals.

NAIFA supports S.1870, and has written to Sens. Lankford and Bennet so stating.

Prospects: Odds are good that S.1870 will be included in the Senate version of a generation-two retirement savings bill. Senators from both parties are signaling support for a bill that looks likely to be substantially similar to the House Ways & Means Committee-approved SECURE 2.0 bill, H.R.2954. 

The Finance Committee plans to hold a hearing on the emerging bill in July, with mark-up coming after Labor Day. With considerable bipartisan support for the measure, it appears chances for its enactment are good.

NAIFA Staff Contact: Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org


House GOP Offers Incentives for Paid Leave

To counter Democrats’ calls for a federal paid leave mandate, two key House Republicans have offered a plan to incentivize rather than require employers to offer paid sick and family leave to their workers. On May 27, Reps. Kevin Brady (R-TX), ranking member of the House Ways & Means Committee, and Jackie Walorski (R-IN), ranking member of the Committee’s Subcommittee on Worker and Family Support, released a discussion draft of the incentives they are proposing.

 The Brady-Walorski package would:

  • Enhance the existing paid leave tax credit for small employers (those with up to 50 employees and $25 million in gross receipts) to adopt new paid leave policies—the enhancement would increase the credit from 25 to 50 percent of wages paid during leave, and would allow some administrative expenses as well as wages to be counted in calculating the credit base.
  • Set the credit at five years, with the credit at full amount for years one-three, at 75 percent of the credit base in year four, and at 50 percent of the credit base in year five.
  • Establish that employers claiming the current credit through 2025 could continue as under current law, with the new phase-out beginning in 2026.
  • Clarify that multi-state employers that operate in states that require paid leave can claim the federal tax credit for wages paid in states that do not require paid leave.
  • Amend the Fair Labor Standards Act (FLSA) to give private-sector employees the option to choose compensatory time off instead of cash for overtime wages—compensatory time off would be limited to no more than 160 hours/year, calculated under the same rules as overtime pay, and it would be at the employee’s choice.
  • Expand the ability of pooling arrangements to include paid sick and family benefits—this provision would amend the rules applicable to Multiple Employer Welfare Arrangements (MEWAs) and Voluntary Employee Beneficiary Associations (VEBAs).
  • Create a new tax-advantaged savings account that individuals could set up to accumulate funds to pay for school expenses, childcare, eldercare or wage replacement during periods of parental or medical leave. Individuals could contribute up to $5,000/year, pre-tax, with earnings and distributions tax-free.
  • Employers could make contributions to these new family savings accounts, and the federal government would contribute $1 for every dollar contributed to the accounts by individuals with adjusted gross incomes of $50,000 or less, up to a maximum of $1,000. The provision would also authorize states, non-profits, and other community-based organizations serving low-income families to contribute to these accounts.
  • Authorizes a new grant condition to Child Care Entitlement to States to allow eligible low-income parents to receive a direct child care subsidy (as a partial wage replacement) in lieu of child care assistance.

The Brady-Walorski proposal also enhances childcare funding, childcare credits, and dependent care savings accounts (tripling the current contribution limits to $15,000/year). The provision also eliminates the “use-it-or-lose-it” rule and increases the age limit for the children covered by the benefits, from 13 to 15. The legislation would also create a commission to study child care assistance issues and would require the Department of Health and Human Services (HHS) to report to Congress on state and local child care regulations.

Prospects: The Brady-Walorski proposal is unlikely to win Democrats’ support as it is based on voluntary employer action rather than mandates. However, it demonstrates the seriousness of the paid leave issue with key lawmakers from both parties proposing federal paid leave programs. A compromise is possible as the issue is a high priority across the federal government. 

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations at dboyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org, or Michael Hedge – Director – Government Relations at mhedge@naifa.org


New York Legislature Approves Mandatory Auto-IRA Program

The New York State Legislature has sent to Gov. Andrew Cuomo a bill (NY A03213-A) that will require all established New York employers with ten or more employees without a retirement plan for their workers to set up an auto-deduct IRA program. The mandatory Secure Choice program will become law when Gov. Cuomo signs the bill, as he is expected to do. 

The New York State Senate approved the measure, by a 44-19 vote, on June 7. The General Assembly ok'd it on May 11, by a vote of 125 to 22. The legislation amends the law that allows for a voluntary auto-IRA program to make the program mandatory. 

The auto-IRA program will require employers that have been in business for two years or more to automatically enroll their workers (subject to an employee opt-out option) in the plan. Employees may choose not only whether to participate, but also the level of contribution (up to the maximum set under IRA rules). Employees who do not opt-out and/or choose a different level of contribution will be automatically set to contribute three percent of compensation. Employers will also have to offer a payroll deposit retirement savings arrangement, and to deposit funds on behalf of employees into their IRAs. The payroll deposit process must be established by no later than nine months after the program’s board opens the program for enrollment.

The measure authorizes the auto-IRA program’s board to evaluate and establish the process for enrollment, including the process by which any employee may opt-out or change the three percent default contribution rate. The board will also set the rules for choosing investment options and on how to terminate participation in the program. 

The measure also includes a rule that prohibits employers that currently offer retirement savings plans from terminating those plans in order to participate in the state program.

Prospects: It seems likely that Gov. Cuomo will sign this measure into law, and that the new mandate will go into effect by mid-2022.

NAIFA Staff Contact: Julie Harrison – State Chapter Director – Government Relations at jharrison@naifa.org


Democrats Introduce Bill Allowing ESG-Based Retirement Investing

Bicameral Democratic legislation introduced on May 20 would specifically allow ESG (environmental, social, governance) investment options in retirement plans. The legislation, if enacted, would reverse a Trump-era regulation that allows ESG-based investment options only if they are the best options available from a purely economic viewpoint.

The bill is the Financial Factors in Selecting Retirement Plan Investment Act. It was introduced in the Senate by Sens. Patty Murray (D-WA) and Tina Smith (D-MN). Its House sponsor is Rep. Suzan DelBene (D-WA).

According to its authors, the legislation would put ESG funds on an even footing in the retirement investment marketplace. It would also permit them to be used as default funds. Default funds are used when plan participants fail to designate their investment choices.

This past March, President Biden announced that his Administration would not enforce the Trump-era rule that requires plan sponsors to put funds that put economic interests ahead of what the rule calls “non-pecuniary goals.” The Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) is thought to be working on a new version of an ESG investing rule.

Prospects: This legislation must overcome a number of hurdles in order to become law—e.g., timing, competition from other priority issues, etc., but Washington insiders give it at last some chance for enactment this year or next. The Administration’s position on the issue and potential DOL activity on a new rule increases its chances.

NAIFA Staff Contact: Judi Carsrud – Assistant Vice President – Government Relations at jcarsrud@naifa.org


IRS Announces 2022 Health and Welfare Plan Limits

In Rev. Proc. 2021-25, the Internal Revenue Service (IRS) announced inflation-adjusted limits for 2022 for Health Savings Accounts (HSAs,) and High Deductible Health Plans (HDHPs). They are as follows:

  • HDHP out-of-pocket limit/self-only coverage: $7,050 (up $50)
  • HDHP out-of-pocket limit/family coverage: $14,100 (up $100)
  • HDHP minimum annual deductible/self-only: $1,400 (no change)
  • HDHP minimum annual deductible/family: $2,800 (no change)
  • HSA annual contribution limit/self-only: $3,650 (up $50)
  • HSA annual contribution limit/family: $7,300 (up $100)
  • HSA catch-up contribution limit: $ 1,800 (no change)

NAIFA Staff Contact: Michael Hedge – Director – Government Relations at mhedge@naifa.org


NAIFA Signs on to Support Letter for SECURE Remote Online Notarization

NAIFA joined with industry partners in a letter to House sponsors of the SECURE Remote Online Notarization Act urging support for the importance of the legislation. Bipartisan legislation (S. 5355, H.R. 6364) was introduced by Sens. Cramer (R-ND) and Warner (D-VA), and Reps. Reschenthaler (R-PA) and Dean (D-PA).

The legislation would allow businesses and consumers to utilize Remote Online Notarization (RON) laws to execute critical documents using two-way audiovisual communication. Current requirements for a signer to physically be in the presence of a Notary are antiquated and unnecessary in a time of heightened awareness, and social distancing. Thirty-four states have already recognized the benefits of RON technology and passed legislation, while many more are currently considering similar proposals.

To address physical restrictions in place during the COVID-10 outbreak, this legislation would allow consumers and businesses to continue operations in certain transactions. Given the ongoing difficulty of financial advisors, agents, and mortgage brokers to meet with their clients, NAIFA and its coalition partners continue to advocate the importance of the legislation becoming law. 

NAIFA Staff Contact: Michael Hedge – Director – Government Relations at mhedge@naifa.org


Ways and Means Republicans Unveil Early Draft of the “Protecting Worker Paychecks and Family Choice Act”

The proposal includes several childcare proposals prepared as a joint collaboration from House Republicans on both the Ways and Means, and the Education and Labor Committees.

The proposal draws on contributions by Rep. Lloyd Smucker (R-PA), Rep. Kevin Hern (R-OK), Rep. Elise Stefanik (R-NY), Rep. Ashley Hinson (R-IA), and Rep. Mary Miller (R-IL).

The proposal looks to expand access to paid family and medical leave by incentivizing more employers to provide leave and focusing on gaps in coverage. It would allow workers and employers to work out the details by expanding the employer-provided paid family and medical leave tax credit and creating new family savings accounts and incentivizes and reduces costs for small employers to offer paid family leave to their employees, by providing more generous tax credits and paving the way for pooling, and cost-sharing. 

Additionally, the proposal promotes equitable access to paid leave by targeting policies to low-wage workers, who are least likely to receive paid leave through their employers.

Prospects: During April’s full Ways and Means Committee hearing on paid leave and childcare, Rep. Brady emphasized his intent to work across the aisle to support working families. Although there is broad support

NAIFA Staff Contact: Michael Hedge – Director – Government Relations at mhedge@naifa.org


NAIFA Submits Comments to Senate Finance Committee Leadership on Unemployment Insurance

Senators Ron Wyden (D-OR) and Michael Bennet (D-CO) have developed a proposal that would update and expand unemployment insurance so that the program is ready to respond to the next recession and meet the needs of the modern workforce. 

NAIFA joined industry partners in a letter to Senate Finance Committee leadership to express strong concerns with a provision in the Committee’s current discussion draft of the Unemployment Insurance Modernization Act. 

Specifically, Section 212 of the discussion draft would require that states use the “ABC test” for the purpose of determining whether a worker is considered an employee eligible for unemployment insurance. This change would significantly disrupt the independent financial services and property-casualty insurance industries and negatively impact their ability to help Main Street American families and businesses build secure financial futures and protect their assets.

Using the “ABC test” would create the presumption that all services performed by an individual for pay constitutes employment, unless the employer can satisfy all three prongs of the “ABC test.” The “A” prong of the test requires that the worker be free from the employer’s control. Financial services professionals who are independent contractors would likely be characterized as employees because they are not free from the control of the broker-dealer, registered investment advisor, or insurance company’s supervision – even though that supervision is solely to comply with federal and state securities and insurance laws and FINRA requirements. 

NAIFA Staff Contact: Michael Hedge – Director – Government Relations at mhedge@naifa.org


NAIFA-MO Secures Passage of CE for Agents Association Membership Bill

Legislation signed recently by Governor Mike Parsons "allows an insurance producer to receive up to four hours of continuing education credit per biennial reporting period for participation as an individual member or employee of a business entity producer member of a local, regional, state, or national professional insurance association with approval by the Director of the Department of Commerce and Insurance."

NAIFA-MO worked on securing the adoption of the bill (HB 604) for several years.

“Our State Government Relations Committee found a good sponsor in Rep. Kurtis Gregory, and we are very proud of this accomplishment for NAIFA members,” said Ed Anderson, NAIFA-MO’s National Committeeperson.

Over the past several years, many NAIFA state chapters have been advocating for legislation to allow financial advisors to receive CE credit for their membership and active participation in a professional agent association. Due to NAIFA’s advocacy, at least 11 states allow advisors to be eligible for CE credit for their association membership: Arkansas, Georgia, Louisiana, Missouri, Nebraska, North Carolina, Ohio, Oklahoma, Texas, Utah, and West Virginia. Depending on the state, and the approval of the respective state insurance commissioner, advisors may receive from one to six CE credit hours for this purpose.

As NAIFA has argued in state legislatures, and before the National Association of Insurance Commissioners, professional insurance associations promote high standards of ethical conduct and provide educational programs and professional development opportunities to association members. NAIFA believes advisors who are active members of an agent association should be eligible for continuing education credit for such membership.

“We believe that permitting advisors to receive CE credit for association membership both encourages advisors to become members of nationally recognized professional insurance associations, and benefits consumers by ensuring them access to better-qualified advisors,” said Anderson.

NAIFA Staff Contacts: Julie Harrison – State Chapter Director – Government Relations at jharrison@naifa.org; or Meaghan Gale – Policy Director – Government Relations at mgale@naifa.org


Cybersecurity Bill Passes Wisconsin Senate with NAIFA Amendment

New data security standards for the insurance industry passed the Wisconsin State Senate on June 9, 2021, on a voice vote. 

NAIFA strongly supported this bipartisan bill, based on a national model, to provide regulatory uniformity and to protect consumer information. 

Senate Bill 160 includes exemptions for small businesses that were supported by NAIFA-WI. The Senate also added an amendment that our Wisconsin members suggested, providing an exemption for securities brokers that are already subject to cybersecurity regulations by FINRA.

The bill requires licensees to develop and maintain data security programs and sets requirements for notifications of consumers and the state if a data breach occurs. Exemptions are provided for businesses with less than $10 million in year-end assets, less than $5 million in gross annual revenue, or less than 50 full-time employees. 

An Assembly committee has also recommended the legislation. It is likely to be scheduled soon for a vote on the Assembly floor and then will go to the Governor for his signature. 

Thank you to state Sen. Patrick Testin (R-Stevens Point) and state Rep. Kevin Petersen (R-Waupaca) for their work authoring and advocating for this important bill, as well as to the Office of the Commissioner of Insurance.

NAIFA Staff Contacts: Julie Harrison – State Chapter Director – Government Relations at jharrison@naifa.org; or Meaghan Gale – Policy Director – Government Relations at mgale@naifa.org


Texas Becomes 12th State to Adopt Best Interest Standard

Legislation signed recently by Governor Greg Abbott enhances protections for Texas consumers seeking lifetime income through annuities. Championed by House Insurance Committee Chairman Dr. Tom Oliverson and Senate Business & Commerce Chairman Kelly Hancock, the new law enhances the standards financial professionals must follow while preserving consumers’ ability to access the tools they need for a secure retirement.

Texas is the 12th state to adopt a measure that closely tracks the ‘best interest of consumer enhancements’ in the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation. These new laws and regulations also align with the SEC’s Regulation Best Interest. Together, these measures provide Texas consumers with a strong network of state and federal protections.

“Unlike a fiduciary-only approach that limits choices for consumers, these measures make sure savers, particularly financially vulnerable middle-income Americans, can access information about options for long-term security through retirement,” said American Council of Life Insurers President and CEO Susan Neely. “We hope additional states adopt these new standards so that more consumers planning for retirement can benefit from these protections.”

“Running out of money is among retirees’ biggest fears,” said Texas Association of Life and Health Insurers President and CEO Jennifer Cawley. “Annuities are the only product on the market that can provide a guaranteed stream of income and address this concern. Thanks to the Texas Legislature’s leadership, Texans planning for retirement will have the tools they need to secure peace of mind no matter how long they live.”

“This new law imposes strict requirements on financial professionals that ensure they will act in the best interest of the Lone Star State consumers they serve,” said National Association of Insurance and Financial Advisors –Texas President Danny O’Connell. “Life insurance companies and agents strongly support this new law. It provides Texans planning for retirement confidence that financial professionals will offer savings recommendations that address the unique situations of individuals and families, rather than their own financial interest.”

NAIFA Staff Contacts: Julie Harrison – State Chapter Director – Government Relations at jharrison@naifa.org; or Meaghan Gale – Policy Director – Government Relations at mgale@naifa.org