October 2022 Issue:

• Congress Enacts Temporary Government Funding Bill
• NFIP Extended through December 16
• Retirement Savings Legislation on Track for Enactment by Year-End
• What Kind of Government Will Voters Elect on November 8?
• Issues Congress May Tackle Prior to Year-End, or Early in 2023
• Key House Republican Offers Bill to Make Tax Cuts Permanent
• Wyden Expands His Probe into PPLI
• Key Republicans Introduce Bicameral Bill to Expand Retirement Plan Investment Options
• FSA Rollover Provisions Expire
• Congressional Scrutiny of Crypto Investments Heats Up
• Lisa Gomez Confirmed as Head of EBSA
• Department of Labor Releases Proposed Independent Contractor Rule
• NAIFA Sends Letter to HFS Committee Leadership on RILA

Congress Enacts Temporary Government Funding Bill

Punting most issues until after the November mid-term elections, Congress on September 30 enacted a continuing resolution (CR) to keep federal agencies operating until December 16. The Senate voted on September 29 and approved the measure 72 to 25. The mostly party-line 230 to 201 House vote came on September 30. President Biden signed it into law as soon as he received it from Congress. The CR mostly just continues fiscal year (FY) 2022 funding authority. Policy changes and new funding levels will be decided during the post-election lame-duck session of the 117^th Congress. 

There was (as there usually is) some drama leading up to the last-minute votes. (Government funding would have run out, triggering a government shutdown, at midnight on September 30 had Congress not enacted the CR.) The biggest sticking point was whether to include a proposal by Sen. Joe Manchin (D-WV) to reform the energy project permitting process. Ultimately, lawmakers declined to include that proposal in the CR. This was a GOP-led “pay-back” to Sen. Manchin for what Republicans considered a “sneak attack” that allowed enactment of the Democrat-only Inflation Reduction Act.

There were a few “anomalies”—measures that changed funding levels (that were mostly simply extended) from FY 2022. These included new money for Ukraine military aid, authorization of Food and Drug Administration (FDA) user fees, and some others. There were, however, no new tax provisions, nor was there new money for fighting COVID or monkeypox. The CR also extended authority and funding for the National Flood Insurance Program (NFIP).

Prospects: Enactment of the CR means there will be a November post-election lame-duck session of the 117^th Congress. It is possible—many say likely—that the bicameral, bipartisan retirement savings package (generally referred to as SECURE 2.0) that is currently under negotiation will be attached to a government funding bill crafted during the lame-duck session of the 117^th Congress. Further extension of NFIP authorization and funding is also likely. A government funding bill is a must-do task in November-December, whether it turns out to be another CR or omnibus (or multiple “mini-bus”) legislation that will change both policy and funding levels. 

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Director – Government Relations, at mhedge@naifa.org.

NFIP Extended through December 16

The short-term government funding legislation (the continuing resolution, or CR) that Congress enacted on September 30 contains a provision extending authorization of the National Flood Insurance Program (NFIP) through December 16, 2022. The extension does not change current NFIP authorization or funding.

There is considerable interest, including from the Federal Emergency Management Agency (FEMA), NFIP’s parent agency, in reforming the current NFIP. This interest is peaking now due to such recent natural disasters as Hurricane Ian in Florida and flooding in Kentucky. Thus, lawmakers are likely to grapple with program reforms and, if those fail, another extension of the current NFIP.

As FEMA itself describes the situation, “Should the NFIP’s authorization lapse, FEMA would still have the authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation.”

FEMA also supports reform of the NFIP. It said, “NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance.”

Prospects: NFIP reform is a familiar issue facing Congress, and one that faces stiff headwinds next month. So, Washington insiders think that while it’s possible that the many issues bedeviling an NFIP reform proposal can be solved by December 16, it is more likely that the NFIP will get no more than another extension of its existing authorization and more funding.

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

Retirement Savings Legislation on Track for Enactment by Year-End

Bicameral, bipartisan retirement savings legislation (usually referred to as SECURE 2.0) is on track to be added to a year-end government funding bill, say negotiators from both parties in both chambers of Congress. Currently, Democratic and Republican negotiators from the House Committees on Ways & Means, and Education & Labor and from the Senate Committees on Health, Education, Labor, and Pensions (HELP), and Finance are melding some 90 provisions in one (or more) of three separate pieces of legislation: the House-passed Securing a Strong Retirement Act (SSRA), H.R.2954; the Senate HELP Committee’s RISE and SHINE Act, S.4353; and the Senate Finance Committee’s EARN Act, S.4808.

Staff-level negotiations are ongoing, and participants are being close-mouthed about early decisions. However, they say that the process is “additive,” meaning they are trying to find a way to include widely supported provisions that are in one or two of the bills, but not all three. Revenue constraints are presenting a challenge to that effort—for example, the Senate position is that no more than $45 billion (over ten years) of revenue-losing provisions (even if they’re offset) can go into a final package. There are also differences in approach, even when underlying policy goals are similar if not identical, in some provisions. An example of that is the emergency savings provisions in the two pieces of Senate legislation. Further, all parties to the negotiations agree that no decision on any provision is final until the entire package is finalized.

Prospects: Prospects for enactment of SECURE 2.0 (almost certainly under a different name) are good. Most of the provisions of the three bills are widely supported on a bipartisan basis. The goal is to attach a final package—which negotiators say they will have ready by late November—to the year-end government funding bill that Congress must enact by December 16. 

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.

What Kind of Government Will Voters Elect on November 8?

Voters across the country go to the polls on November 8, when they will elect all 435 Members of the 118^th Congress’ House of Representatives and 35 U.S. Senators. These are the mid-term elections; President Biden will remain in the White House for 2023 and 2024. But partisan control (Republican or Democrat) of both the Senate and the House is up for grabs.

Currently, most pundits and Washington insiders believe that Democrats will lose seats in, and control of, the House. Those same commentators think it’s too close to call (or perhaps too soon to call) which party will control the Senate. But trend lines are changing rapidly, and even though GOP control of the House seems likely at this point, that could turn out to be a wrong prediction.

Partisan control matters in that the party in control determines the legislative agenda. So, too, does the political nature of the newly elected lawmakers. Both parties have “extremes,” flanks populated by lawmakers who are far from the political center. That means a difference in the set of issues that will occupy the 118^th Congress, depending on which party controls each chamber, and prospects for successful legislating. And current polling suggests that centrists—lawmakers usually more willing to compromise—will be fewer in number in 2023. It looks at this point like more new Senators and Members of the House will be more far-right or far-left. That means even more difficulty in finding a compromise.

As has been demonstrated this year, when the Senate operated on a 50-50 split with ties broken by the Democratic vice president, the narrower the majority, the more influence the far-right or far-left flanks of the party in control will have. That will make it harder to advance partisan legislation. And if 2023 brings divided government—when one party controls the presidency but not the Congress, or the presidency and only one of Congress’ two chambers—the challenge to finding consensus gets even harder.

Prospects: Most Washington insiders think the House will be controlled by the GOP in 2023, but few are willing to bet the bank on that outcome. And if Republicans take over the House (and/or Senate), their margin of control looks like it will be thin—perhaps not as narrow as in the current 117^th Congress, but still small enough that virtually every Member will have to be placated in order to pass anything but the most must-pass bill.

Having said that, it is important to note that tiny margins and intra-party divisions plagued the 117^th Congress for most of its two-year life. The Senate was split 50-50 (with ties broken by Democrat Vice President Harris), while in the House, Democrats had only a four or five-vote majority most of the time. Yet despite the often-times rocky legislative road, Congress still managed to pass quite a lot of significant legislation (e.g., the American Rescue Act, gun control, infrastructure investment, the Inflation Reduction Act, a China trade (computer chips) bill, veterans’ health reforms). This could happen again in 2023-2024.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Director – Government Relations, at mhedge@naifa.org.

Issues Congress May Tackle Prior to Year-End, or Early in 2023

There will be a lame-duck session of the 117^th Congress after the November 8 elections. Issues lawmakers will address either in November-December or next year include whether a new retirement savings package, NFIP reauthorization, and a tax package driven by the need to extend or reinstate expiring or expired tax provisions.

Below is an early look at the issues on Congress’ agenda either in November-December or in the new 118^th Congress. Keep in mind that unforeseen developments could completely change the anticipated issues (and the Congressional/Administration reaction to them).

• Retirement Savings: Currently under negotiation is a bicameral, bipartisan package of some 90 retirement savings provisions—this package is generally referred to as SECURE 2.0. All parties involved in the negotiations believe the discussions will succeed and that SECURE 2.0 (which will almost certainly have a new name) will be enacted by year-end, or perhaps early in 2023. Among the many provisions in the likely final package are favorable changes to required minimum distribution (RMD) rules, new employer retirement savings plan designs aimed at incentivizing more retirement savings among employees, easing of portability rules, emergency savings rules, simplified notice and reporting requirements, and others.
  
  
• NFIP: Congress will have to reauthorize the National Flood Insurance Program (NFIP), and there is already pressure, building over several years, to reform the program. The many flood-related natural disasters in 2021-2022 are highlighting the need to reform the NFIP, especially Hurricane Ian which devastated southwestern Florida last month. The already acute problems with property insurance in Florida are now expected to grow even worse as insurers face claims in the billions of dollars.
  
  
• Debt Limit: Current projections suggest that the government will run out of borrowing authority (and thus put the U.S. full faith and credit at risk due to a default if the debt limit is not suspended or raised) by late winter/early spring, although one budget think tank has suggested that the 3^rd quarter of 2023 is most likely (due to the “extraordinary measures” that Treasury can take to defer hitting the limit). This is always a fraught issue and a must-do legislative item. It will be difficult regardless of which party controls which chambers of Congress. Economists warn that even a partial or short-term default by the U.S. on its financial obligations will have a disastrous worldwide economic impact. This could well turn out to be the top issue of 2023, but it is near-certain it will not be addressed by the 117^th Congress prior to the end of 2022.
  
  
• Budget/Funding the Government: The lame-duck 117^th Congress must find a way to fund government programs for fiscal year (FY) 2023. It is possible it will be another temporary funding bill (a continuing resolution, or a CR). If that is the case, the 118^th Congress will have to enact a funding bill for FY 2023. The 118^th Congress will also have to enact an FY 2024 government funding bill. These are “must” pieces of legislation. However, unless there is an early expiration of the year-end funding bill the 117^th Congress enacts at the end of 2022, this appropriations process is unlikely until much later in 2023. 
  
  
• Taxes: If the GOP takes control of the House (where tax legislation must originate), expect a concerted effort to make permanent the 2017 tax cuts. Those tax cuts are scheduled to expire in 2026. The expiring tax rules include Section 199A, the 20 percent deduction for non-corporate business income (a provision many NAIFA members use), along with lower income and capital gains tax rates, and estate tax rates and rules. If Democrats prevail, expect more proposals to attempt to reduce the perceived inequality created by certain provisions in the tax law (also termed “tax the rich” in political shorthand). If the margins are narrow, expect gridlock that prevents any tax action—unless the deficit spirals out of control. If that happens, tax increases are possible, especially if Democrats are in control. That in turn also would make it far more difficult to enact new tax rules, unless they are “loophole closers” that raise revenue. This type of proposal poses risk for life and health insurance, annuities, retirement savings, and employer-provided benefits. If Republicans are in control, it is possible that spending reductions, for instance, to cut back the Social Security and Medicare programs, would be proposed (as Senator Scott (R-FL) and some House Republicans have already suggested) and possibly linked to a tax reduction bill or a debt ceiling increase. President Biden would most likely veto any legislation containing such cuts but combining those cuts with a debt ceiling fix would complicate that decision.
  
  
• PRO Act: There’s virtually no chance that the 118^th Congress will take up the union-supported PRO Act if the GOP takes control of the House and Senate. There’s a small chance of a PRO Act debate in the Senate if it remains in Democratic hands, but it’s highly likely the GOP will have enough votes to block it if the Senate Democrats do take it up. If, however, Democrats retain control of both chambers of Congress, look for another attempt to pass the bill. The PRO Act largely focuses on unionization issues, but it also contains worker classification provisions that are of interest to many NAIFA members.

Also expect more investigations—if Democrats are in control, into the January 6, 2021, insurrection; if Republicans are in control, into the role of Dr. Fauci in the government’s handling of the COVID-19 pandemic, and into the activities in Ukraine of President Biden’s son, Hunter. There have also been suggestions by some Republican members that they will file motions to impeach the President as well as some of his Cabinet Secretaries. These investigations and motions have the potential to stymie anything but “must-pass” legislation. 

There’s also the possibility of a bitter debate on abortion—it is likely Congress will debate a federal law to ban (if the GOP is in control) or legalize (if the Democrats retain power) abortion. This will be another bitterly divisive debate that could distract Congress from considering any other issues. Also possible is action on legislation to codify the legality of same-sex marriage. And, despite a record amount to be spent on climate change initiatives authorized in the Inflation Reduction Act (now the law), it is possible Congress will also be looking anew at climate change proposals, especially if Democrats control one or both chambers of Congress.

Prospects: The most insightful of Washington watchers are unanimous in saying the current political environment is totally unpredictable. As a result, most folks at this point are predicting legislative gridlock. But that, too, is a prediction that could be totally wrong. One thing is certain, though: 2023 will bring many challenges on the issues that matter most to NAIFA members. 

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Director – Government Relations, at mhedge@naifa.org.

Key House Republican Offers Bill to Make Tax Cuts Permanent

On September 22, Rep. Vern Buchanan (R-FL) introduced H.R.8913, a bill that would make the tax cuts of 2017 permanent. Under current law, all the individual tax cuts in the Tax Cuts and Jobs Act (TCJA) are scheduled to expire in 2026. Among the tax rules affected is the 20 percent deduction for non-corporate business income—something many NAIFA members use.

Also scheduled to expire, and to be extended by the terms of H.R.8913, are current law individual, capital gains and estate tax rates, the standard deduction, and the child tax credit. In all, there are 23 provisions enacted into law at the end of 2017 in the TCJA that expire in 2026. If the provisions expire, tax rates will revert to their former, higher rates (the top individual tax rate would go up from 37 percent to 39.6 percent, for example). And there would be no special deduction for business income earned by Subchapter S, partnership, and sole proprietorship businesses. 

Prospects: H.R.8913 is an early shot in what is likely to be a three-year effort to make permanent (or change) the tax rules under the TCJA. There is virtually no chance that this 117^th Congress will enact legislation to make TCJA’s individual tax provisions permanent. But the effort will dominate in 2023, especially if Republicans take control of the House and/or Senate from the Democrats after the November 8 mid-term elections.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.

Wyden Expands His Probe into PPLI

Senate Finance Committee Chairman Sen. Ron Wyden (D-OR) has expanded his probe into private placement life insurance (PPLI). On September 21, Sen. Wyden sent letters to the American Council of Life Insurers (ACLI), Prudential, and Zurich Insurance Group asking for information in connection with his investigation into the use of PPLI “as a way for wealthy individuals to avoid taxes.”

As he did in his letter last month to a subsidiary of Blackstone Inc., Sen. Wyden repeated in the letter to ACLI, Prudential, and Zurich that he is concerned that PPLI is being used “without a genuine insurance purpose, to invest in hedge funds and other investments while avoiding billions of dollars in federal taxes.”

The letter asked ACLI and the two insurers for information on the total dollar value of assets under administration for PPLI policies, the minimum income and wealth thresholds for people to be eligible to buy PPLI, and about the percentage of PPLI clients that are not U.S. persons or beneficiaries.

Sen. Wyden’s committee staffers say they have no preconceived notions about PPLI or about whether a policy (legislative) response will result from the investigation. But they said they are looking into the use of PPLI in estate planning situations as well as in investment circumstances.

Prospects: The investigation is in its early stages and may or may not result in a legislative proposal. If it does, that proposal may be relatively narrow in scope, or it could impact life insurance more widely. It is a situation NAIFA is watching closely.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.

Key Republicans Introduce Bicameral Bill to Expand Retirement Plan Investment Options

On September 29, Sens. Pat Toomey (R-PA), Tim Scott (R-SC), and Rep. Peter Meijer (R-MI) introduced the Retirement Savings Modernization Act. The bill would protect plan fiduciaries who otherwise comply with all relevant fiduciary rules from charges of failure of fiduciary duty for doing no more than allowing plan participants to select from a wider range of investment choices.

Per the explanation released by the Senate Banking Committee Minority, where Sen. Toomey serves as Ranking Member, the bill would:

1. Clarify that plan fiduciaries may select investment options that include a range of asset classes, including private equity. Nothing in ERISA currently limits the asset classes that may be included in a plan; this amendment makes clear that Congress intends to let investment professionals determine the appropriate range of asset classes.
   
   
2. Protect ERISA’s fiduciary standard. A unanimous U.S. Supreme Court has affirmed that ERISA’s fiduciary duties are “the highest known to the law.” Fiduciaries must still select investments through a prudent process, and the bill explicitly does not create a safe harbor from a fiduciary’s legal duties.
   
   
3. Promote the prudent diversification of retirement savings plans. The bill does not require that plan participants have access to specific asset classes, but it provides fiduciaries with the tools to better ensure diversification.”

Prospects: There is little chance that this partisan bill will be enacted by the 117^th Congress. And two of the three key sponsors—Sen. Toomey and Rep. Meijer—will not be returning to be part of the 118^th Congress. However, Sen. Scott (a former NAIFA member) will be back in January 2023, and he is a key player in Washington. Thus, although there’s almost no possibility that this bill will be considered this year, there is a chance it could start to move next year, especially if the GOP takes control of the Senate and/or the House.

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

FSA Rollover Provisions Expire

The COVID relief era provision that allowed individuals to carry over unspent amounts in flexible spending arrangements (FSAs) from 2021 to 2022 has expired. So, too, did the extended grace period. The expired provisions were enacted as part of COVID-19-related relief legislation over the past two years. However, certain FSA changes enacted in the Consolidated Appropriations Act (CAA) and its related regulatory guidance, are permanent.

Generally, as of 2023, employees may carry over from 2022 only $570 in unused FSA funds into 2023. The grace period ends March 31, 2023. The employee must participate in the FSA in 2023 in order to qualify for the carry-over amount. The employee will have until March 31, 2024, to submit claims against the FSA account balance.

Permanent changes include authorization to add cost-of-living adjustments to the FSA carryover amount, and expansion of the list of expenses that can be paid with FSA (and health savings account (HSA) and health reimbursement account (HRA)) funds to include over-the-counter medications, telehealth charges, feminine products, and personal protective equipment (PPE).

Prospects: Reinstatement of the authority to carry over unused FSA amounts is one of the possible provisions that Congress will consider in the tax extender package that lawmakers may add to the year-end government funding bill. At this point, though, chances for including seem slim.

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

Congressional Scrutiny of Crypto Investments Heats Up

On October 5, House Financial Services Committee (HFSC) Republicans sent a letter to the Justice Department (DOJ) about the Biden executive order regarding the future of digital assets. The GOP concerns centered on the possibility of a “central bank digital currency (CBDC).”

The letter, drafted by Rep. Patrick McHenry (R-NC) and signed by 11 Republicans on the HFSC Committee, questioned whether the Federal Reserve (the Fed) has the authority to look into a central bank digital currency without new legislation to empower such a move. The letter demands a copy of DOJ’s report—required by the Biden executive order— “assessing whether legislative changes would be necessary to issue a CBDC.”

The FSC Republicans said, “We appreciate the efforts to examine the impact a U.S. Central Bank Digital Currency (CBDC) will have on the Federal Reserve and its monetary policy tools; potential risks to our existing payments system; private sector competition and innovation; and the impact on American’s privacy, civil liberties, and security. However, the appropriate place for the discussion on whether authorizing legislation is necessary is in the legislative branch.”

Rep. McHenry, currently the HFSC’s ranking member and likely the committee’s chairman if the GOP takes control of the House after the November elections, has long shown intense interest in the subject of appropriate regulation of digital assets, including a digital currency. 

Prospects: This is one more shot across the bow on the issue of digital assets. It is likely the subject will be a priority for the HFSC next year, especially if – as is expected – the GOP takes control of the House of Representatives.

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

Lisa Gomez Confirmed as Head of EBSA

Late last month, the Senate confirmed President Biden’s nominee, Lisa Gomez, as Assistant Secretary of Labor. She succeeds Preston Rutledge as the head of the Employee Benefits Security Administration (EBSA). The vote was 49 to 36.

 NAIFA congratulated Gomez on her confirmation, saying the association looks forward to “working with the Assistant Secretary to help workers access needed financial products, services, and professional guidance.” NAIFA noted its support for consumer protection (as embodied in the NAIC annuity best interest model regulation and the Securities and Exchange Commission’s (SEC’s) best interest standard). “We are eager to engage in policy discussions with EBSA to preserve a robust framework that protects American planning and saving for the future and managing retirement savings,” NAIFA said in its September 30 statement.

The September 29 vote was the Senate’s second attempt to confirm Gomez. The first attempt, last June, failed due to Democratic Senator absences. Gomez was first nominated last year and then renominated in January 2022, when the Senate failed to vote on her nomination in 2021.

Prospects: Gomez’s background is as an attorney managing a variety of labor issues, from the union side of the equation. But evidence suggests that she will be open to hearing and considering the concerns of management as well. Among EBSA’s priority issues currently is a new look at the fiduciary standard. NAIFA will weigh in with EBSA on this and other issues.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.

Department of Labor Releases Proposed Independent Contractor Rule

On Tuesday, October 11, 2022, the Department of Labor (DOL) released a proposed rule that would replace the existing 2021 test under the Fair Labor Standards Act used to determine worker classification as either an independent contractor or an employee.

The new Labor rule would replace the 2021 rule that went into effect as a result of a ruling in March by the U.S. District Court for the Eastern District of Texas that Labor’s delay and withdrawal of its independent contractor rule violated the Administrative Procedure Act. With the court’s decision, the independent contractor rule became effective as of March 8, 2021.

DOL’s new rule has the potential to threaten independent advisors’ ability to work as independent contractors. The 2021 rule provided consistency in worker classification and protected independent contractor status for independent agents and advisors. 

NAIFA supported the economic reality test and is diligently working to analyze the proposal. DOL is taking comments on the new Rule until November 28, and NAIFA will offer comments to ensure Main Street Americans have access to financial advice from independent producers by preserving the option for them to remain independent.

The new DOL rule would use a multi-factor economic realities test that considers factors of the working relationship to determine whether the worker is truly in business for themselves. 

The rulemaking also would rescind a Trump-era rule that outlined a similar multi-factor test, but that gave greater weight to how much control workers have over their job duties and their opportunities for profit or loss when determining whether a worker is an employee or an independent contractor.

Prospects: The proposed DOL Rule will have a 45-day comment period during which NAIFA will conduct an in-depth analysis of the Rule before submitting comments. It remains to be seen how DOL will respond to comments, but NAIFA is committed to working with regulators as well as legislators to protect the interest of Main Street America. 

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

NAIFA Sends Letter to HFS Committee Leadership on RILA

On September 19, NAIFA joined with coalition partners in a letter asking for the leadership of the House Financial Services Committee and the sponsors of H.R. 4865 – the Registration for Index Linked Annuities (RILA) Act to request House leadership to expeditiously bring the bill to floor for a vote, given the strong bipartisan support for the bill as well as support from both consumer advocates and the financial services industry.

On July 28, the House Financial Services Committee voted to advance a bipartisan bill requiring the Securities and Exchange Commission to create a new form for registering index-linked annuities, which allows investors to save for retirement in a more streamlined process.

Registered index-linked annuity products offer a good option for some consumers who want to benefit from market growth while reducing their exposure to market losses. These are long-term, tax-deferred investments that are often well-suited for investors who are preparing for retirement, especially those who are retired or are nearing retirement and wish to reduce the impact of market downturns.

Unfortunately, the Securities and Exchange Commission (SEC) paperwork required to register RILAs is unnecessarily burdensome and confusing. It requires financial institutions to submit forms more often used for initial public offerings or other “catch-all” forms that require a great deal of extraneous information not relevant to RILAs and not readily available to insurance firms offering RILAs.

Prospects: It is anticipated that a floor vote will still take place this session. If a floor vote is scheduled, it is expected the bill will pass. Currently, coalition partners are also working on building up support in the Senate. 

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