When the first session of the 118^th Congress ended last month, lawmakers left undone controversial and pressing business that will make January a difficult month. Pending are government funding, international aid, and expiring law issues on which there is as yet little or no consensus. Caught in the crosshairs are a tax package with provisions of interest to NAIFA members, extension of the National Flood Insurance Program (NFIP), and proposals to defund regulatory initiatives like the fiduciary-only rule.

Last month, Congress’ Joint Committee on Taxation (JCT) released its annual “tax expenditure report.” This is a list of many tax code rules that result in the government not collecting tax on what would otherwise be taxable income. Many of these rules directly benefit life and health insurance, retirement savings, employer-provided benefits, and general investments.

Treasury and the Internal Revenue Service (IRS) have announced increased enforcement in connection with employee retention tax credit (ERTC) claims. The agencies are warning about more scrutiny as a result of what they call massive fraud in the pandemic-era tax rule. Now, some in Congress are pushing back, concerned that legitimate claims are not being paid as a result of this increased scrutiny. In addition, Congressional tax writers are looking at the ERTC as a possible source of offsetting revenue for the emerging tax bill (see story below).

Currently there are two principal tracks for tax legislation in 2024. The first is an emerging $78 billion package aimed at providing a combination of business and individual tax relief in certain discreet areas. The second is a bigger picture bill that would address the fact that more than half the tax code is scheduled to expire at the end of 2025. Both have significant implications for NAIFA members and their clients.

Last month, the Department of Labor (DOL) proposed rescission of the 2018 association health plan (AHP) regulations. AHPs are designed to allow small employers to band together to achieve cost-effective health insurance availability.

The Centers for Medicare and Medicaid Services (CMS) has announced new cost-sharing limits and required contribution percentages for the 2025 benefit year. For the 2025 calendar year, the self-only coverage annual limitation on cost-sharing is $9,200. It is $18,400 for other than self-only coverage.

On January 8, President Biden officially renominated Julie Sue as Secretary of Labor. Su failed to win the votes needed to confirm her last year, but Senate leadership pulled her nomination from the floor rather than allowing a vote against her. Su is currently serving as acting DOL Secretary.

On December 20, the Treasury Department issued a “grab bag” of guidance on the new retirement savings rules and opportunities in the SECURE 2.0 retirement savings law enacted late in 2022. Notice 2024-02 covers a dozen of the law’s provisions, in a question-and-answer format.

At the NAIC’s Fall Meeting in Orlando, Florida (November 30 – December 3), NAIFA’s Policy Director Roger Moore testified against the Department of Labor’s proposed fiduciary-only rule during the Life and Annuities (A) Committee meeting, commenting that the rule will harm lower- and middle-income families. Moore was joined by representatives from coalition partners in expressing strong support for the NAIC’s efforts opposing DOL’s actions.

NAIFA testified on the first day of the two-day (December 12-13) Department of Labor (DOL) fiduciary rule hearing. President Bryon Holz, who appeared with one of his clients, represented NAIFA, telling DOL of the harm its proposed rule would cause for middle-income retirement investors. NAIFA will also submit formal comments to the DOL ahead of the January 2 deadline for close of comments.

As part of NAIFA’s National Leadership Conference, 248 NAIFA leaders from around the country spent December 5 on Capitol Hill, asking lawmakers to support our efforts to kill the Department of Labor’s (DOL’s) proposed fiduciary rule and exempt financial advisors from its worker classification/independent contractor proposed rule.

On November 15, Congress enacted, and on November 17, President Biden signed into law a continuing resolution (CR) that extends current funding for the government’s discretionary spending until early in 2024. It was a two-part extension that was fraught with political peril. Renewed debate—and risk—will peak again right after the holidays.

On December 6, the tax-writing House Ways & Means Committee’s Subcommittee on Tax Policy held a hearing to look into extending those 2017 Tax Cuts and Jobs Act (TCJA) individual and estate tax provisions that are set to expire as of 2026. There was, of course, the predictable partisan squabbling over “tax cuts for the wealthy” as compared to “tax cuts that stimulate economic growth.” But there was also considerable evidence that there is bipartisan support for a fair number of the TCJA’s provisions, and for some other tax cut ideas.

On December 6, professional staff to Congress’ retirement savings committees released a draft of their proposed SECURE 2.0 technical corrections package. The committee staff are requesting input from stakeholders to be sure the proposed fixes work, and to provide one last opportunity to add any newly identified errors that need correcting.

The issue of “wealth taxes”—particularly whether investment wealth in the form of unrealized gains can be subject to current income tax liability—is swirling in Washington this month. Both the Supreme Court and Congress are confronting the issue.

Treasury and the Internal Revenue Service (IRS) continue to ratchet up pressure on employee retention tax credit (ERTC) claims that they say show evidence of fraud. That, in turn, puts pressure on ERTC claims that, while not necessarily fraudulent, may contain errors and thus attract the attention of government officials cracking down on ERTC claims.

On November 24, the Treasury Department and the IRS issued proposed regulations implementing the rules of the provision in the SECURE retirement laws that qualifies long-term (those who have worked two years or more for an employer), part-time (those who work at least 500 hours/year) employees to participate in an employer-sponsored retirement savings plan.

Congressional Republicans are fighting back against the Department of Labor’s (DOL’s) proposed rule to increase the salary threshold below which the white-collar exception to the Fair Labor Standards Act’s (FLSA’s) overtime (OT) rules would not apply.

Ideas for the emerging “SECURE 3.0” retirement savings bill—which is still early in the development phase—are beginning to proliferate. Here is a summary of some of the idea's lawmakers are considering for the next-generation retirement savings legislation.

A new poll shows that 85 percent of voters in battleground states support a federal paid leave program. And 65 percent of those polled said they would be motivated to vote based on the federal paid leave issue.