As of March 2024, 90% of states have adopted the NAIC Best Interest Model. Vermont, New Hampshire, California, and Indiana are the most recent states to align in uniformity with other states who enacted the NAIC Model. This milestone was achieved as the Department of Labor (DOL) chose to advance its proposed and revived fiduciary-only proposal, “Retirement Security Rule,” for review by the White House Office of Management and Budget (OMB). Unlike this proposal, the best interest standard adopted in 45 states, ensures that all savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security in retirement.

In February, Rep. Brad Finstad (R-MN) introduced the House companion bill of the Prove It Act with Reps. Yadira Caraveo (D-CO) and Nathaniel Moran (R-TX). Senate Small Business and Entrepreneurship Committee Ranking Member Joni Ernst introduced the companion legislation last year. The Prove It Act aims to give small entities a seat at the table during the regulatory process and aims to limit regulatory burden on small businesses.

On January 18, just one day before the deadline after which the government would have begun its partial shutdown, the Senate passed a continuing resolution (CR) that extends current government funding levels until March 1 for four of the 12 appropriations bills and March 8 for the remaining eight. The vote was 77 to 18. Just hours later, the House followed suit, passing the measure under suspension of the rules. The vote was 314 to 108. President Biden signed it into law on January 19.

On January 31, the House of Representatives passed a $78 billion tax package, H.R.7024, the Tax Relief for American Families and Workers Act. The bill contains some provisions that may be helpful to NAIFA members, i.e., increased expensing, a higher reporting threshold, and larger business loan interest deductibility. It also contains, as an offset, a provision that cuts off new ERTC claims.

The individual income, capital gains, and estate tax rules enacted in 2017 expire at the end of 2025. These were significant tax cuts and already Congress and the private sector are gearing up for a major battle over which of these rates and rules should be extended or allowed to sunset. One such rule that is key to many NAIFA members is section 199A, the 20 percent deduction for certain noncorporate business income.

A coalition of small business groups is urging Congress to extend by 90 days the proposed cut-off of employee retention tax credit (ERTC) claims. The Coalition to Preserve American Jobs is arguing that cutting off claims on January 31 would be “slamming the door on many eligible small business owners” right as the tax filing season begins.

On February 7, Rep. Richard Neal (D-MA), ranking member of the House Ways & Means Committee and a chief architect of SECURE and SECURE 2.0, reintroduced his automatic IRA program bill. The bill would impose a penalty tax on employers with more than ten employees that do not have a retirement savings plan in place if they do not set up an automatic enrollment IRA program (or another form of automatic contribution retirement savings plan) for their workers. The bill would not require employer contributions. It would allow employees to opt-out. And it provides a tax credit for small employers to defray the administrative cost of the program.

The Death Tax Repeal Act (H.R. 7035) was introduced in the House of Representatives on January 18. The bill has more than 160 cosponsors (although all but one are Republican). Its primary author is Ways & Means Committee member Rep. Randy Feenstra (R-IA).

On January 12, the Internal Revenue Service (IRS) released initial guidance on implementation of SECURE 2.0 pension-linked emergency savings accounts (PLESAs). The guidance is in Notice 2024-22.

The Senate Banking Committee held a hearing on January 25 on the National Flood Insurance Program (NFIP). The hearing showcased the concerns of coastal lawmakers, whose constituents stand to benefit or lose the most from any changes to the NFIP.

On January 19, the Department of Labor (DOL), Treasury, and the Pension Benefit Guaranty Corporation (PBGC) issued a Request for Information (RFI) on the disclosure requirements of SECURE 2.0. The agencies said they would use this input to “explore ways to make it easier for workers to understand their benefits.”

On January 25, the Centers for Medicare and Medicaid Services (CMS) issued a request for information (RFI) on how to increase transparency and improve the data capabilities of Medicare-managed care plans. Comments on the RFI are due to CMS by mid-summer.

On February 1, 2024, Representative Brad Finstad (R-MN) introduced the bipartisan Prove it Act in the U.S. House of Representatives. Senate Small Business and Entrepreneurship Committee Ranking Member Joni Ernst introduced the companion legislation last year. The Prove It Act aims to give small businesses a seat at the table during the regulatory process and aims to limit the regulatory burden on small businesses.

On January 2, NAIFA submitted comments to the Department of Labor (DOL) on its proposed fiduciary-only rule. The comments pointed out the harm the proposal would do to middle class retirement investors and to financial professionals who already put clients’ interests first. NAIFA recommended that the proposal be withdrawn.

Repeating their testimony at a DOL hearing last month in comments submitted to DOL, industry advocates told a January 10 House hearing that the DOL’s fiduciary-only proposed regulations must be withdrawn. Fifty House members wrote to DOL demanding the rule’s withdrawal. DOL must sift through 19,000+ comments on the rule.

On January 9, the Department of Labor (DOL) released its new, final independent contractor classification regulation. It largely follows the proposed rule, imposing an economic reality based on the totality of the circumstances test to determine whether a worker is an employee or an independent contractor. It contains no industry or occupation exceptions or carve-outs. The rule is effective on March 11, 2024.

On January 5, President Tom Cothron submitted comments to the Centers for Medicare & Medicaid Services (CMS) on behalf of all NAIFA members to express concern over a proposed rule change regarding the Medicare Advantage and Medicare Part D programs.

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).