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November 2020 Issue:

Post-Election Uncertainty Persists

On Saturday, November 7, national news organizations called the presidential election for former vice president Joe Biden. However, President Trump is challenging the outcome in courts in multiple states, and the states have not yet certified their counts. Plus, there are still multiple as yet undecided House races, and two Senate races that are going to a special run-off election on January 5. As a result, there is still some uncertainty about the balance of power in Washington for 2021-2022.

Currently, the Biden campaign is proceeding as if there will soon be an official determination that Biden will be the president-elect. In the House, it appears likely that Democrats will retain control, but with a slimmer majority. 

The Senate currently stands at 50-48, in favor of Republicans, with two races, both Georgia seats to be determined in January. Georgia’s Senators will be determined in a January 5 run-off election. If the Republican candidates win one or both of these elections, the GOP will control the Senate with a one or two-seat majority. If, however, the Democrats win both contests, the Senate would be split, 50-50. With likely Vice President Kamala Harris breaking the tie, that would put control of the Senate in Democrats’ hands. 

This means we will likely have divided government in 2021-2022. Many experts say this means continuing gridlock in the nation’s capital over the next two years. However, Joe Biden has a decades-old, positive relationship with likely Senate Majority Leader Sen. Mitch McConnell (R-KY), and that combined with the smaller House Democratic majority could mean a reemergence of compromise, at least on some key issues. 

Among the issues that could find agreement are the new retirement savings bill, the Securing a Strong Retirement Act (SSRA), and a new coronavirus crisis aid measure. The coronavirus aid bill is likely to be smaller than the nearly $2 trillion package that was in negotiation between Treasury Secretary Steve Mnuchin (on behalf of the White House) and House Speaker Rep. Nancy Pelosi (D-CA) before the election. A new coronavirus aid bill could come together this year, in a lame duck session of the current 116th Congress and President Trump. Or, it could spill into next year when the incoming 117th Congress and the new president are in charge. Either way, new negotiations will likely include Sen. McConnell and will also probably reflect input from the incoming Administration.

Prospects: Most Washington insiders predict that Joe Biden and Kamala Harris will take their oaths of office as president and vice president on January 21. They further predict that House Democrats will hold an eight-seat majority. Finally, odds favor a GOP-controlled Senate, by 52 to 48. 

NAIFA Staff Contacts: 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

Legislative Agenda Is Packed, both during Lame Duck and in 2021

Both the year-end lame duck Congressional agenda and the to-do list facing the incoming 117th Congress are already jam-packed. Here is a look at what to expect.

 Lame Duck: The legislative agenda is poised to get quite busy, and soon. The lame duck 116th Congress must enact legislation to provide funds for the country’s discretionary spending – current funding authority expires at midnight December 11. Failure to do this means much of the government would have to shut down. Lawmakers in both parties and in both chambers say they want an omnibus spending bill that would allow for policy changes and would fund the government’s discretionary activities for the balance of fiscal year (FY) 2021. However, a continuing resolution (CR) is a real possibility. A CR would defer policy change decisions and would likely simply continue current funding levels through whatever date in the new year the negotiators settle on. Authorization of and funding for the National Flood Insurance Program (NFIP) would likely be included in either an omnibus spending bill or a CR.

 A coronavirus crisis aid bill is also a possibility this and/or next month. Senate Majority Leader McConnell will get involved in negotiating a new COVID-aid bill, which he says he wants to enact before year-end. Speaker Pelosi will likely remain the lead House negotiator. The Trump Administration will likely remain involved in the effort, too. 

 Most observers predict that if a bill can come together, it will be smaller than the package that was under discussion prior to the election. Potential provisions to be included in a package would include a re-start of and new funding for the Paycheck Protection Program (PPP), COVID-19-related liability protection for businesses, new federal supplemental unemployment benefits, and money for state and local governments fighting the pandemic. Other aid provisions may also be included in a bill, if one can be negotiated. 

 117th Congress: If this year’s effort to enact a new coronavirus crisis aid bill fails, the issue is likely to be among the first taken up by the 117th Congress and the incoming President early in 2021. It is as yet unclear what other issues will top the agenda in 2021. Among the possibilities—assuming that Joe Biden does indeed become the 46th U.S. president—are:

  •  Modifications to the Affordable Care Act (ACA), particularly to add a public option (probably, although not certainly, a way for individuals younger than age 65 to buy into Medicare)
  • An infrastructure bill that could pull in proposals to increase the corporate and/or top individual tax rates (to pay for new infrastructure projects), and/or to change such current tax rules as the closely-held business income deduction and/or the estate tax
  • A labor bill that would address an increase in the federal minimum wage, a federal paid leave policy, union rules and rules governing who can be an independent contractor versus an employee—and this issue could profoundly impact many of NAIFA’s financial advisors.
  • The new retirement savings bill, while not an identified priority for a Biden Administration, has significant support from both House and Senate Democrats and Republicans. So, it could get Congressional action early, either on its own or as part of another package. 

 Other issues not specific to NAIFA interests—things like climate change or immigration—could take precedence over either the labor bill or the infrastructure measure. And if there’s still a need to finish FY 2021 funding, that will likely come ahead of other initiatives, too.

 NAIFA Staff Contacts: 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.

Bipartisan Generation-Two Retirement Savings Bill Introduced

The House of Representatives’ two lead tax writers, Ways & Means Committee chairman Rep. Richard Neal (D-MA) and ranking member Rep. Kevin Brady (R-TX), introduced a ‘generation-two’ retirement savings bill, H.R.8696, the Securing a Strong Retirement Act (SSRA). Because the legislation includes provisions from a bipartisan Senate measure, the Portman-Cardin bill, Washington insiders give it a good chance for enactment, although probably not until next year. 

 Introduced on October 27, the Neal-Brady retirement savings bill builds on last year’s SECURE Act, its cosponsors say. NAIFA supports the bill. Its provisions include: 

  •  Automatic enrollment, subject to employee opt-out protection, in 401(k), 403(b) and SIMPLE plans
    • The auto-enrollment provisions would allow employees to decline to participate, or to participate at lower levels
    • Auto-enrollment would require employee contributions of at least three percent but no more than 10 percent of compensation in an employee’s first year of participation; automatic contribution levels (again subject to employee opt-out) would automatically increase by one percent per year until the contribution level reaches 10 percent of compensation
    • The auto-enrollment provisions would apply to new plans only—existing plans would be grandfathered
    • The auto-enrollment rules would apply to all businesses with more than ten employees. Employers that have been in business for fewer than three years would be exempt, as would church and governmental plans
  • The SSRA would make required minimum distributions (RMDs) take effect at age 75, up from current law’s age 72
    • The bill also reduces the penalty tax for failure to take RMDs from 50 percent to 25 percent, and to 10 percent if the failure to take an RMD from an IRA is corrected in a timely manner
    • The small employer pension plan start-up cost tax credit would be enhanced—from 50 percent of administrative costs up to an annual cap of $5,000 to 100 percent of administrative costs for employers with 50 or fewer employees
    • An additional tax credit for employer contributions on behalf of employees would be available to employers of 100 employees or fewer—this tax credit is capped at $1,000 per employee, and would start at 100 percent of employer contributions in the first and second years, 75 percent in the third year, 50 percent in the fourth year and 25 percent in the fifth year for employers with 50 or fewer employers—the credit phases down for employers of between 51 and 100 employees
    • The bill makes the start-up credit available to employers joining a multiple employer plan (MEP), or a pooled employer plan (PEP), even if the MEP or PEP itself has been in existence for too long to claim the credit
  • Indexing and expansion of catch-up contribution rules—the bill indexes the IRA catch-up contribution amount, starting in 2022. It also allows for higher catch-up contributions for those over age 60—to $10,000 ($5000 for SIMPLE plans), indexed
    • Saver’s Credit—the SSRA modifies the current law Saver’s Credit—the modifications include a restructure so that the current tiered credit rate would be replaced with a single credit rate of 50 percent, an increase in the maximum credit amount from $1,000/person to $1,500/person, an increase in the maximum income eligibility amount, and indexing of the creditable contribution amount. The provision also directs the Treasury Department to increase public awareness of the Saver’s Credit.
  • Authority for 403(b) plans to participate in multiple employer plans (MEPs)
  • Expansion of investment rule limits on 403(b) plans to allow such plans’ custodial accounts to invest in collective investment trusts; necessary securities law changes to facilitate a 403(b) plan’s ability to invest in collective investment trusts would also be made
  • The bill would allow employers to make matching contributions to 401(k), 403(b) or SIMPLE IRA plans based on a plan participant’s repayment of qualified student loans
  • The SSRA would allow for “de minimus” financial incentives (e.g., a small gift card) to encourage employee participation in a retirement savings plan
  • The bill provides a safe harbor to allow employers to correct elective deferral mistakes
  • The bill modifies the long-term part-time employer rule so that employees who complete at least 500 hours of service per year would be eligible to participate in the employer’s retirement savings plan after two years (down from three years) of consecutive service
  • The SSRA eliminates certain minimum distribution barriers to the election of life annuities—e.g., guaranteed annual increases of only one or two percent, return of premium death benefits, and period certain guarantees for participating annuities
  • The bill modifies Treasury regulations governing qualified longevity annuity contracts (QLACs) by repealing the 25 percent limit and raising the $135,000 limit to $200,000
  • Electronic disclosure would continue to be permitted for three quarterly statements, but paper disclosures would be required at least once annually. Participants/beneficiaries would remain able to get their disclosure on paper rather than electronically, should they so elect.
  • The SSRA expands the rules governing charitable contributions to allow for them to a split-interest entity and to include distributions from qualified plans in the rule that allows for direct charitable gifts from IRAs. It also raises the limit on permissible direct IRA (and other plan) charitable distributions from $100,000 to $130,000
  • The bill gives most plan sponsors until 2022 to make plan amendments required by the provisions in the SSRA (governmental plans would have until 2024), so long as the plan operates in accordance with such amendments as of the effective date of a bill requirement, or amendment.

The legislation also makes changes to the rules governing the sale of employer stock to employee stock ownership plans (ESOPs) sponsored by S corporations; creates a tax credit for employers that accelerate eligibility and vesting for military spouses; expands the definition of governmental plans to include certain first responders—e.g., firefighters, emergency medical technicians, and paramedics; directs Treasury to update its exchange-traded funds (ETF) regulations so that ETFs can be used by individual variable annuities, and eases overpayment recovery rules. Further, it directs the Department of Labor (DOL) to modify its performance benchmark for asset allocation funds regulation; and requires Treasury, DOL, and the Pension Benefit Guaranty Corporation (PBGC) to review their reporting and disclosure requirements and make recommendations to Congress to consolidate, simplify, standardize and improve those regulations. 

There are also a variety of administrative “clean-up” provisions, including one that eliminates the need for defined contribution plans to provide intermittent ERISA or Internal Revenue Code notices to unenrolled participants; creation of a national online “lost and found” data base to make it easier for people to find retirement benefits owed them by former employers that may have moved, changed names or merged; expansion of the Employee Plans Compliance Resolution System; changes to various 457(b) governmental plan rules; and other largely technical rules changes.

Prospects: Given this measure’s bipartisan support, it is possible—but unlikely—that the bill could get folded into year-end government funding legislation. It will have to be reintroduced next year, if Congress does not act on it this year, but it does appear likely that the SSRA will move early in 2021.

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

NAIFA Comments on DOL’s Proposed Independent Contractor Rule

On October 26, NAIFA filed comments in support of the Department of Labor’s (DOL’s) proposed independent contractor rule. The rule proposes an “economic reality” test, and largely follows existing guidelines for determining when a worker is an independent contractor rather than an employee. Many of NAIFA’s members have an independent contractor arrangement with their insurance companies, and those relationships could be at risk under state laws and/or pending federal legislation if the DOL clarification is not finalized, or if it is undone. NAIFA told DOL that the proposed rule would provide greater certainty and promote opportunities for creating innovative work arrangements.

The issue of what constitutes employee status is a hot topic at both the federal level and in many states. At the heart of the debate is California’s “ABC test,” a law (from which insurance agents have won an exception) that classifies a worker as an employee unless they satisfy all three specified elements (freedom from control and direction of the entity hiring them; the work performed is outside the usual course of the hiring entity’s business; and the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed). Congress is expected to debate the PRO Act, which would make the California ABC test (without its exceptions, including the one for insurance agents), part of federal law.

 The DOL’s proposed rule would make determination of a worker’s classification as an employee or as an independent contractor depending on whether “as a matter of economic reality the worker is economically dependent on the hiring entity for work.” This test would allow NAIFA members to continue their existing relationships with their carriers.

 Prospects: It is likely that the PRO Act will run into headwinds in the Senate—opposition that could prove fatal to the legislation if the GOP controls the Senate. But even if the PRO Act advances, chances are good that NAIFA and its allies can win the exception for insurance agents that prevails in the California ABC test. The fate of the regulation is uncertain, given the likely change in Administration that is coming in 2021. However, NAIFA will continue to work with the new Administration as well as with Congress to be sure NAIFA members are protected under any changes to worker classification law. 

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

Long-Term Care Affordability Bill Introduced in the Senate

On October 20, Sen. Pat Toomey (R-PA) offered legislation, S.4820, the Long-Term Care Affordability Act, that would allow long-term care insurance purchasers to use up to $2,500 of 401(k), 403(b), or IRA funds to pay for qualified long-term care insurance policies. 

Under current law, amounts withdrawn from retirement savings plan before the plan participant turns age 59 ½ are subject to an early withdrawal penalty tax. There are a few exceptions to the penalty tax rule. The Toomey bill would add a new one, for the purchase of qualified long-term care insurance, up to a maximum of $2500. 

“For too many Americans approaching retirement, the onset of a chronic illness that requires nursing home or in-home care could cause financial ruin,” Sen. Toomey said. “Paying for long-term care insurance with retirement savings can enhance financial security in retirement.”

Prospects: There is almost no chance that this legislation could be enacted prior to the end of the current 116th Congress in December. However, the bill has considerable support and could well find its way into law next year, after it is reintroduced during the upcoming 117th Congress that convenes in January.

NAIFA Staff Contact: Diane Boyle – Senior Vice President – Government Relations, at DBoyle@naifa.org; Judi Carsrud – Assistant Vice President – Government Relations, at jcarsrud@naifa.org  

Senior House Republicans Offer New Health Care Proposal

 Key senior House Republicans have introduced H.R.14, the “Commitment to Defeat the Virus and Keep America Healthy Act.” The bill contains numerous tax incentives aimed at expanding access to “affordable, quality health care.”

 Introduced on October 30, H.R.14 would also address issues related to access to health care, like telemedicine, and stockpiling necessary supplies to avoid reliance on foreign countries. Sponsors include House Republican Leader Rep. Kevin McCarthy (R-CA), the ranking members from key committees of jurisdiction, including Reps. Kevin Brady (R-TX) at Ways & Means; Greg Walden (R-OR) at Energy & Commerce; and Kay Granger (R-TX) at Appropriations; and Rep. Richard Hudson (R-NC), an Energy & Commerce Committee member.

 The measure’s sponsors say the bill is a way to achieve widespread, affordable health care. Of particular interest to NAIFA members are provisions that would:

  •  Continue the ban on use of preexisting conditions
  • Allow unused 2020 flexible spending arrangement (FSA) amounts to be rolled into 2021
  • Increase (more than double) the dependent care provision that allows amounts deferred for dependent care expenses to be excluded from taxable income
  • Increase (more than double) the contribution limits applicable to health savings accounts (HSAs)
  • Allow use of HSA money to pay for employment-related expenses (dependent care) for 2020 and 2021
  • Allow both spouses to make catch-up contributions to one HSA account
  • Repeal the ceiling on deductibles and out-of-pocket expenses for a high deductible health care (HDHC) policy (that must accompany an HSA)
  • Reduce the Sec 213 limit on the deduction for unreimbursed medical expenses—per the bill, in 2020 and 2021, the above-the-line deduction would be available for medical expenses in excess of five percent of adjustable gross income (AGI); after 2021, the deduction would be available for medical expenses in excess of 7.5 percent of AGI
  • Create a refundable payroll tax credit for 50 percent of the costs incurred by a business for COVID-19 testing, personal protective equipment, disinfecting, extra cleaning, and reconfiguring workspaces—the credit would be capped at $1000/employee for the first 500 employees; $750/employee for employees 501-1,000; and $500/employee for employees 1001 and beyond.

Prospects: There is little chance that this bill as written will be considered in the lame duck session of the 116th Congress, but some of its tax incentive provisions could find their way into a year-end coronavirus crisis aid package, if one comes together. Many of these provisions could also be in play if Congress considers another coronavirus crisis aid bill in 2021.

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

Group Health Plans Must Disclose Cost-Sharing Information

 A final rule coordinated among the Treasury Department, the Department of Labor (DOL), the Employee Benefits Security Administration (EBSA), the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS) requires sponsors of group health insurance plans and health insurers to disclose cost-sharing information, upon request. Thus, a group or individual health insurance beneficiary may demand information on the individual’s out-of-pocket health care costs. Such costs would include co-pays and deductibles.

Health plans and plan sponsors must make cost-sharing information available on an internet website and, if requested, on paper. The rule also requires disclosure of in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing information. In addition, the rule finalizes amendments to medical loss ratio (MLR) rules that allow health insurance issuers to get credit in their MLR calculations for savings they share with plan enrollees that result from enrollees shopping for and receiving care from lower-cost and/or higher-value providers.

 The final rule will take effect early in 2021—60 days after the final rule is published in the Federal Register. That is likely early in November, resulting in an early January effective date.

 The rule is part of President Trump’s approach to controlling health care costs while encouraging expansion of coverage. It combines with health insurance information available through EBSA at 1-866-444-3272 or via dol.gov/ebsa. Information is also available at cms.gov/cciio and at healthcare.gov.

 Prospects: This rule is particularly important for advisors of self-insured health insurance plans. Fully-insured health plans can rely on the health insurance company to provide the required information, but advisors will likely need to coordinate communication on these issues between their clients and their insurance companies. This final rule is likely to garner support from both sides of the political spectrum, even though those on the left may prefer a more extensive approach. Thus, it is likely the rule will stick regardless of changes in political power in Washington, D.C.

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

DOL Finalizes “Do-Good” Investing Rule

 On October 30, the Department of Labor (DOL) released a final “do-good” investing rule that prioritizes financial performance over social concerns in determining whether a benefits plan meets its fiduciary duty to plan participants. The rule means “investment decisions must be based solely on whether they enhance retirement savings regardless of the fiduciaries’ personal preferences,” said DOL Deputy Secretary of Labor, Patrick Pizzella.

 The rule impacts environmental, social, and corporate governance (ESG) funds. Prior to this rule, when competing investments each met a plan’s economic interests equally well, plan fiduciaries could use ESG considerations as a deciding factor in making investment choices. Under this new final rule, plan fiduciaries must select investments based solely on financial considerations. Thus, fiduciaries who invest in ESG options are required to provide analysis and documentation in “the rare circumstances” involving a choice among “economically indistinguishable investments.”

 The rule sets a standard under which fiduciaries may never give up investment return, take on additional risk, or increase costs to promote goals that are not related to their plan participants’ financial interests, explained Jeanne Wilson, an acting assistant secretary at DOL. “This does not mean that fiduciaries are prohibited from considering such issues as environmental impact and workplace practices when they are relevant to the financial analysis,” she said, “because these issues are pecuniary in that instance and therefore appropriate considerations under the rule.”

 The rule takes effect in January 2021.

 Prospects: This is a rule that may get a new look under a Biden Administration. However, it is unlikely that such a review would take place soon, so advisors who deal with plans that are considering investing in an ESG fund must take care to comply with this rule.

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

IRS Issues Final Life Expectancy, Distribution Table Rules

On November 5, the Internal Revenue Service (IRS) released final rules (T.D.9930) on life expectancy and distribution periodic tables. 

The new tables affect calculation of required minimum distributions (RMDs) for IRAs; section 457 deferred compensation plans; and 403(a) and 403(b) annuity contracts, custodial accounts, and retirement income accounts. They determine the amount of payments made over a beneficiary’s lifetime, or in the case of the death of the beneficiary, within five years of the beneficiary’s death (except for certain exceptions).

The rule responds to a 2018 executive order that directed the agency to examine the life expectancy and distribution period tables to determine whether they needed updating to reflect current mortality data. These rules do, in fact, provide updates based on current mortality data. The final rule largely follows the rule as proposed a year ago, on November 8, 2019. However, this final rule does not reflect change made late in 2019 by the SECURE Act. The rule’s preamble specifically states that further updates to reflect the SECURE Act’s provisions will be made.

These final rules take effect for distribution calendar years beginning on or after January 1, 2022. This is a one-year delay from the proposed rule’s effective date. 

Prospects: It is possible that additional proposed or final life expectancy/distribution table rules will emerge in 2021, but it is also possible that the Treasury and the IRS will delay further updates if the Securing a Strong Retirement Act (SSRA) moves early in 2021.

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

IRS Announces Inflation Adjustments for Health, Retirement Plans

 The Internal Revenue Service (IRS) has announced inflation adjustments for 2021 for tax-favored health and retirement plans. The new annual limits on tax-free contributions are in Revenue Procedure 2020-45.

 Among the adjustments are:

  • Health Flexible Savings Arrangement (FSA): The annual $2,750 contribution limit remains unchanged from the 2020 level
  • FSA Carryover: The unused FSA amount that can be rolled over from 20021 to 2022 remains at $550
  • Maximum FSA Contribution: An employer may contribute $500 to each employee annually. Combining that with the $2,750 employee contribution limit results in a maximum annual FSA contribution of $3,250
  • Health Savings Accounts (HSAs): The 2021 HSA limit will be $7,200—up from $7,100
  • ACA Affordability: The maximum amount an employee will have to contribute for employer-sponsored Affordable Care Act (ACA) health insurance will be $104.52/month
  • ACA Pay-or-Play Penalties: The 2021 annualized employer mandate pay or play penalty will be $2,700 for the “A Penalty” (for not offering health insurance) and $4,060 for the “B Penalty” (for offering health insurance that is not “affordable”)
  • 401(k) Contribution Limit: The most an employee can defer from current pay into a 401(k) plan will remain $19,500/year; the same limits will apply to 403(b) and 457 plans
  • Defined Contribution Plan Limit: The non-401(k) plan defined contribution plan limit will increase to $57,000 from $56,000
  • SIMPLE Plan Contribution Limit: The SIMPLE Plan contribution limit will remain $13,500
  • Commuter Benefits: The limit on tax-free employer-paid transit pass/vanpooling and carpooling benefits will remain $270/month
  • Adoption Assistance: The adoption assistance plan limit will rise to $14,440 from $14,300 in 2021

Other inflation adjustments were also announced; e.g., the standard deduction for married couples filing jointly will increase to $25,100 from $24,800, and for single taxpayers from $12,400 to $12,550.

Prospects: There are relatively few inflation adjustments for 2021, reflecting the low cost-of-living increases in 2020. But the inflation-adjust limits are important for tax planning by NAIFA members and the clients they advise.

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

Suitability in Annuity Transactions Activity Soars in States 

The number of states considering the NAIC’s Suitability in Annuity Transaction Model Regulation rose sharply throughout the past couple of weeks. States that have released their version of the rule include Alabama, Arkansas, Kentucky, Massachusetts, Nevada, and Ohio. In Michigan, the model language is moving via legislation, while Idaho and Texas prepare to bring their proposals to the legislatures in the 2021 session. So far, Arizona, Iowa, and Rhode Island have formally adopted the annuity suitability model language.

The model language consists of enhanced consumer protections and other revisions. The revised NAIC Model requires producers and insurers to act in the best interest of annuity purchasers and not put their own financial interests ahead of the consumers’ interest. NAIFA was an active participant in the development of these NAIC revisions and supported its widespread adoption. NAIFA expects at least 20 states to adopt the model by the end of 2021.

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