Here’s what you need to know about it.
Last Thursday and Friday, the U.S. House of Representatives passed H.R. 6757, or the “Family Savings Act,” part of a three-bill package known colloquially as “Tax Reform 2.0.” The bills are “dead on arrival” in the U.S. Senate, according to CNBC Markets, but that might change going forward, as the political landscape continues to evolve.
One important piece of the Family Savings Act for our industry is the “annuity safe harbor language.” This part of the bill, which the National Association for Fixed Annuities (NAFA) champions, makes it easier for employers to provide annuities as part of their employee retirement plans. There are other provisions in the bill NAFA advocates for, too, including the ability of small-business owners to band together to provide multiple-employer benefit plans for their companies’ workers.
The bills don’t stop there. They also include changes like making the tax cuts for individuals (from December 2017’s Tax Cuts and Jobs Act) permanent. Critics point out that would cost an additional $627 billion over 10 years (according to the Joint Committee on Taxation), and those numbers are in addition to the $1.5 trillion the TCJA is projected to cost. However, advocates say more tax cuts will only fuel economic growth.
More important to our industry, another one of the bills, the Retirement Enhancement Security Act (RESA or S. 2526) removes the 70½ age limit for making contributions to traditional IRAs and makes it easier for small businesses to band together to offer 401(k) plans. That same bill, if it is passed by the Senate, would make it easier for 401(k) plans to offer annuities by creating a regulatory “safe harbor” and, according to CNBC, “as long as plan administrators meet certain requirements when choosing an annuity provider, they’d get some legal protection.”
Stay tuned for more updates on this exciting development!
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