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News & Press: CalAdvisor Newsletter

Government Relations, Political Action & Political Involvement

Tuesday, January 19, 2016   (0 Comments)
Posted by: John A. Davidson, LUTCF, FSS
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As a Founding Member of the NAIFA Congressional Council, I receive a weekly briefing every Monday morning regarding the legislative issues in Washington D.C. and how they could impact NAIFA, our industry and our clients. I wanted to begin 2016 with this final report and encourage all of you to be vigilant and engaged in both the state and federal legislation as we head into what promises to be an exciting and unusual election year. 

A workable bipartisan legislative alternative to the Department of Labor (DOL’s) proposed fiduciary rule has been introduced in the House. The government is funded. Some key tax extender rules have been made permanent. The first session of the 114th Congress has adjourned sine die. 

It was, as session-end weeks often are, quite the flurry of a week. The details are in the GovTalk that was sent out to all NAIFA members in December. Below are the highlights, along with a sentence about how each issue may develop in 2016.

FIDUCIARY: After months in development, a workable bipartisan legislative alternative to the DOL’s proposed fiduciary rule was introduced on December 18. The bills, if enacted, would replace DOL’s proposed rules unless Congress votes to affirm them within 60 days of enactment of the legislation.

Generally, H.R. 4293/H.R. 4294 (the legislation was introduced in two bills, to track ERISA and tax jurisdiction) would replace DOL’s contract requirement with enforcement through existing fines/excise tax rules. Financial Advisors would have to act in their client’s best interest, and would have to provide clear and relevant (and manageable) disclosure about fees and expense charges. Proprietary products and variable compensation concerns are addressed and education rules are appropriately expanded. There is a 24-month implementation phase before the new rule takes effect and full grandfathering of existing transactions.

Seven Representatives (four Republicans and three Democrats) are original co-sponsors of H.R. 4293/H.R. 4294. Leading the effort were Reps. Peter Roskam (R-IL) who spoke at the NAIFA PIC/PAC Training meeting in Washington D.C. on December 3, Richard Neal (D-MA) and Phil Roe (R-TN). Supporting the effort during its development phase were Reps. John Larson (D-CT), Buddy Carter (R-GA), Michelle Lujan Grisham (D-NM), and Tom Reed (R-NY). NAIFA thanks each of these Members of Congress and applauds their leadership in protecting the ability of retirement savers to access affordable, professional investment advice.

NAIFA, in conjunction with a wide retirement and financial services coalition, has already begun building support for these bills. The bills’ authors—who serve on the committees of jurisdiction—promise mark-up (finalization) of the legislation in early 2016. They also tell us that the two bills will be combined into one before they go to the House for a floor vote.

This legislation takes on new importance after Congress’ hard fought compromise decision to drop all controversial policy riders (including one affecting DOL work on its fiduciary rule) from the government funding bill passed on December 18. It positions financial advisors well to advance our ongoing position that NAIFA members already work in their clients’ best interests, but need a rule that allows provision of affordable professional investment advice.


TAXES:  Included in the omnibus government funding bill (H.R. 2029) enacted by Congress and signed into law on December 18, are three provisions important to NAIFA members:

1.      There is now no expiration date for the rule that allows full current year deduction of up to $500,000 of the cost of certain business acquisitions (including computer software), up to an overall cap of $2 Million—this is the Section 179 expensing rule.

2.      Permanent law now is the rule that allows taxpayers who are at least 70 ½ to make a direct tax free gift of up to $100,000 from their IRAs to public charities.

3.      Rollovers from employer-sponsored retirement savings plans (ie. 401(k) plans) into SIMPLE IRAs are now permitted.


The bill also makes permanent Subpart F’s exception for active financing, a rule important to some insurance carriers. There are no adverse revenue-raising tax provisions in the bill as enacted. All in all, it was a good result for NAIFA.

ACA: Congressional Leadership also dropped a range of Affordable Care Act (ACA) gutting policy riders from the omnibus government funding bill—but did include in it a two-year delay of the ACA’s Cadillac tax. A House vote on the Senate amendments to the ACA bill that would repeal many of the law’s core provisions (e.g. repeal of the employer and individual mandate, assessments, and federal exchange authority) will occur in early January, House leaders say.

Congress reconvened on Jan. 6.

In closing, I want to thank all of you who have been involved in the Political Process and engaging your legislators at the State and Federal levels. A solid relationship with our lawmakers is going to be the key for us as it always has been. Also, I would ask that each one of you make a significant contribution to the PAC this year…Your PAC dollars are the Volume Control of our Voice in Congress and Sacramento.

Happy New Year!!

John A. Davidson, LUTCF, FSS

Government Relations Chair

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