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NAIFA panelists: NARAB approval likely; tax-reform draft raises concern

2 min read

Modern Money

It appears likely that a measure to create the National Association of Registered Agents and Brokers will become law, and agents need to know what that means for their business, said Jill Hoffman, assistant vice president of federal government relations with the National Association of Insurance and Financial Advisers.

A NARAB amendment is attached to House and Senate legislation to reauthorize the Terrorism Risk Insurance Act backstop. The political consensus is that NARAB will pass along with TRIA, which must be renewed before it expires at the end of this year, Hoffman said.

The bill is designed to establish a national licensing body through which agents would pay a fee to get a NARAB license in the state or states where they want to be licensed, said Scott Sinder, outside counsel with Steptoe & Johnson.

NAIFA wants to have a seat on the NARAB board of directors, which would be appointed by the president and also would include regulators, Sinder said.

Meanwhile, good news on the tax front is that the current tax-reform draft by Rep. Dave Camp, R-Mich., contains no provision to change rules regarding the tax-free “inside buildup” of life insurance, said Danea Kehoe, outside counsel with DBK Consulting.

Other provisions, however, could cause life insurance taxes to rise, Kehoe said. Those involve deferred acquisition costs, which relate to commissions; insurers’ calculations of policy reserves; company-owned life insurance; and changes to capital gains rates, she said.

Provisions that would affect retirement savings include one that would make all individual retirement account contributions subject to the same treatment as Roth contributions, which are not deductible, said Judi Carsrud, NAIFA’s director of federal government relations.

“Now is not the time to make it more difficult for Americans to save for retirement,” given the high number of people reaching retirement age, Carsrud said.

The No. 1 regulatory concern remains a uniform fiduciary rule for investment advisers and broker-dealers, although the SEC is divided on the issue, said Gary Sanders, NAIFA’s vice president of securities and state government relations.

NAIFA’s message to the SEC remains that “it’s better to get it right” rather than rushing to issue a rule, he said.

The Department of Labor, meanwhile, has again delayed its version of such a fiduciary standard, which NAIFA has criticized because of a lack of industry input, Carsrud said.