U.S. Senate Adopts Pension Bill but not Estate Tax

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The U.S Senate passed by an overwhelming margin the Pension bill (H.R. 4). Since the House passed an identical bill last week, the bill will proceed straight to President Bush for his signature. The President is expected to sign it at the earliest possible moment.

In addition to the pure pension provisions that are important to businesses and workers alike, the bill contained several provisions that insurance agents and financial advisors will find helpful in their practices. They are:

Investment Advice- The bill allows advisors representing 401 (k) plan administrators to provide specific advice to workers pondering their investment options under 401 (k) plans.
Life insurance/Annuity/LTC insurance combinations—The bill removes tax law impediments for insurance companies to make combination policies available and for life insurance and annuity owners to use policy cash values to pay for long-term care needs.
COLI-Clarifies the tax rules governing the business use of life insurance. Adopts industry “best practice” standards.
Investor Owned Life Insurance-dropped a provision to place an excise tax on insurance policies, but instructs the Treasury to conduct a study and return within two years with recommendations to address the issue.

Prior to enactment of the pension bill, the Senate failed to muster enough votes to take up the estate tax “reform” bill also passed by the House last week. The Senate will now join the House in recess until after Labor Day.