National Association of Insurance and Financial Advisors

NAIFA Advocacy Staves Off Potentially Harmful Tax Reform Proposals

Register for NAIFA's Jan. 5 Webinar on Tax Reform

The Tax Cuts and Jobs Act, signed into law by the president just before Christmas, is a sweeping overhaul of the federal income tax law. NAIFA advocacy went into high gear as the bill was being written and negotiated in Congress. As the leading voice for advisors and the insurance and financial services industry on Capitol Hill, NAIFA emphasized that public policy must continue to encourage Americans to plan ahead, protect their families’ financial security, and adequately save for retirement.  Well prepared families will have adequate retirement savings accounts, life insurance, medical insurance, and guaranteed income annuities to supplement social security benefits. 
While members of Congress and interest groups proposed and advocated a number of measures that could have made it more difficult or more expensive for families to plan for their long-term financial needs, none of these are included in the final bill.
 Significant provisions that would have directly impacted NAIFA members and their clients that are NOT in the final bill include:
  • There are NO changes to how life insurance and annuity products are taxed!
  • If you encourage businesses and individuals to save for retirement, the bill does not limit the amount of pre-tax contributions to retirement plans or Individual Retirement Accounts (IRAs).
  • If you work with long-term care clients and prospects, or those with large health expenditures, the bill does not repeal the medical expense deduction and lowers the threshold for two years from 10% of AGI to 7.5% of AGI.
  • If you help employers offering workplace benefits, the bill does not limit the tax treatment of employer-sponsored benefits.
  • If you offer other employee benefits, the bill does not change current tax rules for non-qualified deferred compensation or corporate owned life insurance.
  • If you advise high net worth individuals, the estate tax is not repealed (although the exemption amount is doubled), charitable donations deductions are unchanged, and the top individual rate is lowered from 39.6% to 37%.
  • If you offer securities, the bill does not include the first in first out (FIFO rule) provision.
  • If you offer casualty insurance products, the final bill limitations are different from current law but preserve deductions for losses if a disaster is declared by the President.
NAIFA will continue to work on behalf of advisors and their clients as congressional tax-writing committees work on “technical corrections” for the legislation. We are also dedicated to keeping members informed on longer-range impacts of the law.
On January 5, NAIFA is sponsoring a members-only Webinar providing advisor-specific information and analysis of the tax reform measure. More information and registration is available on the NAIFA website
  • Posted December 29, 2017 IN

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