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May 21, 2006 at 04:00 PM
Congress is working intensely to complete work by its Memorial Day recess on pension benefit reform legislation that contains a number of provisions eagerly sought by the life insurance industry because they will extend product offerings.
But industry lobbyists and congressional staffers say that while conferees made important progress in the week of May 15, final action is unlikely before mid-June or, at the worst, by the July 4 recess.
As to industry priorities, lobbyists and congressional staffers say there is a strong likelihood the final bill will include a provision allowing the addition of a long term care rider to annuities, which would be a huge victory for the industry.
On another critical front, it appears that a provision imposing a punitive tax on investor-owned life insurance (IOLI) faces long odds on being included.
But whether the LTC provision is included and the IOLI provision excluded remains “an open question until the deal is sealed and delivered,” as one lobbyist noted.
Also in contention, and a major sticking point between House and Senate negotiators, is allowing insurance companies and their agents to provide investment advice to beneficiaries of 401(k) programs.
However, Rep. John Boehner, R-Ohio, the House majority leader and a longtime proponent of the bill, said several weeks ago the provision would ultimately be included in the bill in “some form.”
On the positive side, sources said the final bill is likely to contain a provision codifying the tax treatment as well as best sales practices of corporate-owned life insurance.
Another provision being looked on favorably would make permanent increases in IRA and 401(k) contribution limits and catch-up provisions for those over 50 contained in a 2001 tax bill, the source said.
