Industry Lauds New Tax Bill

Revised legislation designed to revive expired tax cuts includes a provision, long sought by the life insurance industry, that would simplify the rules dealing with partial withdrawal of funds contained in an annuity contract.

The legislation would benefit both annuity owners and the IRS, said Thomas Currey, president of the National Association of Insurance and Financial Advisers.

A spokesman for the American Council of Life Insurers (ACLI) agreed.

“ACLI supports partial annuitization of nonqualified annuity contracts,” said Whit Cornman, the spokesman. “We appreciate the work of Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Kerry, D-Mass., for their work on this provision.”

The bill is H.R. 5297, the Small Business Jobs Act.

According to Currey, this is not the same proposal as the so called “paycheck for life” proposals for which the industry has also sought support over the last several years. NAIFA supports that, too, Currey said.

The changes were made to win Republican support for the legislation, which has been bogged down as Republicans remain united in opposition to any legislation that would add to the budget deficit.

Sen. Mitch McConnell, R-Ken., the Senate minority leader, has indicated that Republicans will seek to block the bill, according to congressional staffers.

The revised bill also includes two other provisions helpful to the industry. One would allow self-employed people to deduct their health insurance premiums. But NAIFA officials voiced concern that this would be only a one-year change and would not be made permanent under the provision.

Another would allow individuals with traditional 401(k), 403(b) and 457 retirement plans to roll over their accounts to Roth versions of the same programs.