Retirement and tax-related changes as well as fiduciary-related standards from the Securities and Exchange Commission and the Labor Department are expected to top advisors’ and broker-dealers’ regulatory to-do lists in 2019.
While the House passed late on Dec. 20 a retirement and tax package, priming 2019 for much debate — and potentially big changes — for industry officials to digest in the new year, Senate passage of the measure is unlikely.
House Ways and Means Chairman Kevin Brady’s 257-page package includes the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018.
Brady, R-Texas, said in a statement after House passage that the bill includes tax relief for Americans hit by natural disasters, permanent solutions to two temporary tax policies, retirement and savings provisions, “relief” from multiple Obamacare taxes, bipartisan IRS reform, and “a few minor time-sensitive technical corrections” to the tax overhaul passed in 2017.
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The bill includes a host of retirement-planning related provisions, like use of 529 savings accounts to cover homeschooling costs as well as allowing an unborn child to be designated as a beneficiary, as well as provisions of the Retirement Enhancement and Savings Act (RESA).
It also includes provisions on multiple employer plans; pooled employer plans; rules relating to election of safe harbor 401(k) status; certain taxable non-tuition fellowship and stipend payments treated as compensation for IRA purposes; and repeal of maximum age for traditional IRA contributions.
Coming regulations advisors should brace for include an almost certain advice-standards rulemaking by the SEC in 2019, said Karen Barr, president and CEO of the Investment Adviser Association.
“Because advisors are already fiduciaries, the only major change they will have to make is to develop the new short-form disclosure [Form CRS] as well as analyze the final Advisers Act interpretation to ensure continued compliance,” Barr told ThinkAdvisor in mid-December.
Duane Thompson, senior policy analyst at Fi360, a fiduciary education, training and technology company, added that advisors and BDs may see “some surprises in the IA guidance for fiduciaries” coming out of the SEC advice rules, and “possibly some changes to the testimonial and solicitor rules later in the year.”
As for a Labor Department fiduciary rule, Thompson expects Labor “to pass a ‘fiduciary-lite’ rule comprising safe harbors for certain advisory activities after the SEC adopts Regulation Best Interest.”