Once a president signs legislation like the Secure Act, 5 big obstacles to turning words into reality remain...

1. The Internal Revenue Service and other agencies will have to write the regulations

Regulation writers must reconcile new laws with the old laws and regulations.

(Photo: Allison Bell/ALM)

2. Draft regulations will have to go through public comment periods.

The commenting process takes time, and it may change how new laws really work.

(Credit: Wikimedia Commons)

3. Critics of the law or the regulations could sue someone.

Even if the plaintiffs are unsuccessful, litigation could slow implementation of a new law.

4. The November 2020 general elections could change everything.

If someone other than Donald Trump is president in January 2021, or Democrats end up with control over both the House and the Senate, the Secure Act implementation climate could get colder.

(Photo: Bridget Bennett/Bloomberg)

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5. The market could reject it.

Even if Secure Act retirement implementation goes smoothly, companies will still have to figure out how to use the new rules to create viable products.

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President Donald Trump has said he’ll sign the Further Consolidated Appropriations Act, 2020 (FCAA 2020) bill today.

The spending bill will give the federal government the spending capacity it needs to keep from shutting down.

(Related: 7 Possible Obstacles to Secure Act Bliss)

For life, health and annuity professionals, and their clients, provisions built into the package will also:

  • Acknowledge that Congress was never going to let the 40% Affordable Care Act Cadillac plan tax on high-cost heath benefits packages take effect, and permanently repeal the tax.
  • Acknowledge that Congress hated the ACA health insurer tax, and permanently repeal that.
  • Make the “Setting Every Community Up for Retirement Enhancement Act of 2019″ (Secure Act) bill law.

For financial professionals, the implications are that the Secure Act could make the small-group retirement plan market much more attractive, by adding tax credits that sharply reduce what small employers have to pay to set up and administer retirement plans.

(Related: 7 (Polite) Life and Annuity Player Whoops of Joy for the Return of the Secure Act)

The act could also make it easier to build income annuity options into 401(k) plans and other defined contribution retirement plans.

Jubilations

Life insurers, life insurer groups and financial professional groups have spent a huge amount of time and money supporting the Secure Act over the past year, and the FCAA 2020 signing day is also giving them a chance to celebrate the fact that they were able to get major legislation through Congress, in the face of blistering partisanship in Washington.

Here are some of the players’ reactions.

Dennis Glass, president of Lincoln Financial Group

“The Secure Act provisions included in the appropriations legislation clears the way for employers to offer lifetime income benefit options to their employees and helps retirement savers ensure they do not outlive their savings. In addition to the lifetime income enhancements, it will also make it easier for small businesses to band together and provide retirement plans for their employees, which will allow hundreds of thousands of workers to start saving for retirement.

“Lincoln congratulates the broad array of stakeholders in both houses of Congress and the administration who have worked tirelessly to make this common-sense legislation a reality and bring American workers closer to the retirement they envision.”

Prudential Financial Inc.

“Prudential commends Congress for enacting this important, bipartisan legislation. The Secure Act contains the most significant legislative enhancements to the private-sector retirement system in over a decade and will improve the retirement readiness of millions of Americans. Prudential has long advocated for the Secure Act, which will meaningfully help the customers we serve each and every day.”

Kevin Mayeux, chief executive officer of the National Association of Insurance and Financial Advisors

“The big winners with the enactment of the Secure Act will be American small businesses and especially workers preparing for retirement. Secure gives more workers the opportunity to prepare for retirement and gives all retirement savers greater flexibility to create plans meeting their individual needs.”

“Secue has been a top priority for NAIFA. Our advocacy team, including NAIFA’s grassroots network of agents and advisors around the country, has worked in support of the Secure Act since it was first introduced. NAIFA is particularly grateful to Rep. Richard Neal (D-Mass.), chair of the House Ways and Means Committee, Sen. Chuck Grassley (R-Iowa, chair of the Senate Finance Committee, and the almost 160 members of Congress who were sponsors or co-sponsors of this important legislation.

“The Secure Act was a focus when nearly 600 NAIFA members had meetings in the offices of their lawmakers on Capitol Hill as part of NAIFA’s Congressional Conference in May. The House of Representatives overwhelming passed the Secure Act just days after the NAIFA Day on the Hill.”

Marc Cadin, president of the Association for Advanced Life Underwriting

“Amidst historic acrimony, helping Americans save for retirement brought the bipartisan spirit in Congress we have needed — just in time for the holidays. The Secure Act is a huge win for American workers and their financial futures….

“We would like to thank [House Ways and Means] Chairman [Richard] Neal, Ranking Member Kevin Brady, [Senate Finance] Chairman Charles Grassley, Ranking Member Ron Wyden and every member of the House and Senate who saw this bill through to the finish line, as well as our industry partners for their concerted effort toward advocating for this legislation.”

Wayne Chopus, president of the Insured Retirement Institute

“Our optimism that the Secure Act would pass this year never wavered. We continued to work tirelessly to pass this common-sense solution to help expand opportunities for Americans to save for a secure and dignified retirement. At long last, this is now a reality….

“Longer lifespans mean workers will have more years in retirement and will need a retirement financial plan that ensures they won’t outlive their savings. Greater access to lifetime income products within workplace retirement plans can provide monthly income for the life of a retiree.”

Linda K. Stone, senior pension fellow at the American Academy of Actuaries

“The Secure Act represents an important inflection point for how lifetime income options can be made available and managed in the defined-contribution context. The American Academy of Actuaries supports the expansion of options to provide lifetime income for participants in defined-contribution plans who need tools to help them make their money last for their lifetime.

“Longevity risk is one of the biggest challenges in retirement. Life expectancies have generally been increasing and a 65-year-old man today is expected to live until age 83 and a 65-year-old woman is expected to live until 86. However, the risk for one individual living longer than expected is significant. Lifetime income options also decrease investment risk for retirees.

“The Secure Act may encourage more employers to include lifetime income options in their plans which reflect actuarial principles such as longevity risk pooling and institutional pricing in a cost-effective manner beyond what may be available to an individual. More predictable income can help retirees manage their financial security in retirement. With only 55% of workers participating in a workplace retirement plan, the provisions to expand access to these plans through open MEPs [multiple employer plans] and coverage for part-time workers may enhance retirement security for many Americans.”

— Read Health Coverage May Get $348B Spending Bill Booston ThinkAdvisor.

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