Top 5 Washington Wire Stories: Economic Issues Top Agendas

By John Hilton

Perhaps not surprisingly, lawmakers and bureaucrats spent a lot of time in 2020 addressing economic issues designed to limit the damage from the COVID-19 pandemic.

InsuranceNewsNet's most-read Washington Wire stories reflect that economic reality. Tax issues, Social Security and legislation to improve retirement savings dominated our news coverage.

Here are the top five news stories from our nation's capital:

Beware Of The COVID-19 Tax Freight Train

David McKnight, Million Dollar Round Table Top of the Table qualifier and author of The Power Of Zero, gave a May talk on the impact of COVID-19 relief legislation on the federal deficit and what it all means for your clients’ future taxes.

McKnight spoke during an online town hall meeting held by the National Association of Insurance and Financial Advisors.

McKnight specializes in strategies that will get clients into a 0% tax bracket by the time they retire. He shared some tips on how to keep federal taxes from taking a bite out of your clients’ retirement accounts.

The U.S. national debt reached a record high of $24.2 trillion in April, and that’s not taking into account the nearly $2 trillion in federal spending resulting from the CARES Act. That and other COVID-19 stimulus spending that is in the works will lead to higher taxes in the future, McKnight said.

Why? “The government served the dessert before they served the spinach – they promised more than they can deliver,” he said.

Four SECURE Act Options To Protect Your Client’s Retirement Plan

On Dec. 20, 2019, President Donald Trump signed the SECURE Act into law and readers wanted to know what the impact would be for clients.

Short for “Setting Every Community Up for Retirement Enhancement,” the new law has sweeping, long-term implications for beneficiaries of and contributors to retirement accounts.

Under the old rule, when an account holder died, the remaining balance of their retirement account could be distributed in annual installments over the life expectancy of their designated beneficiary.

Alternatively, if a beneficiary was not named, the benefits would have to pass through the estate, and the ultimate beneficiary had to withdraw the benefits within five years of the account holder’s death if the account holder died before they reached age 70 1/2 – the age when required minimum distributions must be taken.

SECURE Act Opens Door For Annuities — Will They Walk Through?

The SECURE Act was one of the biggest pre-COVID-19 storylines, and readers wanted to know what impact the legislation would have on annuity sales.

Ben Norquist of Convergent Retirement Plan Solutions, said that's a definite maybe.

Speaking during a January webinar sponsored by the LIMRA Secure Retirement Institute, Norquist said the fiduciary liabilities for plan sponsors could be a sticking point.

"I don't feel like I have a solid grasp yet on the extent to which the plan sponsor community at the end of the day 5, 10, 15 years from now is going to fully embrace a role that keeps them in a in a fiduciary capacity through retirement," he said. "Obviously some will, and maybe it'll turn the corner where it just becomes the norm."

But first, there will likely be a long evolution phase that includes more simplified products and further clarification of compensation issues in the various distribution channels, Norquist added.

Seniors May Get Tax-Free Life Settlements If House Bill Passes

This March story highlighted bipartisan legislation that would help seniors pay for late-life care through favorable tax changes, according to officials with the Life Insurance Settlement Association.

The trade association was lobbying for the “Senior Health Planning Account Act,” introduced by Rep. Brian Higgins, D-NY, and Rep. Gregory Steube, R-Fla. The bill would allow seniors to sell their life insurance policies – known as a life settlement – and use the proceeds, tax-free, to pay for their health care costs.

“Seniors are the only group of Americans who are not eligible for existing tax programs for contributing their own resources to help pay for health care,” said Michael Freedman, chair of LISA’s Public Policy Council.

The bill was referred to the House Committee on Ways and Means.

Changes To Social Security You Need To Know For 2020

This story focused on Social Security changes for 2020, changes that affect an estimated 61 million people who collect benefits. For many it is the only source of retirement income.

Changes to the Social Security Administration pension program are an annual event and 2020 was no different. Some changes are due to formulas, while others are part of the legislative framework underpinning Social Security.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.