Policy/Legislation
Senate Position on Alternative IRA Investments Still Unclear: The Times News Express reports that though the U.S. House of Representatives has for now dropped Section 138312, a provision in its massive tax and spend bill that would disallow IRA investments, like private equity that require owners to be so-called “accredited investors,” it’s unclear how the Senate will ultimately land on the tax measures and other aspects of the broad package. ADISA urges its members to continue to contact their senators and House members to firmly reject this provision.
Action Still Needed
As mentioned above, we are not yet completely in the clear, and ADISA still encourages you to voice your concern to Congress — especially the Senate — regarding the proposed prohibition of most alternative investments being included in individual retirement accounts (IRAs). Please write to your Members of Congress asking that this IRA provision be kept out of any legislation. We have provided you with a letter template, but your correspondence is much more effective if you customize it with potential impacts on your clients. Please use this form to write to your two U.S. Senators to join our call-to-action. Constituent voices do make a difference! Thank you for your support.
House Passes Massive Tax and Spend Bill: The Wall Street Journal reports that the House passed a $2.2 trillion tax increase, education, healthcare and climate package on Friday morning. The measure was approved on a 220-213 vote, with all Republicans and just one Democrat opposed. The bill goes to the evenly divided Senate where lawmakers are planning to change or pare back some of the bill’s provisions. The nonpartisan Congressional Budget Office found that the bill would contribute $367 billion to the deficit over 10 years. The Wall Street Journal's editorial board reports that The Penn Wharton Budget Model estimates the House bill would cost nearly $4.6 trillion over 10 years if temporary provisions are made permanent, as most will be. The Committee for a Responsible Federal Budget (CRFB) pegs the cost at $4.9 trillion if temporary tax credits and programs are made permanent through 2031.
Senate Consideration of Biden Tax and Spend Bill to Slip: The Hill reports that the Senate's debate over President Biden’s tax increase and social and climate spending bill appears likely to slip after the House failed to send the bill over before the Veterans Day recess. Senate Majority Leader Charles Schumer (D-NY) had hoped to start debate on the Build Back Better Act legislation this week. But in a letter sent to the Senate Democratic Caucus, he said the Senate is "likely" to take up the National Defense Authorization Act (NDAA), a massive defense policy bill, instead. “Timing of consideration of the BBBA in the Senate will largely depend on when the House sends us the bill and when CBO finalizes their scores for all of the committees, which are needed to complete the 'Byrd Bath' process," Schumer wrote. The Senate would need roughly another full week to make sure all the bill’s provisions complied with Senate budget rules. But if the Senate's timing on the tax and spending bill slips past Thanksgiving, it runs into other looming deadlines, including funding the government and increasing the debt limit. Schumer told senators to keep their schedules “flexible” after the Dec. 13 Senate target adjournment date.
Dem Tax and Spend Bill Would Tax Middle Class, Benefit the Rich: The New York Post reports that President Biden’s Build Back Better agenda would raise taxes on up to 30 percent of middle-class families, despite his campaign promises not to hike taxes on anyone making under $400,000 per year, according to a new analysis by the Tax Policy Center. Politico reports that the Tax Policy Center also said that under House Democrats' massive budget reconciliation plan, roughly two-thirds of people who earn more than $1 million would receive a tax cut next year averaging $16,800. Most of the tax cut would be from the change to the annual cap on state and local tax deductions.
Costs Not Paid For, Hurts Growth: The Committee for a Responsible Federal Budget estimates that the latest version of the tax and spend bill includes roughly $2.4 trillion of spending increases and tax cuts through 2031 along with $2.2 trillion of offsets. The result is a roughly $200 billion deficit increase over 10 years. However, the committee says extending temporary provisions in the bill could add another $2 trillion to $2.5 trillion to the total cost. And the Tax Foundation reports that it found that due to the plan’s economically costly and inefficient tax increases, the long-run GDP would drop by a little over $1 for every $1 in new tax revenue.
Tax Foundation Raises Alarm on Biden Tax Plan: The Tax Foundation warns that some of the tax increases in the Biden tax and spending plan may end up hurting private pensions. By relying on measures of income reported on company financial statements, i.e., book income, the proposed corporate alternative minimum tax and the interest expense limitation could fall harder on companies that use mark-to-market accounting for their pension plans. The proposed limitation on business interest expense would also pose problems for pension accounting, the foundation said.
House Ed and Labor Committee Passes Retirement Bill: ThinkAdvisor reports that the House Education and Labor Committee passed the Retirement Improvement and Savings Enhancement, or RISE, Act, bipartisan legislation that creates an online searchable database to locate lost retirement accounts and raises the cap for transferring former employees’ retirement funds to an IRA from $5,000 to $7,000.
House Financial Services Passes Bill to Prohibit BDs, Advisors From Requiring Arbitration: ThinkAdvisor reports that the House Financial Services Committee passed a series of bills late Wednesday regarding pre-dispute mandatory arbitration, protecting seniors and reining in fees paid to sponsors of special-purpose acquisition companies. The Investor Choice Act, H.R. 2620, prohibits broker-dealers and investment advisors from including pre-dispute binding mandatory arbitration clauses in their customer agreements. Also approved was the Empowering States to Protect Seniors from Bad Actors Act, H.R. 5914, which would move responsibility for administering the Senior Investor Protection Grant Program from the Consumer Financial Protection Bureau to the Securities and Exchange Commission.
Regulation
FINRA New Fingerprint Process Starts Dec. 6: ThinkAdvisor reports that the Financial Industry Regulatory Authority’s new fingerprint process for broker-dealers and funding portals kicks in on Dec. 6. Broker-dealers and funding portals must send fingerprints to FINRA’s designated fingerprint provider, Sterling, for processing by the Department of Justice. Sterling will not accept or process fingerprints from broker-dealers and funding portals before that date, FINRA said in a notice. More information about key dates and required tasks is available on FINRA’s Fingerprint Process Change webpage.
SEC Reports Record-Breaking Year for Whistleblowers, Increase in New Enforcement Actions: The DI Wire reports that the Securities and Exchange Commission filed 434 new enforcement actions in fiscal year 2021, which ended on September 30th, a 7 percent increase over the prior year. The agency also reported that its whistleblower program had “a record-breaking year.” The SEC filed 697 total enforcement actions in fiscal year 2021, including the 434 new actions, 120 actions against issuers who were delinquent in making required filings with the SEC, and 143 follow-on administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders. This represented a 3 percent decrease over the total actions filed in fiscal year 2020.
FINRA Changes Continuing Ed Rules: ThinkAdvisor reports that FINRA adopted changes to its continuing education (CE) and registration rules, which include, among other measures, requiring those registered with FINRA to complete continuing education requirements yearly instead of every three years. (See Regulatory Notice 21-41.)
