Background

The U.S. Joint Select Committee on Deficit Reduction, a group of 12 Senators and Representatives better known as the "Super Committee," has until November 23 to report a bipartisan, bicameral proposal to reduce the national deficit by $1.2 trillion. The Super Committee proposal will then receive an up-or-down vote from Congress before Christmas, with no amendments allowed.

Tax expenditures - "special" tax rules that benefit many forms of savings, investment, and insurance, among other things - have been heavily discussed as a possible source for raising revenue to reduce the deficit. Employer-provided retirement plans are considered the second largest tax expenditure under the federal income tax, narrowly trailing employer-provided health insurance.

To counter this move by the Super Committee, U.S. Representatives Jim Gerlach (R-PA) and Richard Neal (D-MA) are introducing a Concurrent Resolution to give all Members of the U.S. House of Representatives the opportunity to voice official support for preserving employer-provided retirement savings tax rules.

Read the current draft of the Concurrent Resolution here.

Before November 23 - Email Your Member of Congress!

• Click here to contact U.S. Rep. Jeb Hensarling (R-Dallas) who is a Co-Chair of the Super Committee. 
• Click here for a list of all other U.S. Representatives from Texas and their email addresses.

Ask your Representative to sign on as an original co-sponsor of the Gerlach-Neal Resolution that gives all members of the U.S. House of Representatives the opportunity to voice official support for employer-provided retirement savings tax rules.

Tell your Representative that it is critical that members of the Super Committee, as well as the tax-writing regular committees, understand that reducing incentives for employer-based retirement savings is the wrong way to go about closing the budget deficit. Employer-based retirement plans are the biggest success story for national savings in a sea of public and private debt.

Email Nancy Cates at the NAIFA-Texas office after emailing your Congressman. NAIFA-Texas will keep count of emails from Texas about this important issue. 

TDI Commissioner Eleanor Kitzman (center in red) flanked by: (left to right) NAIFA-Texas Board Trustee Lane Boozer, Secretary/Treasurer Joey Ussery, President-Elect Doug Massey, President Stephen Ehlers, National Committeeman Ron Mullen, Trustee Jason Talley, NAIFA-Texas PAC Board member Robin Johnston and NAIFA-Texas CEO/Chief Financial Officer Des Taylor.

The relationship between NAIFA-Texas and the Texas Department of Insurance (TDI) strengthened this month during two separate meetings. NAIFA-Texas Board and PAC Board members met with newly appointed TDI Commissioner Eleanor Kitzman to introduce NAIFA-Texas and its mission of advocacy for positive legislation/regulation, enhancement of business/professional skills and ethical conduct of its agent members.

On a separate occasion, Des Taylor, NAIFA-Texas CEO/Chief Legislative Officer, along with the American Council of Life Insurers and Texas Association of Life & Health Insurers, met with TDI legal, licensing, and CE staffers regarding the impact of Texas House Bill 2277 (passed in the 2011 82nd Texas Legislative Session) on agent training and CE requirements.  TDI clarified the following:

• Annuity product specific training referenced in the 2011 Texas House Bill 2277 is unrelated to the 20-year continuously licensed "longevity" exemption which is a separate provision in the law.  The longevity statute remains intact.
• Companies will perform the 4-hour annuity specific training for their agents - grandfathered or not - who sell or intend to sell the company's annuities.  It is not a requirement for licensure. Additionally, non grandfathered agents selling annuities will be required, under HB 2277, to have 8 hours of annuity CE completed during their two-year license period.

The Texas Department of Insurance (TDI) issued Commissioner's Bulletin NO. B-0042-11 to remind companies, agents, subcontractors and consumers that the marketing of Medicare Advantage, Medicare Advantage Prescription Drug Plans, Prescription Drug Plans and 1876 Cost Plans, is subject to the Medicare Marketing Guidelines established by the Centers for Medicare & Medicaid Services (CMS).

Any company marketing these products must ensure that its agents and subcontractors are in full compliance with the rules, the Guidelines, transmittals and other CMS requirements.   Click here for an electronic copy of the current Guidelines.

Specific questions may be addressed to: Audrey Selden, 512-475-1760 or Audrey.Selden@tdi.state.tx.us.

According to the most recent IFAPAC report, dated September 30, 2011, NAIFA-Texas is NUMBER ONE in the amount of PAC contributions collected, $139,875.  Additionally, Texas is NUMBER ONE in the number of PAC contributors at 546. Given that Texas is not the largest association in terms of membership (2975 members, compared to #1 California's 3,134 and #2 New York's 3,123), these numbers speak to Texans' higher level of commitment to the PAC.

NAIFA-Texas is at 80% of its year-end goal for PAC Contributions.  That means two months to collect $25,000.  Even if only 1 in 4 current non-contributors pledged a mere $1/week, the $25,000 goal would be surpassed.   

Are you willing to stand up and be that 1 in 4?    Contribute today.

Now is the most critical time for agents with the legislative season in Congress about to become the most threatening ever over the last 80 years.    

Alan Kifer, NAIFA-Texas Trustee

"Please don't think that new leadership in the White House after next year's election will protect us from further continuous Congressional or Executive Agency attacks on our industry's tax expenditures of life insurance and annuities. In fact, they won't wait till next year - it's coming soon in Deficit Reduction Plan proposals for us all," said Alan Kifer, NAIFA-Texas Trustee and Capitol PAC Contributor ($5000+/year).

"We must honor the integrity of what we do to preserve every American family's right to be secure in their financial future. That takes a voice and a seat at the table. That = $$.  And, I assure each and every one of you that if we don't have a seat at the table, we will for certain be 'on the menu!'"

Accept this plea for "all hands on deck."  If we don't execute a strong game-plan now, we are going to pay - Americans will pay - a dear price later. Contribute today.

After five years and as required by law, the Department of Labor (DOL) has issued a new final regulation that defines the portion of the Pension Protection Act of 2006 intended to make it easier for advisers to provide ongoing retirement planning advice to 401(k) and IRA investors.  The regulation becomes effective on December 27, 2011.

This regulation is a new exemption, which means that it does not prohibit anything that was previously authorized.  Instead, it defines new business opportunities that may be available if all the regulation's terms and conditions are followed.  However, this regulation also provides a glimpse of the types of regulations that would necessarily follow if advisers who are not currently fiduciaries under ERISA were to get pulled inside that net by the DOL's separate initiative to redefine "fiduciary."

Overview of the Final Investment Advice Regulation

The statutory exemption allows fiduciary investment advisers to receive compensation from investment vehicles they recommend if either (1) the investment advice they provide is based on a computer model certified as unbiased and as applying generally accepted investment theories, or (2) the adviser is compensated on a "level-fee" basis (i.e., fees do not vary based on investments selected by the participant).  The final regulation provides detailed guidance to advisers on compliance with these conditions.

The regulation also shows advisers how to comply with other conditions and safeguards in the statutory exemption, including:

• Requiring that a plan fiduciary (independent of the investment adviser or its affiliates) authorize the advice arrangement.
• Imposing recordkeeping requirements for investment advisers relying on the exemption.
• Requiring that computer models must be certified in advance as unbiased and meeting the exemption's requirements by an independent expert.
• Establishing qualifications and a selection process for the investment expert who must perform the above certification.
• Clarifying that the level-fee requirement does not permit investment advisers (including their employees) to receive compensation from any party (including affiliates) that vary on the basis of the investments participants select.
• Establishing an annual audit of both computer model and level-fee advice arrangements, including the requirement that the auditor be independent from the investment advice provider.
• Requiring disclosures by advisers to plan participants.

On October 24th the Texas Supreme Court heard arguments that the state margins (also known as the franchise) tax violates the Texas Constitution.  An insurance adjustment firm claims that the margins tax is unconstitutional because the Legislature is required to get voter approval before imposing an income tax.

Because the partners' net income was reduced due to the margins tax, the insurance adjustment firm says it is an income tax. The Texas Constitution prohibits the Legislature from imposing "a tax on the net incomes of natural persons, including a person's share of partnership ... income," unless voters approve the tax. The Texas Supreme Court will have to resolve several issues to determine if the margins tax violates that constitutional provision.

The margins tax is a major source of funding for public education.  For this reason, the Texas Legislature wrote into the 2006 law that any legal challenge to the margins tax would go straight to the Supreme Court so that it could be resolved quickly.

Texas' margins tax was revamped when the Supreme Court ruled the state's school finance system unconstitutional in 2005.  In response, local property tax rates were reduced by one-third and the state franchise (margins) tax was revamped to make up the difference.

Texas Speaker of the House Joe Straus

Texas Speaker of the House Joe Straus recently released his 82nd Legislature interim committee charges.  These initial charges, with more to follow for 33 House committees, and the subsequent recommendations, will provide a blueprint for legislation to be considered during the 83rd Regular Session of the Texas Legislature in 2013.

The Texas House Insurance Committee was given 3 charges of interest to NAIFA-Texas members:

1. Study whether Texas would benefit from allowing purchases of health insurance coverage across state lines.  Examine the options available to facilitate such purchases, and include consideration of how to guarantee appropriate consumer protections.
2. Monitor implementation of the federal Patient Protection and Affordable Care Act, including any changes that may result from ongoing litigation or legislative modification or repeal.  The Insurance Committee with work with the House Committee on Public Health on this issue.
3. Monitor the agencies and programs under the committee's jurisdiction including the implementation of House Bill 3 regarding the Texas Windstorm Insurance Association.

NAIFA-Texas will monitor the interim hearings for any potential recommendations or legislation that could affect agents.

Juli McNeely NAIFA-Trustee

The NAIFA-Texas Board of Trustees met in Austin October 17-18 for its regular fall meeting.  NAIFA-Trustee Juli McNeely, LUTCF, CFP, CLU. McNeely who serves as liaison to NAIFA-Texas reported on national issues.

The NAIFA-Texas Board agenda included:

• 2010-2011 Fiscal Year Review from accountant John Cantwell who reported that NAIFA-Texas and NAIFA-Texas PAC are both financially sound. Eighty-three cents of every membership dollar is used for member benefits.
• Reports from state trustees and local presidents that included advocacy, membership and programs.
• 2012 NAIFA-TX Career Conference schedule which will include local leadership training and a trade exhibition.
• Feasibility of establishing a state-run at-large association in Texas.
• Success of NAIFA's Day on the Hill where 1,000 NAIFA members successfully advocated for the Department of Labor to withdraw and redefine "fiduciary" for advice given to retirement plan participants.
• Approval of Carolyn Watson of Abilene as 2012 NAIFA-Texas PAC Chair and Larry Ynman of San Antonio as a 2012 Regional Vice-Chair.

The Leadership in Life Institute (LILI) selection committee has announced the selection of the 2012 class of candidates. Nine students, selected from applicants across the state, will take part in the Institute, which is slated to begin in Austin on February 6, 2012. LILI is a six-month leadership development course offered exclusively to NAIFA members. The curriculum includes creating a business plan, exploring tools to improve your practice and techniques to enhance interpersonal relationships. The LILI curriculum is based on the leadership writings of Stephen Covey, John Maxwell, Jim Collins, and Kouzes & Posner. The following nine (9) candidates were selected:

• Lauren P. Hayden of NAIFA-Dallas
• Beverly A. Norman of NAIFA-Dallas
• Glenda R. Brooks of NAIFA-Greater East Texas
• Steven D. Aycock, CFP of NAIFA-Austin
• Luis A. Estrada of NAIFA-Austin
• Keith D. Reed of NAIFA-Waco
• Angela M. Lamb of NAIFA-Fort Worth
• Khalid Alrashed of NAIFA-Houston
• Alan C. Kifer, MSFS, CFP, RFC, LUTCF of NAIFA-Houston

Stephen Ehlers, NAIFA-Texas President, and Cylinda Clark, Immediate Past President, were dressed for the occasion last year.

NAIFA-Austin and NAIFA-Texas are gearing up for their annual Holiday Gala, slated for December 1, 4:30-6:30 pm, in the NAIFA-Texas offices located at 515 Congress Avenue, Suite 1650 in Austin. 

This is a good time for NAIFA-Texas members who have never visited the state offices to come by for a tour and some good conversation and refreshments.

A silent auction will be held during the party to benefit NAIFA-Austin.  Last year, items included a wonderful selection of wines, gift baskets, and Longhorn-themed glassware.  Almost everyone took home something  special.

NAIFA-Austin will send out registration details for this year's event later this month.