Retirement bill would allow tax-free financial planning

Retirement bill would allow tax-free financial planning
Adviser advocates are grateful for attention to the matter, but say the provision needs to be clarified.
MAY 30, 2019
Recently introduced legislation includes tax incentives for financial planning related to retirement. The provision, contained in section 113 of the Retirement Security and Savings Act, would permit employees to use pre-tax dollars through employer-based retirement programs to pay for investment advice regarding qualified plans. It also would allow retirement advice for investments held outside such arrangements. The feature is one of more than four dozen in a bill written by Sens. Robert Portman, R-Ohio, and Ben Cardin, D-Md., that was released earlier this month. The legislation is designed to help people save more for retirement and expand the number of businesses that sponsor plans. The fact that the lawmakers promote financial planning around retirement drew praise from Chris Iacovella, chief executive of the American Securities Association, which represents regional financial services firms. The group highlights such policy in its own retirement security agenda. "It's really good Congress is recognizing how important a sound financial plan is in times of volatility and uncertainty," he said. But it's unclear how broadly the provision would apply and how it defines financial planning services, according to Maureen Thompson, vice president of public policy at the Certified Financial Planner Board of Standards Inc. Regardless, she's happy to see it's been included in an extensive retirement savings bill. "We think it's important that Congress is focusing on the issue of retirement planning and looking at ways it can be more accessible," Ms. Thompson said. "It would be a helpful thing for people saving for retirement." David O'Brien, principal at Evolution Advisers, said he would like to know more about the scope of the planning functions permitted under the bill and whether there are criteria for financial advisers who are hired. "We need to understand what services are eligible and the standard of care under which financial planning must be provided," he said. "Consumers should be able to know that the services will be delivered by a CFP professional and with a fiduciary duty." A spokespeople for Mr. Portman and Mr. Cardin did not respond to requests for comment. The bill was introduced just before another comprehensive retirement savings measure, the SECURE Act, received overwhelming House approval last week. Sens. Charles Grassley, R-Ia., and Ron Wyden, D-Ore., chairman and ranking member, respectively, of the Senate Finance Committee, have introduced the Retirement Enhancement and Savings Act, which closely resembles the SECURE Act, and have expressed a desire to move quickly on the House bill. The Portman-Cardin measure could become part of the effort to move retirement security legislation, according to Mr. Iacovella. "It's a natural complement to those bills," he said. The 417-3 House vote for SECURE "gives the Senate a lot of leeway to include a variety of bipartisan measures that will help working families save for retirement."

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.