'Less pressure' on changes to defined contribution plans under tax reform: Graff

Brian Graff, executive director of the National Association of Plan Advisors, predicts the Trump administration will favor tax changes that will be well liked.
JUN 26, 2017

The state of political affairs in Washington is making it less likely that there will be major changes to the treatment of defined contribution plans under any upcoming tax-reform legislation, an executive with the largest association for retirement plan advisers said Sunday evening. "The White House has told me, has told a lot of people, that at least from the Trump administration's standpoint, anything in tax reform should not be a significant change in tax policy," said Brian Graff, executive director of the National Association of Plan Advisors. "What they're doing is saying, 'We don't want to rock the boat … We want to do tax reform if everyone likes it.'" This points to an increasing likelihood that any change to the tax code will take the form of a temporary, "unpaid-for individual tax cut" rather than a permanent reform, said Mr. Graff, who spoke at the annual Kohler Retirement Plan Advisor Best Practices Conference in Kohler, Wis. (More: Tax reform could be 'way worse' for retirement industry than Department of Labor's fiduciary rule: Graff) Paul Ryan, speaker of the House of Representatives, cited retirement savings incentives as one of the items that Republicans would seek to preserve during a tax-reform exercise. Since DC plans represent one of the federal government's largest tax expenditures, industry stakeholders have feared some of the existing savings incentives for plan participants would be amended to pay for proposed tax cuts. However, some of the more extreme changes being floated, such as increased reliance on Roth contributions, "are significantly less likely and continue to be significantly less likely … if it's going to be politically negative [for Republicans]," said Mr. Graff, who's also the CEO of the American Retirement Association, the umbrella organization for NAPA and other retirement industry trade groups. "The good news is this takes a lot of the pressure off us," he said. "I don't want to say we've won and it's over, but I do want to say that practically, there is less pressure because of the way things are going. Of course, that could be subject to change." Mr. Graff still is a "little bit nervous" at the prospect of DC plans being used as a revenue-raiser for a tax cut on the corporate side. After the election of Donald J. Trump as president in November, Republicans began outlining an ambitious agenda of health care and tax reform as two top-priority legislative items. However, health care and the ongoing investigation of the potential ties between Russian officials and the Trump administration are holding up all other activities on Capitol Hill, Mr. Graff said. (More: Planning Roth conversions during tax reform uncertainty) And, if the new health care bill introduced in the Senate goes to conference, meaning it is reconciled with the House of Representatives' version of the Obamacare replacement bill, it could take up most of the summer, meaning tax reform likely wouldn't happen until the fall and would extend into next year, Mr. Graff said. "Time is compressing," Mr. Graff said. "Something as significant as tax reform is being subsumed by all these other things."

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

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.