Pub. 6 2016-2017 Issue 5

16 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S Any effort to expand the role of HSAs in healthcare will be well-received by the Republican controlled House and Senate, who want to provide a more decentralized approach to healthcare, and by individuals and businesses seeking to lower their health insurance costs. DOL Fiduciary Rule There has been a great deal of speculation as to what the election of Donald Trump means for the DOL’s fiduciary rule. While Former Secretary of State Hillary Clinton supported the DOL’s fiduciary rule, writing in a New York Times op-ed that the rule is a “common-sense effort to prevent conflicts of interest” by financial managers, President-elect Trump has not taken a formal position on the fiduciary rule, although an adviser to the president-elect has stated that the rule should be scuttled. That is easier said than done, given that the initial appli- cability date of the rule is April 10, 2017, less than 90 days after President-elect Trump takes office. The president-elect has a number of options available, including issuing an executive order that states that the guidance will not be enforced, or delaying or suspending the effective dates of the regulation. Congress also could enact legislation that would overturn the DOL’s fiduciary rule, but it is unclear if Republicans could garner enough Democratic support to meet the Senate’s 60-vote threshold to bring the bill to a final vote. The DOL also could issue new regulations which would replace the current DOL fiduciary rule, just as the Obama administration replaced the fiduciary rules issued in 1975. That however, would be a time-consuming process, given the amount of time required for Senate confirmation of key DOL appointees. And, once the new administration’s appointees are in place, replacing the rule would require issuance of proposed regulations, a public comment period, and a review of the regulations by the Office of Management and Budget, prior to release of the final regulations. It is almost certain that the fiduciary rule would be in place for some time before it would be replaced by a new regulation. And, while the Trump administration could choose to not enforce the rule, it would not be able to exempt financial or- ganizations using the best interest contract exemption from exposure to breach of contract and class-action lawsuits. Comprehensive Tax Reform One the campaign trail, both Hillary Clinton and Donald Trump spoke of the need for tax reform. Now, withRepublicans in control of both the White House and Congress, chances for comprehensive tax reform have risen dramatically. In a post-election interview reported in The Wall Street Journal, HouseWays andMeans Committee Chairman Kevin Brady (R-TX) indicated that amajor tax rewrite is a top agenda item for next year, noting that House Republican staffers are already writing parts on the plan. President-elect Trump’s tax plan is very similar to the tax reform blueprint that House Republicans introduced in June, in that both plans would lower individual and business tax rates. And, while Donald Trump’s plan proposed limiting the value of certain itemized deductions and exclusions—including the value of theexclusionforemployeecontributions todefinedcontribution plans and IRAs—changes to retirement savings incentives also are part of the House Republican plan. Both plans are shy on specifics, but the House Republican blueprint would “continue the current tax incentives for savings” while the Ways and Means Committee works to consolidate and reformthemultipledifferent retirement savings provisions in the current tax code toprovide for effectiveandefficient incentives for savings and investment. This couldresult insignificant changes to employer-sponsored retirement plans if Congress decides to sim- plify the plans by adopting one set of rules to cover all plan types. The blueprint also calls for the creation of a more general savings vehicle—such as Universal Savings Accounts—to which individuals couldcontribute, andwhichwouldallowwithdrawals of contributions and earnings at any time, for any reason, with- out penalty. Creation of these new savings accounts with their greater flexibility for penalty-freewithdrawals would likely have a significant impact on IRAs. Once the new Congress convenes in January, the presi- dent-elect is sworn in, and the new administration’s political appointees are in place, we will have a clearer picture of how a Trump presidency will affect retirement policy. Stay tuned. n DennisZuehlke isComplianceManagerforAscensus inMiddleton,Wisconsin.Mr.Zuehlke provides clients with technical support on tax-advantaged accounts (including individual retirement accounts, health savings accounts, simplified employee pension plans, and Coverdell education savings accounts), and information reporting and tax withholding issues. He is a frequent national speaker on compliance-related issues and retirement savings trends within the financial services industry. Mr. Zuehlke attended Marquette University and graduated from the University of Wisconsin. Prior to joining Ascensus, he held a similar position with the Credit Union National Association. Ascensus is the largest independentretirementandcollegesavingsservicesprovider intheUnitedStates,helping over 7 million Americans save for the future. With more than 35 years of experience, the firm partners with financial institutions to offer tailored solutions that meet the needs of financialprofessionals,employers,andindividuals.Ascensusspecializesinrecordkeeping, administrative, and programmanagement services, supporting over 40,000 retirement plansandover3.8million529collegesavingsaccounts.Italsoadministersmorethan1.6 millionIRAsandhealthsavingsaccountsandishometooneofthelargestERISAconsulting teams in the country. For more information about Ascensus, visit www.ascensus.com . While Donald Trump’s plan proposed limiting the value of certain itemized deductions and exclusions—including the value of the exclusion for employee contributions to defined contribution plans and IRAs—changes to retirement savings incentives also are part of the House Republican plan.