You’ve heard about the effort in Washington to update federal tax rules and ThinkAdvisor, an online resource for investment news and tools for financial advisers, reports there are seven ways the tax fight could hit annuities. According to ThinkAdvisor, federal tax rule changes could lead to richer consumers and in turn, put consumers in a better position to prepare for retirement income and long-term care. ThinkAdvisor Insurance Editor Allison Bell adds the efforts could encourage consumers to take out cash they have saved for retirement and spend it on things or services that may eventually harm their retirement plans. Now, here’s the list of seven ways the effort to change federal tax rules could affect the annuity community.
1. The uncertainty could increase the already high uncertainty level.
2. The tax fight could revive old efforts to tax annuity contract value while it's growing, or tax distributions from life insurance policies used in retirement planning.
3. The tax fight could disrupt Medicaid planning strategies.
4. The tax fight could, eventually, replace the current menagerie of savings programs with a few simple savings programs.
5. The tax fight could disrupt charitable-giving strategies.
6. The tax fight could lead to upheaval in group health.
7. The tax fight could change complicated tax provisions that have helped life insurers weather regulatory uncertainty and low interest rates.