Graff: A ‘Changed Landscape’ in Washington
Elections, it is said, have consequences. And the retirement industry is among those for whom the results that became clear in the early hours of Nov. 9 signals that change is on the horizon. In the Nov. 15 ASPPA webcast, “What the Election Means to the Retirement Industry,” Brian Graff, CEO of the American Retirement Association and Executive Director of ASPPA, offered his insights on what the industry can expect.
“I think the landscape has changed dramatically since before Tuesday of last week,” said Graff. Some effects are indeterminate, but others are imminent and well-defined.
Whither the DOL’s Fiduciary Rule?
The fate of the DOL fiduciary rule is unclear. Graff noted that the Trump team has not made a decision on the rule. “I don’t care what you’ve read, no one knows what’s going on with this thing,” he said.
Graff told listeners that the rule is “not on the current list for immediate action” and that no decision is likely to be made until a Secretary of Labor is named, “and even then not likely before confirmation,” since that would risk a Senate filibuster on the confirmation of the prospective DOL Secretary.Tax Reform Likely
Graff cited the expectation he voiced at the ASPPA Annual Conference in October
— that in the event that the Republicans won the White House and stayed in control of the House and Senate, the prospects for tax reform would increase. Now that that has come to pass, he said that cutting tax rates is a “signature part of [President-elect Trump’s] agenda” and that it is one of the GOP’s core issues. “I think that what they want to do is rewrite the tax code,” said Graff, noting that the overarching theme is simplification and reducing taxes.
Graff warned that tax reform is “fraught with peril” and that retirement plans now face “a very scary prospect.” His concerns generally center on the limits and tax expenditures involved with pre-tax deferrals, as well as on other changes in the tax code that could have an impact on plan formation.
Noting that the GOP retained control of the House of Representatives but lost some ground in the Senate, with two fewer seats in the next Congress, Graff said that Republicans “don’t have a foolproof majority.” Republican-backed legislation “will sail through the House,” but that may not be the case in the Senate, he believes, since Republicans will lack a large enough majority to avoid a cloture motion in order to end debate on a measure and proceed quickly to a vote.What’s Next?
Regarding the DOL fiduciary rule, Graff said that the American Retirement Association has acted quickly. “Believe me,” he said, “the message has been conveyed” regarding the need for clarity and some indication of what the coming administration plans.
As for individuals, plan sponsors and service providers, given the current uncertainty about whether the rule will be uprooted, modified or kept as is, Graff said, for now “the most prudent thing is to keep going forward” on preparing for implementation of the rule.
And regarding tax reform, Graff said “it’s going to be a brutal battle over the next 6-12 months. The likelihood of them pursuing tax reform is very high.” As a result, said Graff, “we have our work cut out for us,” adding that the American Retirement Association is “working very hard” on a strategy for what he expects to be a very tough debate.
“Stay involved. Don’t just be passive,” exhorted Graff, adding that, “it’s important that everyone participate in the process. It’s either going to happen to you or happen with you.”
The Nov. 15 webcast is now available on demand; for more information, click here