http://www.youtube.com/watch?v=7MsTOogs6Vw New Biz Law to Ease Annuitization September 26, 2010 Copyright:A.M. Best Company, Inc.Source:BestWire ServicesWordcount:unknownCompanies that deal in annuities are awaiting a presidential signature enacting a small-business bill that includes -- tucked within its pages -- a provision easing partial access to annuities. Now that the U.S. House of Representatives has approved the bill, following the previous week's passage in the Senate, the White House has announced that President Barack Obama would sign it into law on Sept. 27.The legislation, HR 5297, which cleared the Senate 61-38 and the House 237-187, included this small insurance item that reflected an idea that has been around since first proposed by Rep. Earl Pomeroy, D-N.D. The provision would allow owners of nonqualified annuities, which are retail annuities outside retirement plans, to more simply annuitize a segment of their annuity contract, letting the remaining portion grow on a tax-deferred basis (BestWire, Sept. 17, 2010)."It's going to make it a whole lot easier for people to annuitize a portion of their nonqualified annuity contract," said Alane Dent, vice president for federal relations, tax and retirement security at the American Council of Life Insurers. "Any way that we can encourage people to receive lifetime income is a good thing. ... Hopefully we will see more people encouraged to take some of their deferred annuity as a partial annuitization."The current system is too cumbersome, insurers have argued, requiring "a two-fold process," Dent said. "The insurance company has to actually terminate that contract and create two contracts," she said. "It's just an administrative complication."According to Congress' Joint Committee on Taxation, the annuities provision would generate federal revenue of $956 million over 10 years, from 2011 to 2020 (BestWire, Sept. 17, 2010). Dent said the industry had been working with the IRS to clarify these rules within the tax code, but the feds preferred a clear "legislative route."Also in September, annuities were the subject of attention from federal agencies. The U.S. Department of Labor held a hearing at which insurers argued the positives of wider annuity use in Americans' retirement accounts. The agency, in conjunction with the Department of the Treasury, has been examining the potential benefits of greater annuity use, and though the agencies had already received written comments from the industry, the hearing was a chance to deliver direct testimony (BestWire, Sept. 15, 2010).(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)
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