401k Funeral at NAPA Summit?

' Hybrid' HSAs might be the answer

401k plan, HSAs, TrumpWhat happens now? Who knows, according to ARA's Brian Graff.

This post has been updated to more accurately reflect quotes made by ARA CEO Brian Graff about the tax implications of health savings accounts.

“Back in D.C., things are cray-cray right now,” Brian Graff said to laughter. “I came to Vegas for a little piece and quiet.”

The chief executive officer of the American Retirement Association kicked off the National Association of Plan Advisors’ 2017 401k Summit in Las Vegas on Sunday afternoon. The well-known 401k industry advocacy wonk was decidedly dour on the state of the industry, at least when it came to politics.

“I have generalized anxiety that isn’t from getting up here and speaking, but just from what’s going on and how it will affect the industry and people I care about,” Graff lamented. “We’re going to talk about what’s happening, but anything I say at this point is educational, rampant speculation.”

Claiming he has never seen change move as fast as it is now in his 25 years in politics and policy, he added, “you’re either going to cry or laugh, so let’s have some fun.”

Noting that tax reform was a major campaign platform, and referencing tax reform that occurred in 1986 that reduced 401k limits by 70 percent, he said “I know for a fact that many Republicans didn’t expect to win the House, Senate and the White House, and now they have to act.”

Trump wants to reform the tax code by “closing loopholes,” but one man’s loophole is another man’s valuable deduction.

“Whatever happens, he [and congressional Republicans] want it to be revenue neutral; it cannot increase the debt and deficit.”

At one point he paused for dramatic effect, and emphasized, “If tax reform happens, there is no way we come through unscathed. We might think it is crazy to reduce the 401k limit, but you have to understand tax reform is all about tradeoffs. Tax reform is ugly, but we have a seat at the table and are trying to make lemonade from lemons.”

Graff was much more bullish on health savings accounts, noting HSA contributions are tax deductible, tax deferred and if used for medical expenses, tax free, which “frankly is more compelling than a 401k, because worst case scenario, you wait until age 65 and then it’s taxed just like a 401k anyway. The [HSA] market is going to blow up.”

“We’re already talking to people up on the hill about some sort of HSA/401k integrated experience.”

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