annuity

The Department of Labor Fiduciary Rule (the Rule) went into effect on June 9, 2017. The Rule, by law, requires a higher standard of care for advice given on qualified retirement assets. The full requirements will go into effect on January 1, 2018, barring further regulatory or legislative changes.

As of June 9th, those who give advice and/or make a recommendation regarding assets in retirement accounts and expect to be compensated based on the advice/recommendation will be held to the Impartial Conduct Standards, which has three requirements:

• Advice is in the best interest of the customer
• Compensation is reasonable
• Statements about investment transactions, compensation & conflicts of interest are not misleading

During this initial phase-in through the end of the year, the Prohibited Transaction Exemption (PTE) 84-24 can be used to sell traditional fixed annuities, fixed indexed annuities and life insurance involving qualified retirement assets. Under current law, transactions on or after January 1, 2018, will require additional scrutiny and only traditional fixed annuities and life insurance can be sold using PTE 84-24. Fixed indexed annuities will need to be sold through a Financial Institution as defined by the Rule using the Best Interest Contract Exemption (BICE)

Continue Reading   |   View Company Updates   |   Sample PTE 84-24 Disclosure

On March 1, 2017, the Department of Labor released a proposed rule to extend for sixty days the applicability date of the Fiduciary Rule. It was widely expected that the delay would be six months so the sixty-day delay is somewhat of a surprise. This proposal, which includes a 15-day comment period, would extend the effective date from April 10th to June 9th. We will keep you updated as the more details become available.