Requirements of the Rule and PTE 84-24
The agent/producer must comply with certain provisions and requirements under the Rule and PTE 84-24, including, but not limited to, the following:
The Impartial Conduct Standards
- The agent/producer must act as a fiduciary and in the best interest of the client;
- The agent/producer must not make any materially misleading statements; and
- The agent/producer must disclose all material conflicts of interest.
General Conditions
- The combined total of all fees and compensation received by the agent/producer, the Brokerage General Agent ("BGA") or Insurance Agency and, if applicable, the Independent Marketing Organization ("IMO"), must be reasonable within the meaning of ERISA Section 408(b)(2) and Internal Revenue Code Section 4975(d)(2).
Conditions for Transactions
- The agent/producer must disclose in writing to the client that he or she is an agent of, but not an affiliate of, the insurance company issuing the annuity;
- The agent/producer must itemize and disclose in writing to the client the percentages or dollar amounts of compensation that will be received by the agent/producer, the BGA and, if applicable, the IMO for the first year and for any renewal periods;
- The agent/producer has disclosed in writing a description of any charges, fees, discounts, penalties or adjustments that may be imposed under the annuity contract; and
- The client must acknowledge in writing that he or she has received these written disclosures.
Recordkeeping
- The agent/producer must maintain, in a manner reasonably accessible for audit and examination, the records regarding the transaction for a period of no less than six years from the date the annuity contract is issued.
We encourage all agents/producers to consult with their firm's legal and compliance contacts to ensure compliance with the Rule and PTE 84-24. More information about the Rule and PTE 84-24 can be found on the Department of Labor's website. The Department of Labor has established a page dedicated to the Rule, which can be found here.