DOL Fiduciary Rule
The Department of Labor announced there will be no delay in the June 9 applicability date of the Fiduciary Rule. In order to submit Qualified annuity business after this date, you must utilize either the Best Interest Contract Exemption, or the 84-24 exemption. Below you can find forms to help you meet the terms of the exemption you wish to utilize.
How does the rule affect annuity sales?
Now through June 9, 2017: Business as usual as the new rule does not yet apply.
June 10 through December 31, 2017: The DOL Fiduciary rule is in effect for all annuity business involving an IRA, ERISA Plan or 401 Plan.
In order to receive commission, you must use an allowable Exemption for both new sales and adding funds to existing contracts.
• All producers can use the 84-24 Exemption for traditional fixed and fixed-indexed annuity business.
• Producers who have a Financial Institution can use the Best Interest Contract Exemption (BICE) for traditional fixed, and fixed-indexed annuity business. >/p>
Beginning January 1, 2018: Full compliance with the final fiduciary rule is required for all business involving an IRA, ERISA Plan or 401 Plan. All transitional accommodations go away.
• Producers must use the BICE to receive a commission for fixed-indexed annuity business.
• Producers can use either the 84-24 Exemption or BICE to receive a commission for traditional fixed annuity business.
How do I use the 84-24 exemption?
To use the 84-24 exemption from June 10 through December 31, 2017, you must:
• Comply with the impartial conduct standards. These standards require you to a) act in the client’s best interest, b) receive reasonable compensation and c) avoid misrepresentations
• Provide a written disclosure complying with PTE 84-24 (we will include this form in the application kits we provide)
• Receive a written acknowledgment of the disclosure and approval of the transaction from the IRA owner or independent plan fiduciary.
Typically, you will not need to submit the disclosure to the carrier as part of the new business process.
How do I use the BICE?
To use the BICE from June 10 through December 31, 2017, you must:
• Be affiliated with a Financial Institution who is compliant with the DOL Fiduciary Rule
• Comply with the impartial conduct standards pursuant to the policies and procedures established by the Financial Institution in your hierarchy.
Beginning January 1, 2018, the BICE will require a signed agreement with the client and other obligations, in addition to the above requirements.
The Financial Institution is responsible for working with producers to ensure BICE requirements are met.
Will business be rejected if I don't have a Financial Institution?
• Now through June 9, 2017: Business as usual.
• June 10 through December 31, 2017: Submit all Qualified business via the 84-24 Exemption.
• Beginning January 1, 2018: If producers do not have a Financial Institution you will not be able to submit fixed-indexed annuity business involving a deposit to or withdrawal from an IRA, ERISA Plan or 401 Plan without first meeting the BICE guidelines.
Are there any changes to the new business process?
Aside from the Exemption requirements outlined above, there are no changes to the new business process, including suitability reviews.
Do I have to carry fiduciary liability with my E&O coverage?
While you will not be required to carry this coverage, it is up to the producer to evaluate their individual needs and make the decision that is right for them.