NOTE: For New Genworth Income Assurance Sales funded with qualified money.
On June 9, 2017, certain provisions of the Department of Labor’s Fiduciary Rule (the “Rule”) and amendments to Prohibited Transaction Exemption 84-24 (“PTE 84-24”) will become effective and applicable. The Rule and, in particular, PTE 84-24 will ONLY apply to transactions involving fixed annuities that use qualified assets from an employee benefit plan under Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974 (“ERISA”), Individual Retirement Account (“IRA”) or Roth IRA, or will be purchased within an IRA or Roth IRA.
Effective on June 9, 2017, Genworth will require all agents/producers that effect a purchase, sale or other transaction in a fixed annuity that is covered under the Rule to provide Genworth with a written attestation that such covered transaction conforms to all applicable provisions of the Rule and PTE 84-24. Applications that are received by Genworth without the executed attestation, including applications for the Income Assurance Immediate Need Annuity, will be considered “Not In Good Order.”
A copy of the required attestation can be found HERE.
Template PTE 84-24 Disclosure
Among other things, PTE 84-24 requires the agent/producer to provide his or her client with certain disclosures related to the covered transaction. The PTE 84-24 disclosure document (the “Disclosure”) must be completed by the agent/producer and signed by his or her client.
Genworth has created a template for the Disclosure that can be used in the sale of its Income Assurance Immediate Need Annuity. An agent/producer may use the template or any other form that satisfies the requirements of the Rule and PTE 84-24. Genworth WILL NOT require the submission of the completed and signed Disclosure. If the agent/producer submits the Disclosure to Genworth, Genworth will review the information and, if inaccurate, will consider the application “Not In Good Order.”
A copy of Genworth’s template PTE 84-24 disclosure can be found HERE.
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.
- 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.
- 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.