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January 19, 2022
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Department of Labor Fiduciary Rule—Important Information
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The Department of Labor (DOL) Fiduciary Rule has been updated to expand the agency’s interpretation of the existing five-part test to determine when an individual is an ERISA fiduciary. For the period of February 16, 2021, through January 31, 2022, the DOL advised it would not pursue prohibited transactions claims against ERISA fiduciaries who comply with the impartial conduct standards for transactions. Impartial conduct standards require fiduciaries to: (1) provide advice that reflects the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use, (2) receive only reasonable compensation, and (3) make statements that are not materially misleading.
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However,
beginning January 31, 2022,
the DOL will require compliance with the Fiduciary Rule.
Legacy is providing this information to assist you with compliance
and will continue to monitor DOL activity and advise you of any further enforcement delays.
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ERISA Fiduciary Status
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Updates to the DOL Fiduciary Rule will impact insurance Producers, as the ERISA fiduciary status may be triggered more easily under the DOL’s reinterpretation of the five-part test, especially for rollover or IRA recommendations. You are an ERISA fiduciary if you:
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render advice to ERISA retirement plans, participants in those plans or IRA owners as to the value of securities or other property, or makes recommendations as to the advisability of investing in, purchasing, or selling securities or other property; |
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on a regular basis; |
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pursuant to a mutual understanding or agreement; |
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the advice will be a primary basis for investment decisions; and that |
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the advice is individualized to an ERISA plan participant or the IRA owner. |
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If a Producer is determined to be an ERISA fiduciary, to receive compensation, such as commissions, he/she must comply with the requirements of a PTE.
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PTE 84-24
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To receive compensation, Producers may still use PTE 84-24. The general conditions of PTE 84-24 include:
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That a recommendation is made in the ordinary course of business and is as favorable as an arm’s length transaction with an unrelated party would be. |
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The combined total of all fees, commissions, etc., received by the Producer must not be in excess of “reasonable compensation.” |
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The Producer may not have certain relationships with the plan or IRA, including acting as a trustee or as an administrator to the plan or an employer. |
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PTE 84-24 also requires a Producer to disclose:
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The nature of any affiliation or relationship with the insurance company whose contract is being recommended and any limitations on the products that can be recommended. |
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The sales commission, expressed as a percentage of gross annual premium payments. |
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Any charges, fees, discounts, penalties, or adjustments under the annuity contract. |
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Legacy and its insurance company partners will not be monitoring each agent’s compliance with PTE 84-24. However, it is important that you maintain written documentation for no less than six years of your compliance, to the extent that you are deemed an ERISA Fiduciary.
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On December 18, 2020, the DOL adopted PTE 2020-02. However, Legacy, Americo Financial Life and Annuity Insurance Company, Ameritas Life Insurance Corp., and Integrity Life Insurance Company (Western & Southern Financial Group) are NOT financial institutions within the meaning of PTE 2020-02 and have no responsibility for, and are not monitoring, whether a Producer is an ERISA fiduciary, and if so, the Producer’s compliance with any PTE. Therefore, it is important that you rely on and comply with PTE 84-24.
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Additional Information
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We encourage you to review these notices from Americo, Ameritas, and Integrity for additional information on the DOL Fiduciary Rule and how to comply.
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If you have any questions, please call the
Legacy Marketing Group®
Sales Team, 800-395-1053, Ext. 4002.
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