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Compliance & Licensing

Are You Following the New Forms Requirements?

By June 22, 2022No Comments

As you know, as a result of the DOL Rule, ESI has referred to doing business under two Prohibited Transaction Exemptions, also known as PTE 84-24 and PTE 20-02.

Compliance with PTE 84-24 took place in December of 2021.  It was largely focused on disclosure of third-party compensation from the recommendation to purchase insurance products such as fixed-indexed or variable annuities.

PTE 20-02 has a compliance date of June 30th, 2022.    By utilizing 20-02, reps can continue to receive third-party compensation for advice related to ERISA and IRA-based accounts, as long as certain criteria are met.  PTE 20-02 will be used for brokerage, mutual fund, and advisory business.  To comply with PTE 20-02 ESI has updated disclosures on various forms and created two new forms: the IRA-to-IRA Disclosure Form and the IRA Transfer of Assets Form. In addition, revisions have been made to the Defined Contribution Rollover Recommendation and the Defined Benefit Rollover Recommendation forms. Note that these new/updated forms have been available for use, however, starting June 1st ,  the new versions of all forms must be used regardless of when they were signed. Beginning, June 30th, if an error is made on the form, it is outdated, or it is missing, the business may need to be rejected per the regulation since disclosure must occur pre-transaction. The Operations Team may send reminder emails and/or call to remind reps of the upcoming changes while in the transition period.

The two new IRA to IRA Disclosures and the four revised Rollover Disclosures contain elements of the Best Interest Supplemental Worksheet.  As such, the Best Interest Supplemental Worksheet is no longer needed when one of these forms is required.

As we approach the enforcement date, you are encouraged to review the communications, training and reference materials that have been distributed over the past nine months. All communications and related materials can be found on the NL Agent Portal. Simply log in, click on Training, and choose the DOL Training Page.

TC127390(0622)1