You may recall in all communications relating to the Department of Labor, 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.
Each of the new or revised forms 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.
Revised Forms
Defined Contribution Rollover Recommendation and Defined Benefit Rollover Recommendation
These forms will continue to be required when all of the following apply:
- A transaction is occurring in an IRA account (new business or subsequent deposit)
- Will be funded with transfer/rollover from a defined contribution plan such as a 401(k), or a defined benefit plan such as a pension
- The destination of the funds is a non-annuity product.
New Forms
IRA to IRA Disclosure Form (Direct Mutual Fund and Advisory Business)
This form will be required when all of the following apply:
- A transaction is occurring in an IRA account (new business or subsequent deposit)
- Will be funded with transfer/rollover from another IRA
- The destination of the funds is a non-annuity product.
IRA Transfer of Assets Form (Brokerage and ESI Illuminations)
This form will be required when all of the following apply:
- A transaction is occurring in an IRA account (new business or subsequent deposit)
- Will be funded with transfer/rollover from another IRA
- The product used is either:
- Brokerage Account
- ESI Illuminations Account
Forms in Docupace
When the new forms are available, they will be found under the Optional Forms section in Docupace, and will need to be added to the work item if applicable. They will also be available in Merrill. Stay tuned for further communication, draft copies, and training tips on how to complete these new forms.
Reminder! DOL education and training is available on the National Life Portal. Simply click on the lightning bolt located in the upper right side of the main menu bar and scroll down to DOL Training Page.
TC126474(0422)1