84-24 Disclosure Form Instructions for IRAs (Fixed Rate Annuities) GENERAL CONSIDERATIONS: After receipt of the disclosures, and prior For the most part, the disclosure form to execution of the transaction, the IRA contains only the information that the owner must acknowledge in writing the exemption requires to be disclosed to receipt of the disclosures and approve the IRA owners. There are other transaction. requirements that must be satisfied, described below. These may be added to SPECIFIC INSTRUCTIONS: the disclosure form, but are not required to do so. The annuity contract and the issuing insurance company should be identified In recommending a fixed rate annuity, the in the form. agent must act in the Best Interest of the IRA owner. If the agent is affiliated with the insurance company (see that “Defined Terms”), All statements by the agent about the should be specified. recommended contract, fees and material conflicts of interest (see If the agent is not affiliated, the statement “Defined must not be materially should be deleted. Terms”) misleading. Failure to disclose a material conflict of interest is considered to be If the ability to recommend agent’s misleading. Information about the annuity contracts is limited by an contract, carrier, material conflicts of agreement, it should be affirmatively interest and additional fees for holding stated. If so limited, the affirmative the contract must be included on the statement should be included in the form disclosure form. given to the IRA owner. The transaction must be effected in the If the ability is not so limited, the agent’s ordinary course of the paragraph can be deleted in its entirety. agent’s business, must be on terms at least as favorable to the retirement investor as The commission for the first year an arm’s length agent’s transaction with an unrelated party would and each succeeding year should be be, and the commission to be received by disclosed where indicated on the form. the agent must not exceed reasonable compensation for the services provided. If feasible, it should be disclosed in dollar amounts. The agent must not be a trustee or fiduciary with discretionary authority If that is not feasible, the commission over the investment of assets of the IRA. should be disclosed as a percentage of gross annual premium payments, asset The disclosures must be provided in accumulation value, or contract value. writing prior to execution of the (For example, it may not be feasible if the transaction.
84-24 Disclosure Form Instructions for IRAs (Fixed Rate Annuities) GENERAL CONSIDERATIONS: For the most part, the disclosure form contains only the information that the exemption requires to be disclosed to IRA owners. There are other requirements that must be satisfied, described below. These may be added to the disclosure form, but are not required to do so. In recommending a fixed rate annuity, the agent must act in the Best Interest of the IRA owner. All statements by the agent about the recommended contract, fees and material conflicts of interest (see “Defined Terms”) must not be materially misleading. Failure to disclose a material conflict of interest is considered to be misleading. Information about the contract, carrier, material conflicts of interest and additional fees for holding the contract must be included on the disclosure form. The transaction must be effected in the ordinary course of the agent’s business, must be on terms at least as favorable to the retirement investor as an arm’s length transaction with an unrelated party would be, and the commission to be received by the agent must not exceed reasonable compensation for the services provided. The agent must not be a trustee or fiduciary with discretionary authority over the investment of assets of the IRA. The disclosures must be provided in writing prior to execution of the transaction. After receipt of the disclosures, and prior to execution of the transaction, the IRA owner must acknowledge in writing the receipt of the disclosures and approve the transaction. SPECIFIC INSTRUCTIONS: The annuity contract and the issuing insurance company should be identified in the form. If the agent is affiliated with the insurance company (see “Defined Terms”), that should be specified. If the agent is not affiliated, the statement should be deleted. If the agent’s ability to recommend annuity contracts is limited by an agreement, it should be affirmatively stated. If so limited, the affirmative statement should be included in the form given to the IRA owner. If the agent’s ability is not so limited, the paragraph can be deleted in its entirety. The agent’s commission for the first year and each succeeding year should be disclosed where indicated on the form. If feasible, it should be disclosed in dollar amounts. If that is not feasible, the commission should be disclosed as a percentage of gross annual premium payments, asset accumulation value, or contract value. (For example, it may not be feasible if the
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