Under the Department of Labor’s (DOL) new policies, all producers (agents) that rollover funds from a Individual Retirement Account (IRA), Pension or other similar plans to an IRA annuity or other Defined Contribution/Benefit plans must meet the 5-part test under the Prohibited Transaction Exemption (PTE). Those requirements can be found in PTE84-24 put out by DOL. Each individual doing a rollover will be provided with a Producer Compensation Disclosure document.
The Impartial Conduct Standards require that:
The advice provided by the producer must be in the “best Interest” of the retirement client. This best interest has two chief components: Prudence and Loyalty:
- Under the prudence standard, the advice must meet a professional standard of care, and
- Under the loyalty standard, the advice must be based on the interest of the client rather than the competing financial interest of the producer or firm;
- No more than reasonable compensation can be charged or received by the producer or firm, and
- The Producer may not make any misleading statements about the investment transactions, product, compensation, or any conflicts of interest.