76004 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

1Reorganization Plan No. 4 of 1978 (5 U.S.C. 

App. 1 (2018)) generally transferred the authority of 

the Secretary of the Treasury to grant administrative 

exemptions under Code section 4975 to the 

Secretary of Labor. 

2As defined in Section X(d), the term ‘‘Individual 

Retirement Account’’ or ‘‘IRA’’ means any plan that 

is an account or annuity described in Code section 

4975(e)(1)(B) through (F), including an Archer 

medical savings account, a health savings account, 

and a Coverdell education savings account. While 

the Department uses the term ‘‘Retirement Investor’’ 

throughout this document, the exemption is not 

limited only to investment advice fiduciaries of 

employee pension benefit plans and IRAs. Relief 

would be available for investment advice 

fiduciaries of employee welfare benefit plans with 

an investment component as well. 

3 41 FR 56760 (Dec. 29, 1976), finalized as PTE 

77–9, 42 FR 32395 (June 24, 1977) 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

[Application No. D–12060] 

ZRIN 1210–ZA33 

Proposed Amendment to Prohibited 

Transaction Exemption 84–24 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of Proposed Amendment 

to Prohibited Transaction Exemption 

84–24. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

a proposed amendment to Prohibited 

Transaction Exemption (PTE) 84–24, an 

exemption from certain prohibited 

transaction provisions of the Employee 

Retirement Income Security Act of 1974 

(ERISA) and the Internal Revenue Code 

of 1986 (the Code). The amendment 

would affect participants and 

beneficiaries of plans, Individual 

Retirement Account (IRA) owners, and 

certain fiduciaries of plans and IRAs. 

DATES: 

Public Comments. Comments are due 

on or before January 2, 2024. 

Public Hearing. The Department 

anticipates holding a public hearing 

approximately 45 days following the 

date of publication in the Federal 

Register. Specific information regarding 

the date, location, and submission of 

requests to testify will be published in 

a notice in the Federal Register. 

Applicability Date. The Department 

proposes to make the final amendment 

effective 60 days after it is published in 

the Federal Register. 

ADDRESSES: All written comments 

concerning the proposed amendments 

should be sent to the Employee Benefits 

Security Administration, Office of 

Exemption Determinations, U.S. 

Department of Labor through the 

Federal eRulemaking Portal and 

identified by Application No. D–12060. 

Federal eRulemaking Portal: Visit 

http://www.regulations.gov. Follow the 

instructions for sending comments. 

Docket: For access to the docket to 

read background documents and 

comments, including the plain-language 

summary of the proposal required by 

the Providing Accountability Through 

Transparency Act of 2023, or comments, 

please go to the Federal eRulemaking 

Portal at http://www.regulations.gov. 

See SUPPLEMENTARY INFORMATION

below for additional information 

regarding comments. 

FOR FURTHER INFORMATION CONTACT: 

Susan Wilker, (202) 693–8540 (not a 

toll-free number), Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor. 

SUPPLEMENTARY INFORMATION: 

Comment Instructions 

Warning: All comments received will 

be included in the public record 

without change and will be made 

available online at regulations.gov. This 

includes any personal information 

provided, unless the comment includes 

information claimed to be confidential 

or information whose disclosure is 

restricted by statute. If you submit a 

comment, EBSA recommends that you 

include your name and other contact 

information, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as Social Security number or an 

unlisted phone number), or confidential 

business information that you do not 

want publicly disclosed. If EBSA cannot 

read your comment due to technical 

difficulties and cannot contact you for 

clarification, EBSA might not be able to 

consider your comment. The 

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it. If you send an email 

directly to EBSA without going through 

regulations.gov, your email address will 

be automatically captured and included 

as part of the comment that is placed in 

the public record and made available on 

the internet. 

Background 

As described elsewhere in this edition 

of the Federal Register, the Department 

is proposing to amend the regulation 

defining when a person renders 

‘‘investment advice for a fee or other 

compensation, direct or indirect’’ with 

respect to any moneys or other property 

of an employee benefit plan, for 

purposes of the definition of a 

‘‘fiduciary’’ in section 3(21)(A)(ii) of 

ERISA and in section 4975(e)(3)(B) of 

the Code. The Department also is 

proposing amendments to existing PTEs 

75–1, 77–4, 80–83, 83–1, 86–128, and 

2020–02 elsewhere in this edition of the 

Federal Register. 

The Department is proposing to 

amend PTE 84–24 to address specific 

issues that Insurers confront in 

complying with the current conditions 

of PTE 2020–02 when distributing 

annuities through independent agents. 

The ERISA and Code provisions at issue 

generally prohibit employee benefit 

plan and IRA fiduciaries from engaging 

in self-dealing in connection with 

transactions involving these plans and 

IRAs. Currently, PTE 84–24 allows these 

fiduciaries to receive compensation 

when plans and IRAs enter into certain 

insurance and mutual fund transactions 

that the fiduciaries recommend, as well 

as certain related transactions. The 

proposed amendment would provide 

exemptive relief to fiduciaries who are 

Independent Producers that recommend 

annuities from an unaffiliated Insurer to 

Retirement Investors on a commission 

or fee basis if certain protective 

conditions are met. 

The Department is proposing this 

amendment on its own motion pursuant 

to its authority under ERISA section 

408(a) and Code section 4975(c)(2) and 

in accordance with procedures set forth 

in 29 CFR part 2570, subpart B (76 FR 

66637 (October 27, 2011)).1

Current PTE 84–24 

Currently, under PTE 84–24, plans 

and IRAs may purchase insurance or 

annuity contracts or investment 

company securities, and insurance 

agents or brokers, pension consultants, 

and principal underwriters may receive 

compensation as a result of these 

purchases.2 Originally proposed in 

1976,3 PTE 84–24 covers several 

transactions in connection with the 

purchase of insurance and annuity 

contracts and the purchase and sale of 

securities issued by an investment 

company. 

PTE 2020–02 

When the Department finalized PTE 

2020–02 in December 2020, the 

Department explained that insurance 

companies could rely on either PTE 

2020–02 or PTE 84–24 regardless of 

whether they sell their products through 

captive or independent agents. In the 

preamble to the final PTE 2020–02, the 


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4 ‘‘Insurance company Financial Institutions can 

comply with the new exemption by supervising 

independent insurance agents, or by creating 

oversight and compliance systems through 

contracts with insurance intermediaries. The 

Financial Institution and/or intermediary would 

address incentives created with respect to 

independent agents’ recommendations of the 

Financial Institution’s insurance or annuity 

products.’’ 85 FR 82798, 82835 (Dec. 18, 2020). 

5https://www.dol.gov/sites/dolgov/files/ebsa/ 

about-ebsa/our-activities/resource-center/faqs/newfiduciary-advice-exemption.pdf 

6For purposes of this disclosure, and throughout 

the exemption, the term fiduciary status is limited 

to fiduciary status under Title I, the Code, or both. 

While this exemption and the SEC’s Regulation Best 

Interest both use the term ‘‘best interest,’’ the 

Department retains interpretive authority with 

respect to satisfaction of this exemption. 

7For purposes of this disclosure, and throughout 

the exemption, the term fiduciary status is limited 

to fiduciary status under Title I, the Code, or both. 

Department stated that insurance 

companies working with independent 

agents can satisfy the conditions of PTE 

2020–02 related to the required policies 

and procedures either by supervising 

independent insurance agents or by 

contracting with insurance 

intermediaries to do so.4 In April 2021, 

the Department provided further 

guidance in a set of Frequently Asked 

Questions (FAQs) regarding compliance 

with the exemption.5 Specifically, 

Question 18 of the FAQs provided that: 

When an independent insurance agent 

recommends an annuity under the 

exemption, the agent and the financial 

institution (e.g., the insurance company) 

must satisfy the exemption’s conditions, 

including the fiduciary acknowledgement 

and the Impartial Conduct Standards with 

respect to that transaction. In such cases, the 

insurance company must ensure that it has 

adopted policies and procedures to ensure 

compliance with the Impartial Conduct 

Standards and to avoid incentives that place 

the firm’s or agent’s interests ahead of the 

interests of retirement investors. While the 

independent agent may recommend products 

issued by a variety of insurance companies, 

PTE 2020–02 does not require insurance 

companies to exercise supervisory 

responsibility with respect to the practices of 

unrelated and unaffiliated insurance 

companies. When an insurance company is 

the supervisory financial institution for 

purposes of the exemption, its obligation is 

simply to ensure that the insurer, its 

affiliates, and related parties meet the 

exemption’s terms with respect to the 

insurance company’s annuity which is the 

subject of the transaction. 

Since issuing PTE 2020–02 and 

posting the FAQs on its website, the 

Department has conferred with 

representatives of insurance companies 

that distribute annuities through 

independent agents, regarding their 

compliance with the conditions of PTE 

2020–02. At the meetings, the 

representatives almost universally 

asserted that the main compliance 

challenge they face in complying with 

PTE 2020–02 is that they cannot 

effectively exercise fiduciary authority 

over independent insurance agents who 

do not work for any one insurance 

company and are not obligated to 

recommend only one company’s 

annuities. According to the insurance 

company representatives, unlike a 

broker-dealer that can readily control 

the products its representatives 

recommend and the compensation they 

receive, insurance companies working 

with independent agents have much 

less authority over the conduct and 

compensation of independent agents. 

These insurance companies also face 

much greater liability risk if they are 

required to provide a fiduciary 

acknowledgement, because they do not 

have the necessary control over the 

independent agents to manage the 

independent agent’s product offerings 

and do not know the full range of 

products the independent agent is 

authorized to sell. Thus, despite the 

Department’s compliance guidance 

provided in the preamble to PTE 2020– 

02 and FAQ 18, these parties 

represented to the Department that they 

prefer relying on existing PTE 84–24. 

While acknowledging these concerns, 

the Department continues to believe that 

insurance companies can effectively 

exercise fiduciary oversight with respect 

to independent agents’ 

recommendations of their own products 

under PTE 2020–02. PTE 2020–02 is a 

broad, flexible, and principles-based 

approach that applies across different 

financial sectors and business models 

and provides relief for multiple 

categories of Financial Institutions and 

Investment Professionals, including 

insurance companies selling their 

products through independent agents, 

and it would continue to be so if the 

Department adopts the amendments to 

PTE 2020–02 that it is proposing today. 

The Department is proposing to amend 

PTE 84–24, however, to provide a 

narrowly tailored, alternative exemption 

allowing independent insurance agents 

to receive commissions from insurance 

companies with respect to annuity 

recommendations. 

As amended, PTE 84–24 would not 

require the insurance company to 

provide a fiduciary acknowledgement, 

and the insurance company would not 

be treated as a fiduciary merely because 

it exercised oversight responsibilities 

over independent insurance agents 

under the exemption.6 Instead, the 

proposed amendment would require the 

independent agent that recommends the 

annuity to make the fiduciary 

acknowledgement,7 and the insurance 

company selling its product through the 

independent agent only would be 

required to exercise supervisory 

authority over the independent agent’s 

recommendation of its own products. 

The proposed amended exemption 

would be limited to commissions or fees 

as defined in the amendment, which 

would have to be fully disclosed to the 

Retirement Investor. 

Overview of the Proposed Amendment 

to PTE 84–24 

The Department is proposing to 

amend PTE 84–24 so that investment 

advice fiduciaries would rely on a new 

section of PTE 84–24 for independent 

insurance agents (called Independent 

Producers) selling non-securities 

annuities or other insurance products 

not regulated by the Securities and 

Exchange Commission (SEC) to 

Retirement Investors. The proposed 

amendment would exclude investment 

advice fiduciaries from the current relief 

in PTE 84–24 while proposing relief 

under a new section of the exemption 

with specific conditions for 

independent insurance agents providing 

investment advice. The Department’s 

objective in proposing this amendment 

is to provide a level playing field for all 

investment advice fiduciaries. 

To rely on the investment advice 

relief in this proposed amendment to 

PTE 84–24, the Independent Producers 

would have to sell annuities of two or 

more unrelated Insurers. Independent 

Producers that sell or recommend 

investment products other than 

annuities, such as mutual funds, stocks 

and bonds, and certificates of deposit 

must rely on PTE 2020–02 when 

receiving fees or other compensation in 

connection with investment 

recommendations related to those 

products. The amended PTE 84–24 

would provide relief from the 

prohibited transaction rules only for the 

receipt of fully disclosed commissions 

or fees in connection with annuity 

recommendations or other insurance 

products not regulated by the SEC. In 

other respects, the proposed amendment 

to PTE 84–24 for investment advice 

would provide very similar protections 

to Retirement Investors as PTE 2020–02 

and create a level playing field for all 

investment advice provided to 

Retirement Investors regardless of the 

investment products that are 

recommended. 

The Department is proposing to 

amend PTE 84–24 to exclude 


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76006 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

8Nondiscretionary trustees were added in 1984, 

in response to a request from the Investment 

Company Institute listing typical nondiscretionary 

or trustee services. In an April 21, 1980 letter, ‘‘ICI 

states nondiscretionary trustees and custodians: 

(a) Open and maintain plan accounts and, in the 

case of defined contribution plans, individual 

participant accounts, pursuant to the employer’s 

instructions; 

(b) Receive contributions from the employer and 

credit them to individual participant accounts in 

accordance with the employer’s instructions; 

(c) Invest contributions and other plan assets in 

shares of a mutual fund or funds or other products 

such as insurance or annuity contracts designated 

by the employer, plan trustee, or participants, and 

reinvest dividends and other distributions in such 

investments; 

(d) Redeem, transfer, or exchange mutual fund 

shares or surrender insurance or annuity contracts 

as instructed by the employer, plan trustee, or 

participant; 

investment advice fiduciaries from the 

existing relief provided in Section II, 

which would be redesignated as Section 

II(a). The proposed amendment would 

add Section II(b), which would provide 

investment advice fiduciaries with relief 

from the restrictions of ERISA sections 

406(a)(1)(D) and 406(b) and the taxes 

imposed by Code section 4975(a) and (b) 

by reason of Code sections 4975(c)(1)(E) 

and (F) if: 

• the fiduciary is an Independent 

Producer (as defined in Section X(d)), 

• the transactions are described in 

new Section III(g), and 

• the conditions set forth in new 

Sections VI, VII, and IX are satisfied. 

These conditions are similar to the 

conditions contained in PTE 2020–02 

but are tailored to protect Retirement 

Investors from the specific conflicts that 

can arise for Independent Producers that 

are compensated through commissions 

when providing investment advice to 

Retirement Investors regarding the 

purchase of an annuity. The Department 

also is proposing to add a new eligibility 

provision in Section VIII for investment 

advice transactions and amend the 

current recordkeeping condition in 

Section V(e) with a new recordkeeping 

provision in Section IX that is similar to 

the recordkeeping provision in PTE 

2020–02. 

Although the Department is proposing 

a pathway for insurance companies to 

oversee the conduct of Independent 

Producers under the proposed 

amendment to PTE 84–24 without 

assuming fiduciary status, the 

Department remains concerned that, 

without fiduciary status, insurance 

companies may not take their 

supervisory obligations as seriously as 

they should. Accordingly, the proposed 

amendment does not provide relief for 

the Insurer, and it strictly limits the 

scope of relief to the Independent 

Producer’s receipt of fully disclosed 

commissions. An Insurer must rely on 

PTE 2020–02 for relief if it is itself an 

investment advice fiduciary because it 

provides investment advice within the 

meaning of ERISA section 3(21)(A)(ii) 

and Code section 4975(e)(3)(B) and the 

regulations issued thereunder. In 

addition, an Insurer’s systematic failures 

to comply with the proposed 

exemption’s conditions could result in 

Independent Producers’ inability to rely 

on the amended exemption for relief 

with respect to recommendations of that 

Insurer’s products. In such a situation, 

the Independent Producer would still be 

able to receive compensation in 

connection with fiduciary investment 

advice related to the products of other 

Insurers, as long as those other Insurers 

complied with all conditions of 

amended PTE 84–24. 

Effective Date 

The Department proposes that the 

amendment will be effective on the date 

that is 60 days after the publication of 

a final amendment in the Federal 

Register. Prior to the effective date, PTE 

84–24 would remain available for all 

insurance agents and insurance 

companies that currently rely on the 

exemption. Thus, the Department 

confirms that the restrictions of ERISA 

section 406(a)(1)(A), 406(a)(1)(D), and 

406(b) and the sanctions imposed by 

Code section 4975(a) and (b), by reason 

of Code section 4975(c)(1)(A), (D), (E) 

and (F), would not apply to the receipt 

of compensation by an Insurer, 

Investment Professional, or any Affiliate 

and Related Entity in connection with 

investment advice, if the 

recommendation were made before the 

effective date or pursuant to a 

systematic purchase program 

established before the effective date. 

Also, no party would be held to the 

amended conditions for a transaction 

that occurred before the effective date of 

the amended exemption. 

Description of Changes to Existing PTE 

84–24 

Section II of existing PTE 84–24 

provides exemptive relief for the 

covered transactions described in 

Section III(a) through (f). The 

Department is proposing minor 

language changes to capitalize defined 

terms where they are used in the 

existing sections of PTE 84–24, to 

update the references to a ‘‘master or 

prototype plan’’ to instead refer to a 

‘‘Pre-approved Plan,’’ consistent with 

changes in IRS Rev. Proc. 2017–41, and 

to move the definitions from existing 

Section VI to new proposed Section X. 

As amended, Section III(a)-(f) would 

read: 

(a) The receipt, directly or indirectly, 

by an insurance agent or broker or a 

pension consultant of a Mutual Fund 

Commission or an Insurance Sales 

Commission from an insurance 

company in connection with the 

purchase, with plan assets, of an 

insurance or annuity contract; 

(b) The receipt of a Mutual Fund 

Commission by a Principal Underwriter 

for an investment company registered 

under the Investment Company Act of 

1940 (hereinafter referred to as an 

investment company) in connection 

with the purchase, with plan assets, of 

securities issued by an investment 

company; 

(c) The effecting by an insurance 

agent or broker, pension consultant or 

investment company Principal 

Underwriter of a transaction for the 

purchase, with plan assets, of an 

insurance or annuity contract or 

securities issued by an investment 

company; 

(d) The purchase, with plan assets, of 

an insurance or annuity contract from 

an insurance company; 

(e) The purchase, with plan assets, of 

an insurance or annuity contract from 

an insurance company which is a 

fiduciary or a service provider (or both) 

with respect to the plan solely by reason 

of the sponsorship of a Pre-approved 

Plan; and 

(f) The purchase, with plan assets, of 

securities issued by an investment 

company from, or the sale of such 

securities to, an investment company or 

an investment company Principal 

Underwriter, when such investment 

company, Principal Underwriter, or the 

investment company investment adviser 

is a fiduciary or a service provider (or 

both) with respect to the plan solely by 

reason of: (1) the sponsorship of a Preapproved Plan; or (2) the provision of 

Nondiscretionary Trust Services to the 

plan; or (3) both (1) and (2). 

The Department also is proposing the 

following amendments. 

Excluding Investment Advice 

The Department is proposing to 

exclude investment advice fiduciaries 

from relief for the transactions described 

in Section III(a) through (f) of current 

PTE 84–24. Investment advice 

fiduciaries would be required to comply 

with the conditions in Sections VI–VIII, 

which are tailored specifically for 

investment advice. The Department 

notes that many types of fiduciaries are 

already excluded from the transactions 

in Sections III(a)–(d). The relief 

provided for in these sections would 

remain available for non-fiduciaries and 

nondiscretionary trustees,8 even if they 


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(e) Provide or maintain ‘‘designation of 

beneficiary’’ forms and make distributions from the 

trust or custodial account to participants or 

beneficiaries in accordance with the instructions of 

the employer, plan trustee, participants, or 

beneficiaries; 

(f) Deliver to participants or their employer all 

notices, prospectuses, and proxy statements, and 

vote proxies in accordance with the participants’ 

instructions. 

(g) Maintain records of all contributions, 

investments, distributions, and other transactions 

and report them to the employer and participants; 

(h) Make necessary filings with the Internal 

Revenue Service and other government agencies; 

(i) Keep custody of the plan’s assets; 

(j) Reply to and prepare correspondence, either 

directly or through the mutual fund distributor or 

adviser, regarding the investment account and the 

operation and interpretation of a master or 

prototype plan sponsored by the complex to which 

the nondiscretionary trustee or custodian belongs. 

In some situations, the trustee or custodian is 

empowered to amend the master or prototype plan; 

in others, this power resides in the sponsor of the 

master or prototype plan. ICI further describes the 

duties of the nondiscretionary trustees as 

‘‘ministerial’’ and indicates that such trustees 

possess no decisional authority with respect to a 

plan’s funding medium or subsequent purchases or 

sales.’’ 

9The Department is not proposing to amend 

Section III(f) to remove the phrase ‘‘investment 

company adviser,’’ but notes that those providing 

investment advice within the meaning of ERISA 

section 3(21)(A)(ii) and Code section 4975(e)(3)(B) 

would be excluded under Section II(a). 

10The Insurance Sales Commission may be paid 

directly to an intermediary such as an intermediary 

marketing organization (IMO) or field market 

organization) FMO, which then compensates the 

individual Independent Producer who has provided 

investment advice. 

11The Department has previously expressed this 

view on the scope of relief under PTE 84–24 in 

amending the exemption in 2016. ‘‘The Department 

does not believe this exemption was properly 

interpreted over the years to provide relief for 

payments such as administrative services fees, 

which are not akin to a commission. No 

determination has been made that the conditions of 

the exemption are protective in the context of such 

payments. Without further information on these 

fees, or suggested additional conditions addressed 

at these types of payments, the Department declines 

to take such an expansive approach to relief from 

the prohibited transaction rules under the terms of 

this exemption.’’ 81 FR 21147, 21166 (Apr. 8, 2016). 

do not need all of the prohibited 

transaction relief provided. The relief 

for the transaction described in Section 

III(e) would be available for any 

insurance company that is a fiduciary 

(other than an investment advice 

fiduciary) or service provider (or both) 

with respect to the plan solely by reason 

of the sponsorship of a Pre-approved 

Plan. The relief for the transaction 

described in Section III(f) would be 

available for any insurance company, 

principal underwriter, or investment 

company adviser that is a fiduciary 

(other than an investment advice 

fiduciary) or service provider (or both) 

with respect to the plan solely by reason 

of: (1) the sponsorship of a Pre-approved 

Plan; or (2) the provision of 

nondiscretionary trust services to the 

plan; or (3) both (1) and (2).9

The Department requests comment on 

whether the relief in proposed Section 

II(a) for the covered transactions in 

Section III(a)–(f) will be used by 

fiduciaries and non-fiduciaries. The 

Department further asks whether parties 

are currently relying on Sections III(e) 

and (f), involving Pre-approved Plans. 

To the extent Sections III(a) through (f) 

provide needed relief, the Department 

also asks whether the conditions in 

current Sections IV and V are 

sufficiently protective for the specific 

covered transactions. 

Commissions 

The Department is proposing to 

replace the term ‘‘sales commission,’’ 

which is not defined in Section VI of 

existing PTE 84–24, with the more 

specific terms Mutual Fund 

Commission and Insurance Sales 

Commission. ‘‘Insurance Sales 

Commission’’ would be defined as a 

sales commission paid by the Insurance 

Company or an Affiliate to the 

Independent Producer 10 for the service 

of recommending and/or effecting the 

purchase or sale of an insurance or 

annuity contract, including renewal fees 

and trailing fees but excluding revenue 

sharing payments, administrative fees or 

marketing payments, payments from 

parties other than the Insurance 

Company or its Affiliates, or any other 

similar fees. ‘‘Mutual Fund 

Commission’’ would be defined as a 

commission or sales load paid by either 

the Plan or the investment company for 

the service of effecting or executing the 

purchase of investment company 

securities, but does not include 12b–1 

fees, revenue sharing payments, 

administrative fees, management fees, or 

marketing fees. 

The Department is proposing to use 

these terms to clarify the types of 

compensation that can be received 

under the exemption. The Department is 

limiting the exemption to sales 

commissions on insurance or annuity 

contracts and investment company 

securities, as opposed to any related or 

alternative forms of compensation. This 

is consistent with the Department’s 

historical understanding and intent. The 

exemption was originally granted in 

1977, and the conditions were crafted 

with simple commission payments in 

mind. In the interim, the exemption was 

not amended or formally interpreted to 

broadly permit additional types of 

compensation. The proposed definitions 

would provide certainty regarding the 

payments permitted by the exemption.11

The Department requests comment on 

whether these defined terms 

appropriately capture the type of 

compensation that an Independent 

Producer may receive. 

Disclosures to IRA Owners 

Section V(b)(1) of PTE 84–24 

currently requires insurance agents, 

brokers, or consultants to provide 

disclosures to an ‘‘independent 

fiduciary’’ before executing a 

transaction involving the purchase of an 

annuity with plan assets. That fiduciary 

must acknowledge receipt of the 

disclosure in writing and approve the 

transaction. The Department is 

proposing to clarify that for transactions 

involving IRAs, these disclosures may 

be provided to the IRA owner instead of 

an unrelated fiduciary. The Department 

requests comment on how frequently 

this provision is currently used, how 

frequently it would be used with the 

additional proposed changes to PTE 84– 

24 described below, how it is practically 

implemented today, and how the 

revised provision would be 

operationalized. 

Discretionary Managers 

The Department proposes to clarify 

the exclusion for discretionary managers 

in current Section V(a)(3), which 

provides that the insurance agent or 

broker, pension consultant, insurance 

company, or investment company 

principal underwriter may not be a 

fiduciary who is expressly authorized in 

writing to manage, acquire or dispose of 

the plan’s assets on a discretionary 

basis. The Department is proposing to 

amend this provision to exclude 

fiduciaries with discretionary authority, 

regardless of whether that authority has 

been conferred orally or in writing. As 

amended, proposed Section V(a)(3) 

would provide that the insurance agent 

or broker, pension consultant, insurance 

company, or investment company 

principal underwriter may not be a 

fiduciary who is authorized (formally or 

informally) to manage, acquire or 

dispose of the plan’s assets on a 

discretionary basis. The Department 

intends for this change to be a mere 

clarification, but requests comment as to 

whether fiduciaries with oral authority 

to manage plan assets have been relying 

on PTE 84–24, because the current 

condition requires the fiduciary to be 

‘‘expressly authorized in writing.’’ 

Recordkeeping 

The Department is proposing to add a 

new Section IX to PTE 84–24 that would 

require fiduciaries engaging in all 

transactions covered by the exemption 

to maintain records necessary for the 


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76008 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

12Available at https://content.naic.org/sites/ 

default/files/inline-files/MDL-275.pdf. 

following to determine that the 

conditions of this exemption have been 

met: 

(1) any authorized employee of the 

Department or the Internal Revenue 

Service or another state or federal 

regulator, 

(2) any fiduciary of a Plan that 

engaged in a transaction pursuant to this 

exemption, 

(3) any contributing employer and any 

employee organization whose members 

are covered by a Plan that engaged in a 

transaction pursuant to this exemption, 

or 

(4) any participant or beneficiary of a 

Plan or beneficial owner of an IRA 

acting on behalf of the IRA that engaged 

in a transaction pursuant to this 

exemption. 

This requirement would replace the 

more limited existing recordkeeping 

requirement in current Section V(e). 

This proposed amendment to the 

recordkeeping requirement is consistent 

with the recordkeeping provision the 

Department has included in other 

existing class exemptions (including the 

proposed amendment to the 

recordkeeping provisions of PTE 2020– 

02). It is intended to protect the rights 

of plan participants, beneficiaries, and 

IRA owners by ensuring that they and 

the Department are provided with 

sufficient information to determine 

whether the exemption conditions have 

been satisfied. 

Fiduciary Investment Advice 

Exemption 

The relief for fiduciary investment 

advice in proposed Section II(b) for the 

covered transactions described in 

proposed Section III(g) is generally 

similar to the relief provided in PTE 

2020–02. However, while PTE 2020–02 

is available for almost any fiduciary 

investment advice provider, the 

amended PTE 84–24 would be available 

only for investment advice that is 

provided to a Retirement Investor by an 

Independent Producer who works with 

multiple insurance companies to sell 

non-securities annuities or other 

insurance products not regulated by the 

SEC. The Department requests comment 

on whether to exclude these other 

insurance products not regulated by the 

SEC and limit Section III(g) to only nonsecurities annuities. 

Independent Producers relying on 

proposed Section III(g) may reasonably 

rely on factual representations from the 

Insurer, and the Insurer may reasonably 

rely on factual representations from the 

Independent Producer regarding 

compliance with the exemption 

conditions, as long as they do not know 

that such factual representations are 

incomplete or inaccurate. For example, 

the Independent Producer can rely on 

the Insurer’s representations that it is 

maintaining the required 

documentation. 

Proposed Section VI provides 

conditions for transactions described in 

proposed Section III(g) and would 

require the advice to be provided by an 

Independent Producer that is authorized 

to sell annuities from two or more 

unrelated Insurers. The term 

‘‘Independent Producer’’ would be 

defined in Section X as a person or 

entity that is licensed under the laws of 

a state to sell, solicit or negotiate 

insurance contracts, including 

annuities, and that sells products of 

multiple unaffiliated insurance 

companies to Retirement Investors but 

is not an employee of an insurance 

company (including a statutory 

employee under Code section 3121). 

The term ‘‘Retirement Investor’’ would 

be defined in proposed Section X(o) to 

have the same meaning as it has in PTE 

2020–02, and the term ‘‘Insurer’’ would 

be defined in proposed Section X(f) 

similarly to the definition of the term 

‘‘Financial Institution’’ in PTE 2020–02, 

except it would be limited to insurance 

companies. 

Thus, proposed Section VI would 

limit the transactions described in 

proposed Section III(g) to the narrow 

category of transactions in which an 

independent, insurance-only agent 

provides investment advice to a 

Retirement Investor regarding a nonsecurities annuity or insurance contract. 

For all other investment advice 

transactions, including those by 

Independent Producers that do not 

satisfy the conditions of the amended 

PTE 84–24 and those involving captive 

or career insurance agents, the advice 

provider would have to rely on PTE 

2020–02 to receive exemptive relief for 

investment advice transactions. The 

Department has determined that when 

non-independent agents recommend 

insurance products, the insurance 

company whose product is 

recommended should be willing and 

able to acknowledge its fiduciary status 

under ERISA and the Code when 

investment advice is provided to a 

Retirement Investor for a fee, because it 

has sufficient control over the agent and 

the products the agent recommends. 

Even though amended PTE 84–24 

would not require Insurers to be 

fiduciaries, they would be subject to 

certain conditions when their products 

are recommended. Consistent with the 

NAIC Suitability in Annuity 

Transactions Model Regulation (the 

NAIC Model Regulation),12 and as 

discussed in the policies and 

procedures section below, the proposed 

exemption would require the Insurer 

whose product is being sold to provide 

meaningful supervision over the 

Independent Producer making the 

recommendation and sale to the 

Retirement Investor. As stated in 

proposed Section VI(b), the Insurer 

would not become an investment advice 

fiduciary under ERISA and/or the Code 

merely by complying with the 

applicable exemption conditions and 

providing the required supervision. 

However, the Department cautions that 

Insurers selling insurance and annuity 

products through Independent 

Producers could become an investment 

advice fiduciary under ERISA and/or 

the Code through other actions they 

take. If the Insurers are fiduciaries, they 

could not rely on amended PTE 84–24 

and would need to rely on a different 

prohibited transaction exemption, such 

as PTE 2020–02, for relief from ERISA 

section 406(b) and Code section 4975. 

To facilitate compliance with the 

exemption, Independent Producers and 

Insurers may rely on factual 

representations from each other, as long 

as they are reasonable in doing so. For 

example, an Independent Producer may 

generally rely on an Insurer’s written 

report generated as part of its 

retrospective review required by Section 

VII(d), unless the Independent Producer 

knows (or should know) that the report 

is inaccurate or incomplete. 

Exclusions 

Section VI(c) proposes to exclude 

certain specific investment advice 

transactions. Under proposed Section 

VI(c)(1), the relief would not be 

available if the Plan is covered by Title 

I of ERISA and the Independent 

Producer, Insurer, or any Affiliate is the 

employer of employees covered by the 

Plan, or the Plan’s named fiduciary or 

administrator. For example, an 

Independent Producer that sponsors a 

plan for its employees and provides the 

investment advice to the plan can only 

receive direct expenses and not 

reasonable compensation for the advice. 

However, there is an exception when 

the advice provider is selected by an 

independent fiduciary. Proposed 

Section VI(c)(2) would exclude 

transactions that involve the 

Independent Producer acting in a 

fiduciary capacity other than as an 

investment advice fiduciary. Unlike in 

PTE 2020–02, the Department is not 

proposing a specific provision for 


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13The Department cautions that an Insurer cannot 

insulate itself from fiduciary status merely by not 

making this acknowledgment. As noted above, an 

Insurer may become a fiduciary based on its 

actions. 

pooled employer plans, because the 

Department does not expect that pooled 

employer plans would need to rely on 

the limited relief in this exemption. The 

Department requests comment on 

whether pooled employer plans as 

described in ERISA section 3(43) would 

rely on the investment advice relief in 

amended PTE 84–24. 

Impartial Conduct Standards of 

Amended PTE 84–24 

Section VII(a) of the proposed 

amendment would condition relief for 

investment advice transactions 

described in proposed Section III(g) on 

the Independent Producer that is 

providing investment advice to 

Retirement Investors complying with 

the Impartial Conduct Standards that 

are the same as those in PTE 2020–02— 

i.e., acting in the Retirement Investor’s 

Best Interest, receiving no more than 

reasonable compensation, and making 

no misleading statements—with some 

modifications to reflect the specifics of 

the independent agent channel. These 

standards are discussed below. 

Best Interest 

The Best Interest standard would 

require the Independent Producer to 

provide investment advice that is in the 

Retirement Investor’s Best Interest at the 

time it is provided. Proposed Section 

VII would rely on the same Best Interest 

standard from PTE 2020–02. As defined 

in proposed Section X(b), Best Interest 

advice 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 in the 

conduct of an enterprise of a like 

character and with like aims, based on 

the investment objectives, risk 

tolerance, financial circumstances, and 

needs of the Retirement Investor, and 

does not place the financial or other 

interests of the Independent Producer, 

Insurer or any Affiliate, Related Entity, 

or other party ahead of the interests of 

the Retirement Investor, or subordinate 

the Retirement Investor’s interests to 

those of the Independent Producer, 

Insurer or any Affiliate, Related Entity, 

or other party. For example, in choosing 

between annuity products offered by 

Insurers whose products the 

Independent Producer is authorized to 

sell, the Independent Producer may not 

recommend a product that is worse for 

the Retirement Investor but better or 

more profitable for the Independent 

Producer or Insurer. 

Reasonable Compensation 

Like PTE 2020–02, the proposed 

exemption requires an Independent 

Producer’s compensation to not exceed 

reasonable compensation within the 

meaning of ERISA section 408(b)(2) and 

Code section 4975(d)(2). To tailor this 

condition to the specifics of insurance 

sales, Section VII(a)(2) would require 

that the Independent Producer can only 

receive an Insurance Sales Commission 

as compensation in connection with the 

transaction. 

No Misleading Statements 

Proposed Section VII(a)(3) provides 

the same prohibition on misleading 

statements that is part of PTE 2020–02. 

This provision requires an Independent 

Producer’s statements to the Retirement 

Investor about the recommended 

transaction and other relevant matters to 

not be materially misleading at the time 

the statements are made. For purposes 

of this condition, the term ‘‘materially 

misleading’’ includes omitting 

information that is needed to make the 

statement not misleading in light of the 

circumstances under which it was 

made. To the extent the Independent 

Producer provides materials, including 

marketing materials that are prepared 

and provided by the Insurer, this 

condition also would require such 

materials not to be materially 

misleading to the Independent 

Producer’s knowledge. 

Disclosure 

Section VII(b) of the proposed 

amendment would require Independent 

Producers to provide disclosures to 

Retirement Investors before engaging in 

a transaction pursuant to this 

exemption. Similar to PTE 2020–02, 

proposed Section VII(b)(1) would 

require a fiduciary acknowledgement, 

but unlike PTE 2020–02, only the 

Independent Producer and not the 

Insurer must acknowledge that it is a 

fiduciary providing investment advice 

to the Retirement Investor. Also similar 

to the proposed amendment to PTE 

2020–02, the Department is proposing 

additional disclosures in PTE 84–24 

Section VII(b) to help ensure that 

Retirement Investors have sufficient 

information to make an informed 

decision about the costs of the 

transaction and the significance and 

severity of the Independent Producer’s 

conflicts of interest. The Department 

requests comment on these disclosures, 

particularly regarding whether 

additional or alternative information 

would be helpful to Retirement 

Investors receiving advice from 

Independent Producers. The 

Department is also interested in 

receiving comments regarding whether 

it should require Insurers or 

Independent Producers to maintain a 

public website containing the pretransaction disclosure, a description of 

the Insurer’s or Independent Producer’s 

business model, associated Conflicts of 

Interest (including arrangements that 

provide third party payments), and a 

schedule of typical fees. The 

Department is interested in receiving 

data and other information regarding the 

benefits of such a web disclosure. The 

Department is also interested in 

receiving any data that commenters may 

have that can inform an estimate of the 

extent to which Retirement Investors, 

investment consultants, and third party 

intermediaries would visit and use a 

web page that includes such 

disclosures. 

Pre-Transaction Disclosure 

Similar to PTE 2020–02, proposed 

Section VII(b)(1) would require a 

fiduciary acknowledgement, but unlike 

PTE 2020–02, only the Independent 

Producer and not the Insurer must 

acknowledge that it is a fiduciary 

providing investment advice to the 

Retirement Investor.13 Section VII(b)(2) 

would require the Independent 

Producer to provide the Retirement 

Investor with a written statement of the 

Best Interest standard of care that the 

Independent Producer owes to the 

Retirement Investor. Under Section 

VII(b)(3), the Independent Producer 

must provide a written description of 

the services to be provided and the 

Independent Producer’s material 

Conflicts of Interest that is accurate and 

not misleading in any material respects. 

The description will include the 

products the Independent Producer is 

licensed and authorized to sell and 

inform the Retirement Investor in 

writing of any limits on the range of 

insurance products recommended. The 

Independent Producer must identify the 

specific Insurers and specific 

investment products available for 

recommendation. 

Under proposed Section VII(b)(4), the 

Independent Producer would also be 

required to provide a written statement 

of the amount of the Insurance Sales 

Commission it will be paid in 

connection with the purchase by the 

Retirement Investor of the 

recommended annuity. The statement 

must disclose the amount of the 

expected Insurance Sales Commission, 

in both dollars and as a percentage of 

gross annual premium payments. If 

applicable, the statement must also 

disclose the amount the Independent 


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14Some insurers offer fee-based annuities which 

are generally designed for sale in fee-based 

distribution models. These annuities do not pay a 

sales commission and typically have no withdrawal 

charges or lower charges than under commissioned 

products. Compensation for sales of fee-based 

annuities is usually based on a percentage of the 

annuity’s account value or some other 

methodology. Fee-based annuities are eligible for 

the relief provided by the proposed amendment if 

all the conditions of the exemption are met. If an 

Independent Producer recommends a fee-based 

annuity, the written statement must disclose the 

specific method for determining the amount of 

compensation for the first year and succeeding 

years, expressed both in dollars and as percentage 

of the account value (or other relevant value) to the 

extent possible. 

Producer will be paid for the first year 

and each succeeding year.14

Under proposed Section VII(b)(5), the 

Independent Producer would also be 

required to provide a written statement 

informing the Retirement Investor of the 

right to obtain specific information 

regarding costs, fees, and compensation, 

and how to obtain it, free of charge. The 

statement must be written in plain 

English, taking into consideration the 

Retirement Investor’s level of financial 

experience, and it must be accurate and 

not misleading. The cost, fee, and 

compensation information may be 

described in dollar amounts, 

percentages, formulas, or other means 

reasonably designed to be materially 

accurate in scope, magnitude, and 

nature of the compensation. The 

information must be detailed enough for 

the Retirement Investor to make an 

informed judgment about the 

transaction costs and the significance 

and severity of the Conflicts of Interest. 

For example, the Retirement Investor 

may ask how the Independent Producer 

would be compensated for 

recommending and selling other 

products they are authorized to sell and 

whether the Independent Producer is 

likely to receive more as a result of its 

recommendation than it would have 

received if it had recommended other 

annuities. 

The proposed requirement to disclose 

the amount of expected Insurance Sales 

Commission, expressed both in dollars 

and as a percentage of gross annual 

premium payments, if applicable, for 

the first year and for each of the 

succeeding years is consistent with the 

existing disclosure requirements in PTE 

84–24 Section V(b)(1). The proposed 

requirement to disclose the range of 

compensation is intended to ensure that 

the Retirement Investor understands the 

magnitude of the Independent 

Producer’s material Conflicts of Interest. 

Without a single Insurer overseeing each 

recommendation, Independent 

Producers must carefully analyze and 

disclose the various incentives available 

from different Insurers that could affect 

the recommendation. For this reason, 

proposed Section VII(b)(4) requires the 

Independent Producer to make specific 

disclosures before the sale of a 

recommended annuity. The 

Independent Producer must consider 

and document its conclusions that the 

recommended annuity is in the 

Retirement Investor’s Best Interest and 

provide that documentation to the 

Retirement Investor and the Insurer. 

To assist Independent Producers in 

complying with this proposed 

exemption’s disclosure conditions, the 

Department is providing the following 

proposed model language that will 

satisfy proposed Section VII(b)(1), (2), 

and (5). 

When we make investment 

recommendations to you regarding your 

retirement plan account or individual 

retirement account, we are fiduciaries within 

the meaning of Title I of the Employee 

Retirement Income Security Act and/or the 

Internal Revenue Code, as applicable, which 

are laws governing retirement accounts. The 

way we make money creates some conflicts 

with your interests, so we operate under a 

special rule that requires us to act in your 

best interest and not put our interest ahead 

of yours. Under this special rule’s provisions, 

we must: 

• Meet a professional standard of care 

when making investment recommendations 

(give prudent advice); 

• Never put our financial interests ahead 

of yours when making recommendations 

(give loyal advice); 

• Avoid misleading statements about 

conflicts of interest, fees, and investments; 

• Follow policies and procedures designed 

to ensure that we give advice that is in your 

best interest; 

• Charge no more than is reasonable for 

our services; and 

• Give you basic information about 

conflicts of interest. 

You can ask us for more information 

explaining costs, fees, and compensation, so 

that you may make an informed judgment 

about the costs of the transaction and about 

the significance and severity of the Conflicts 

of Interest. We will provide you with this 

information at no cost to you. 

Please note that the Department is not 

proposing to include model language for 

Section VII(b)(3) or (4) that would 

describe services to be provided, the 

conflicts of interest, or the commissions 

paid because those will vary for each 

Independent Producer. 

Best Interest Documentation and 

Rollover Disclosure 

Under proposed Section II(b)(6), 

before the sale of a recommended nonsecurity annuity, the Independent 

Producer would consider and document 

its conclusions as to whether the 

recommended non-security annuity is 

in the Best Interest of the Retirement 

Investor. The Independent Producer 

must provide this documentation to 

both the Retirement Investor and to the 

Insurer whose products are being sold. 

The Department requests comment on 

whether this proposed condition should 

be expanded to other insurance 

products not regulated by the SEC. 

Proposed Section VII(b)(7) would 

further require Independent Producers 

to provide a rollover disclosure that is 

similar to the disclosure required in the 

proposed amendment to PTE 2020–02 

Section II(b)(5). Before engaging in a 

rollover or making a recommendation to 

a Plan participant as to the post-rollover 

investment of assets currently held in a 

Plan, the Independent Producer must 

consider and document its conclusions 

as to whether a rollover is in the 

Retirement Investor’s Best Interest and 

provide that documentation to the 

Retirement Investor. Relevant factors to 

consider must include but are not 

limited to: 

• the alternatives to a rollover, 

including leaving the money in the 

Plan, if applicable, 

• the comparative fees and expenses, 

• whether an employer or other party 

pays for some or all administrative 

expenses, and 

• the different levels of fiduciary 

protection, services, and investments 

available. 

To assist the Insurer in satisfying its 

supervisory obligations, the 

Independent Producer must also 

provide the documentation to the 

Insurer. 

Good Faith 

Proposed Section VII(b)(6) provides 

that Independent Producers and the 

Insurer may rely in good faith on 

information and assurances from other 

entities that are not Affiliates as long as 

they do not know or have reason to 

know that such information is 

incomplete or inaccurate. Proposed 

Section II(b)(7) confirms that the 

Independent Producer would not be 

required to disclose information that 

otherwise is prohibited by law. 

Policies and Procedures 

The exemption depends on oversight 

by a responsible Insurer to ensure that 

appropriate policies and procedures are 

in place. While the exemption would 

not require the Insurer to act in a 

fiduciary capacity or to acknowledge 

fiduciary status, the Insurer would be 

expected to adopt and implement 

protective policies and procedures, and 

to carefully police recommendations of 

its own investment products. These 

requirements are consistent with 

supervisory requirements for insurance 


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15NAIC Model Regulation Section 6.C.(2)(d) 

provides that ‘‘[t]he insurer shall establish and 

maintain procedures for the review of each 

recommendation prior to issuance of an annuity 

that are designed to ensure that there is a reasonable 

basis to determine that the recommended annuity 

would effectively address the particular consumer’s 

financial situation, insurance needs and financial 

objectives. Such review procedures may apply a 

screening system for the purpose of identifying 

selected transactions for additional review and may 

be accomplished electronically or through other 

means including, but not limited to, physical 

review. Such an electronic or other system may be 

designed to require additional review only of those 

transactions identified for additional review by the 

selection criteria’’). Section 6.C.(2)(e) provides that 

‘‘[t]he insurer shall establish and maintain 

reasonable procedures to detect recommendations 

that are not in compliance with subsections A, B, 

D and E. This may include, but is not limited to, 

confirmation of the consumer’s consumer profile 

information, systematic customer surveys, producer 

and consumer interviews, confirmation letters, 

producer statements or attestations and programs of 

internal monitoring. Nothing in this subparagraph 

prevents an insurer from complying with this 

subparagraph by applying sampling procedures, or 

by confirming the consumer profile information or 

other required information under this section after 

issuance or delivery of the annuity.’’ 

16 Id., Section 1.A. 

17NAIC Model Regulation Section 6.C.(4) 

provides that an insurer is not required to include 

in its system of supervision: (a) A producer’s 

recommendations to consumers of products other 

than the annuities offered by the insurer; or (b) 

Consideration of or comparison to options available 

to the producer or compensation relating to those 

options other than annuities or other products 

offered by the insurer. 

companies under state insurance law, 

and do not require the Insurers to police 

Independent Producers’ 

recommendations of competitors’ 

products. 

Proposed Section VII(c) would require 

Insurers to establish, maintain, and 

enforce written policies and procedures. 

These conditions are similar to those in 

PTE 2020–02 Section II(c), including 

that compliance with these obligations 

are the Insurer’s responsibility and not 

the Independent Producer’s. Under 

proposed Section VII(c)(1), the Insurer 

must establish, maintain, and enforce 

written policies and procedures for the 

Insurer to review each of the 

Independent Producer’s 

recommendations before an annuity is 

issued to a Retirement Investor. The 

policies and procedures must be 

prudently designed to ensure 

compliance with the Impartial Conduct 

Standards and other conditions of this 

exemption. This requirement is similar 

to that in PTE 2020–02 and is consistent 

with the language in NAIC Model 

Regulation Section 6.C.(2)(d), which 

provides that ‘‘[t]he insurer shall 

establish and maintain procedures for 

the review of each recommendation 

prior to issuance of an annuity that are 

designed to ensure there is a reasonable 

basis to determine that the 

recommended annuity would effectively 

address the particular consumer’s 

financial situation, insurance needs and 

financial objectives.’’ Under the 

proposal, the Insurer’s prudent review 

of the Independent Producer’s specific 

recommendations must be made 

without regard to the Insurer’s own 

interests or those of its affiliates and 

related entities. 

The Department notes that the NAIC 

Model Regulation contemplates that 

insurance companies will maintain a 

system of oversight with respect to 

insurance agents. Insurers could 

implement procedures to review 

annuity sales to Retirement Investors to 

ensure that they are made in compliance 

with the Impartial Conduct Standards 

similar to how they currently are 

required to review annuity sales to 

ensure compliance with the state-law 

suitability requirements.15 Section I of 

the NAIC Model Regulation provides 

that the purpose of the regulation is to 

‘‘require producers, as defined in this 

regulation, to act in the best interest of 

the consumer when making a 

recommendation of an annuity and to 

require insurers to establish and 

maintain a system to supervise 

recommendations so that the insurance 

needs and financial objectives of 

consumers at the time of the transaction 

are effectively addressed.’’ 16

Accordingly, the Department believes 

that a system of oversight by Insurers 

over Independent Producers is 

consistent with the obligations imposed 

by NAIC’s Model Regulation, and is 

achievable under this proposed 

amendment to PTE 84–24. 

In terms of the specific oversight 

requirements, the Department confirms 

that under the proposed amendment, an 

Insurer would only be required to 

supervise an Independent Producer’s 

recommendations of the annuities it 

offers to Retirement Investors. The 

Insurer would not be required to review 

annuities offered by another institution. 

The Department also clarifies that the 

exemption would not require the 

Insurer to consider or compare the 

specific annuities that an Independent 

Producer sells or the compensation 

relating to those annuities, unless they 

are annuities the Insurer offers. This 

approach is also consistent with the 

approach of NAIC Model Regulation 

Section 6.C.(4).17

Under proposed Section VII(c)(2), the 

Insurer’s policies and procedures must 

mitigate Conflicts of Interest to the 

extent that a reasonable person 

reviewing the policies and procedures 

and the Insurer’s incentive practices as 

a whole would conclude that they do 

not create an incentive for the 

Independent Producer to place its 

interests, or those of the Insurer, or any 

Affiliate, ahead of the Retirement 

Investor’s interests. The Insurer’s 

procedures must identify and eliminate 

quotas, appraisals, bonuses, contests, 

special awards, differential 

compensation, riders and or other 

similar features that are intended, or 

that a reasonable person would 

conclude are likely, to incentivize 

Independent Producers to provide 

recommendations that do not meet the 

Impartial Conduct Standards. This is the 

same condition that applies to Financial 

Institutions under Section II(c)(2) of PTE 

2020–02. It is also consistent with, 

although more protective than, the 

narrower NAIC Model Regulation 

section 6.C.(2)(h), which prohibits an 

insurer from establishing sales contests, 

sales quotas, bonuses, and non-cash 

compensation that are based on sales of 

specific annuities within a limited 

period of time. 

Under proposed Section VII(c)(2), an 

Insurer could not offer incentive 

vacations, trips, or even educational 

conferences, if qualification for the 

vacation, trip or conference is based on 

sales volume or satisfaction of sales 

quotas. The Best Interest standard 

discussed above and defined in 

proposed Section X(b) clearly prohibits 

these types of incentives on the grounds 

they create undue conflicts of interest. 

Moreover, the Department believes that 

educational opportunities should be 

offered equally to all agents and not 

connected to sales volume, because 

training is a necessary component of 

providing Best Interest advice. This 

emphasis on Independent Producer 

training is consistent with NAIC Model 

Regulation section 6.C.(2)(c), which 

requires insurers to provide its 

producers with product-specific training 

and training materials that explain all 

material features of its annuity products. 

Under proposed Section VII(c)(3), the 

Insurer’s policies and procedures must 

include a prudent process for 

determining whether to authorize an 

Independent Producer to sell the 

Insurer’s annuity contracts to 

Retirement Investors. It must also 

include a prudent process for taking 

action to protect Retirement Investors 

from Independent Producers who have 

failed or are likely to fail to adhere to 

the Impartial Conduct Standards, or 

who lack the necessary education, 

training, or skill. This is consistent with, 

but more protective than, NAIC Model 

Regulation section 7.B.(11), which 

requires an insurer to verify the 

producer has completed the annuity 

training course required under NAIC 


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18NAIC Model Reg Section 6.(C)(i) provides that: 

‘‘The insurer shall annually provide a written report 

to senior management, including to the senior 

manager responsible for audit functions, which 

details a review, with appropriate testing, 

reasonably designed to determine the effectiveness 

of the supervision system, the exceptions found, 

and corrective action taken or recommended, if 

any.’’ 

Model Regulation section 7 before 

allowing the producer to sell an annuity 

product for that insurer. 

As part of a prudent evaluation of an 

Independent Producer’s background, the 

Insurer must carefully review customer 

complaints, disciplinary history, and 

regulatory actions concerning the 

Independent Producer, as well as the 

Independent Producer’s training, 

education, and conduct with respect to 

the Insurer’s own products. The Insurer 

must document the basis for its initial 

determination that it can rely on the 

Independent Producer to adhere to the 

Impartial Conduct Standards, and it 

must review that determination at least 

annually as part of the retrospective 

review. The Department notes that 

Insurers may rely in part on an 

automated system to apply general 

standards and review formal discipline 

records, as long as careful, individual 

review is applied when the general 

review raises concerns. However, the 

Department expects that an Insurer 

would not work with an Independent 

Producer that either has been barred by 

any regulator from selling insurance or 

annuity contracts, or that is ineligible to 

rely on either PTE 2020–02 or the 

amended PTE 84–24 under proposed 

Section VIII. The Department requests 

comments on these requirements and is 

specifically interested in the systems 

Insurers currently use to determine 

whether Independent Producers are 

compliant with state insurance 

obligations. The Department is also 

interested in comments about how 

Insurers have operationalized the 

supervisory requirements in the NAIC 

Model Regulation. 

Under proposed Section VII(c)(4), 

Insurers must provide their complete 

policies and procedures to the 

Department within 10 days upon 

request. The Department believes that 

ensuring its access to policies and 

procedures will facilitate the quicker 

resolution of disputes and allow the 

Department, if it desires, to survey the 

policies and procedures for exemption 

compliance and effectiveness. 

Retrospective Review 

Proposed Section VII(d) would 

require Insurers to conduct a 

retrospective review, at least annually. 

The retrospective review must be 

reasonably designed to detect and 

prevent violations of, and achieve 

compliance with the Impartial Conduct 

Standards, the terms of this exemption, 

and the policies and procedures 

governing compliance with the 

exemption, including the effectiveness 

of the supervision system, any 

noncompliance discovered in 

connection with the review, and 

corrective actions taken or 

recommended, if any. 

The retrospective review requirement 

is similar to that in Section II(d) of PTE 

2020–02. However, unlike PTE 2020–02, 

Insurers under proposed Section VII(d) 

of PTE 84–24 must include in their 

review a prudent determination whether 

to continue to permit individual 

Independent Producers to sell the 

Insurer’s annuity contracts to 

Retirement Investors. This review does 

not need to be as extensive as the initial 

decision to contract with an 

Independent Producer. An Insurer may 

consider any change in discipline 

records that are found in widelyavailable databases and rollover 

documentations that have been 

provided under Section VII(c)(5). 

Additionally, the Insurer must update 

the policies and procedures as business, 

regulatory, and legislative changes and 

events dictate, and to ensure they 

remain prudently designed, effective, 

and compliant with Section VII(c). 

Consistent with both PTE 2020–02 

and the NAIC Model Regulation Section 

6.C.(2)(i),18 proposed Section VII(d)(2) 

would require the Insurer to provide a 

Senior Executive Officer with an annual 

written report which details the review. 

Under Section VII(d)(3), the Department 

would further require the Insurer to 

provide the Independent Producer with 

the underlying methodology and results 

of the retrospective review. The 

Department understands that Insurers 

will conduct reviews for many different 

Independent Producers and confirms 

that Independent Producers only have 

the right to information about their own 

sales. There is no obligation to inform 

any Independent Producers of an 

unrelated Independent Producer’s 

failure. 

Proposed Section VII(d)(4) would 

require a Senior Executive Officer of the 

Insurer to annually certify that: 

• The officer has reviewed the 

retrospective review report, 

• The Insurer has filed (or will file 

timely, including extensions) Form 

5330, reporting any non-exempt 

prohibited transaction discovered by the 

Insurer in connection with investment 

advice covered under Code section 

4975(e)(3)(B), 

• The Insurer has advised the 

Independent Producer of the violation 

and any resulting excise taxes owed 

under Code section 4975, and 

• The Insurer has notified the 

Department of Labor of the violation via 

email to PTE_84-24@dol.gov. 

• The Insurer has established policies 

and procedures prudently designed to 

ensure that Independent Producers 

achieve compliance with the conditions 

of this exemption, and has updated and 

modified the policies and procedures as 

appropriate after consideration of the 

findings in the retrospective review 

report; and 

• The Insurer has in place a prudent 

process to modify such policies and 

procedures as business, regulatory, and 

legislative changes and events dictate, 

as well as a prudent process to test the 

effectiveness of such policies and 

procedures on a periodic basis, to 

ensure its continuing compliance with 

the exemption’s conditions. 

Under proposed Section VII(d)(5), the 

review, report, and certification must be 

completed no later than 6 months 

following the end of the period covered 

by the review, and proposed Section 

VII(d)(6) would require the Insurer to 

retain the report, certification, and 

supporting data for a period of six years 

and make the report, certification, and 

supporting data available to the 

Department, within 10 business days of 

request, to the extent permitted by law. 

Self-Correction 

While the Insurer is responsible for 

the retrospective review, proposed 

Section VII(e) would allow the 

Independent Producer to make the 

corrections needed to avoid a nonexempt prohibited transaction in certain 

circumstances. Self-correction would be 

allowed in cases when either (1) the 

Independent Producer has refunded any 

charge to the Retirement Investor or (2) 

the Insurer has rescinded a mis-sold 

annuity, canceled the contract, and 

waived the surrender charges. This is 

somewhat different from the selfcorrection provision in PTE 2020–02, 

which is focused on investment losses. 

With a fixed annuity, the consumer is 

guaranteed not to lose any account 

value but can incur a charge (and hence 

a loss) if the contract is surrendered 

during the surrender charge period. The 

usual remedy for a mis-sold annuity is 

rescission, which requires the insurer to 

cancel the contract and waive surrender 

charges. Under the proposed 

amendment, the Independent Producer 

must notify the Department of the 

violation and the refund or rescission 

via email to PTE_84-24@dol.gov within 

30 days of correction. The correction 

must occur no later than 90 days after 

the Independent Producer learned, or 


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reasonably should have learned, of the 

violation. Lastly, the Independent 

Producer must notify the person(s) at 

the Insurer responsible for conducting 

the retrospective review during the 

applicable review cycle and the 

violation and correction must 

specifically be set forth in the written 

retrospective review report. 

Eligibility 

Section VIII of the proposed 

amendment identifies circumstances 

under which an Independent Producer 

or Insurer would become ineligible to 

rely on the exemption for 10 years, and 

also circumstances when an entity 

would not be permitted to serve as an 

Insurer under this exemption for 10 

years. These eligibility provisions are 

similar to the provisions of Section III 

of PTE 2020–02, and are intended to 

promote compliance. Section VIII(a) 

describes how Independent Producers 

can become ineligible. The proposed 

amendment sets forth the specific 

crimes (including foreign crimes) that 

could cause ineligibility in Section 

III(a)(1). Independent Producers would 

also become ineligible if they are issued 

a written ineligibility notice from the 

Department stating that they: (A) 

engaged in a systematic pattern or 

practice of violating the conditions of 

this exemption; (B) intentionally 

violated, or knowingly participated in 

violations of, the conditions of this 

exemption; (C) engaged in a systematic 

pattern or practice of failing to correct 

prohibited transactions, report those 

transactions to the IRS on Form 5330, 

and pay excise taxes involving 

investment advice; or (D) provided 

materially misleading information to the 

Department in connection with the its 

conduct under the exemption. 

Independent Producers would become 

ineligible six months after the 

conviction date, the date of the 

Department’s written determination 

regarding a foreign conviction, or the 

date of the Department’s written 

ineligibility notice, as applicable. 

During the six-month period, the 

Independent Producers are still 

fiduciaries, subject to all of the fiduciary 

requirements and prohibited transaction 

rules. Thus, Independent Producers 

must continue to comply with the 

exemption during those six months, and 

any transactions that do not meet the 

terms of the exemption will be subject 

to excise tax and ERISA penalties. The 

ineligibility remains in effect until the 

earliest of: a subsequent judgement 

reversing a person’s conviction, 10 years 

after the person became ineligible or is 

released from imprisonment, if later, or 

the Department grants an individual 

exemption permitting reliance on this 

exemption, notwithstanding the 

conviction. 

Section VIII(b) delineates similarly 

eligibility provisions for Insurers. An 

entity will be ineligible to serve as an 

Insurer with respect to the exemption if 

it has a conviction for a crime listed 

under Section VIII(b)(1) or has been 

determined to be ineligible under 

Section VIII(b)(2). Furthermore, because 

Insurers that fail to satisfy the 

conditions of this exemption would not 

necessarily engage in a non-exempt 

prohibited transaction, their eligibility 

to rely on this exemption would not be 

linked to engaging in a systematic 

pattern or practice of failing to correct 

prohibited transactions, report those 

transactions to the IRS on Form 5330, 

and pay excise taxes imposed by Code 

section 4975 in connection with nonexempt prohibited transactions 

involving investment advice under Code 

section 4975(e)(3)(B). The Department 

notes that, as a fiduciary, before 

recommending an insurance product the 

Independent Producer is responsible for 

ensuring that the relevant insurance 

company is an Insurer permitted to sell 

its products through Independent 

Producers and Section VIII. The 

Independent Producer may reasonably 

rely on an Insurer’s representations to it 

regarding the Insurer’s continued 

eligibility under the exemption. 

Insurers would become ineligible six 

months after the conviction date, the 

date of the Department’s written 

determination regarding a foreign 

conviction, or the date of the 

Department’s written ineligibility 

notice, as applicable. Unlike 

Independent Producers, Insurers might 

not be fiduciaries; therefore, they might 

not be subject to all fiduciary 

requirements during the six-month 

period. As fiduciaries, the Independent 

Producers should be aware of whether 

they are selling products of any Insurers 

that will become ineligible within six 

months. The ineligibility remains in 

effect until the earliest of: a subsequent 

judgement reversing a person’s 

conviction, 10 years after the person 

became ineligible or is released from 

imprisonment, if later, or the 

Department grants an individual 

exemption permitting reliance on this 

exemption, notwithstanding the 

conviction. 

Proposed Section VIII(c) would 

provide Independent Producers and 

Insurers with the opportunity to be 

heard. Like PTE 2020–02, there would 

be no separate evidentiary hearing 

following conviction by a U.S. federal or 

state court of competent jurisdiction, 

but Section XVIII(c)(1) would allow 

Insurers and Independent Producers to 

submit a petition informing the 

Department of the conviction and 

seeking a determination that continued 

reliance on the exemption would not be 

contrary to the purposes of the 

exemption. 

Proposed Section VIII(c)(2) would 

allow Independent Producers and 

Insurers to request an evidentiary 

hearing before becoming ineligible and 

losing access to the exemption. Before 

issuing a written ineligibility notice, the 

Department will issue a written warning 

to the Independent Producer or Insurer, 

as applicable, identifying specific 

conduct implicating proposed Section 

VIII(a)(2) or (b)(2), as applicable. The 

Insurer or Independent Producer then 

has a six-month opportunity to correct 

their conduct. At the end of the sixmonth period, if the Department 

determines that the Independent 

Producer or Insurer has not taken 

appropriate action to prevent recurrence 

of the disqualifying conduct, it will give 

the Independent Producer or Insurer the 

opportunity to be heard in person 

(including by phone or 

videoconference), in writing, or a 

combination thereof, before the 

Department issues the written 

ineligibility notice. The opportunity to 

be heard will be limited to one 

conference unless the Department 

determines in its sole discretion to 

allow additional conferences. 

Following a hearing for either foreign 

convictions or other misconduct, the 

Department’s determination will be 

based solely on its discretion. The 

Department will consider the following 

when making its determination: 

• the gravity of the offense; 

• the degree to which the underlying 

conduct concerned individual 

misconduct, or, alternately, corporate 

managers or policy; 

• recency of the conduct at issue; 

• any remedial measures the 

Independent Producer or Insurer has 

taken upon learning of the underlying 

conduct; and 

• other factors the Department 

determines in its discretion are 

reasonable in light of the nature and 

purposes of the exemption. 

If the Department issues a written 

ineligibility notice, the notice will 

articulate the basis for the Department’s 

determination that the Independent 

Producer or Insurer engaged in conduct 

described in Section VIII(a)(2). 

If an Insurer or Independent Producer 

is ineligible to rely on amended PTE 84– 

24, proposed Section VIII(d) provides 

that the Insurer or Independent 

Producer may rely on a statutory or 


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19Set forth in 29 CFR 2570.35(d). 

separate administrative prohibited 

transaction exemption if one is available 

or seek an individual prohibited 

transaction exemption from the 

Department. The Department notes that 

PTE 2020–02 will generally be available 

for insurance companies that are 

ineligible to serve as Insurers under PTE 

84–24. However, the Department may, 

as part of its eligibility determination 

process, determine that an entity is not 

eligible for either PTE 2020–02 or PTE 

84–24. The written warning, 

opportunity to be heard, and written 

ineligibility notice would each clearly 

state the exemption or exemptions for 

which ineligibility was being 

considered. 

If an Insurer cannot sell its products 

under PTE 84–24, the Department 

would consider an application for an 

individual exemption for that Insurer, 

and any resulting exemption would 

likely require the Insurer to be a 

fiduciary and acknowledge fiduciary 

status. If an applicant seeks retroactive 

relief in connection with an exemption 

application, the Department will 

consider the application in accordance 

with its retroactive exemption policy.19

The Department may require additional 

prospective compliance conditions as a 

condition of retroactive relief. The 

Department requests comments on the 

process described above, including 

whether it would be helpful to provide 

greater details about the evidentiary 

hearing and the written ineligibility 

notice, and, if so, what details are 

necessary. 

Recordkeeping 

As discussed above, the Department is 

proposing to add a new Section IX to 

PTE 84–24, which would require the 

party engaging in a transaction covered 

by the exemption to maintain records 

necessary to enable certain persons 

(described in proposed Section IX(a)(2)) 

to determine whether the conditions of 

this exemption have been met. This 

provision would apply to all of the 

conditions of PTE 84–24, replacing the 

more limited existing recordkeeping 

requirement in current Section V(e). 

This proposed recordkeeping 

requirement is consistent with PTE 

2020–02 and is intended to protect the 

rights of plan participants and 

beneficiaries and IRA owners by 

ensuring that they and the Department 

have sufficient information to confirm 

that that exemption conditions have 

been satisfied. 

Executive Order 12866 and 13563 

Statement 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying costs and benefits, reducing 

costs, harmonizing rules, and promoting 

flexibility. 

Under Executive Order 12866, as 

amended by Executive Order 14094, 

‘‘significant’’ regulatory actions are 

subject to review by the Office of 

Management and Budget (OMB). 

Section 3(f) of the Executive Order 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

rule (1) having an annual effect on the 

economy of $200 million or more, or 

adversely and materially affecting a 

sector of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or state, local, or 

tribal governments or communities; (2) 

creating a serious inconsistency or 

otherwise interfering with an action 

taken or planned by another agency; (3) 

materially altering the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or (4) 

raising legal or policy issues for which 

centralized review would meaningfully 

further the President’s priorities or the 

principles set forth in the Executive 

Order. It has been determined that this 

proposal is a ‘‘significant regulatory 

action’’ within the scope of section 

3(f)(1) of the Executive Order. 

Therefore, the Department has 

provided an assessment of the 

proposal’s potential costs, benefits, and 

transfers, and OMB has reviewed this 

proposed amendment pursuant to the 

Executive Order. 

Paperwork Reduction Act 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department conducts a 

preclearance consultation program to 

allow the general public and Federal 

agencies to comment on proposed and 

continuing collections of information in 

accordance with the Paperwork 

Reduction Act of 1995 (PRA). This helps 

ensure that the public understands the 

Department’s collection instructions, 

respondents can provide the requested 

data in the desired format, reporting 

burden (time and financial resources) is 

minimized, collection instruments are 

clearly understood, and the Department 

can properly assess the impact of 

collection requirements on respondents. 

The Department is soliciting 

comments regarding the information 

collection request (ICR) included in the 

proposed amendments to the ICR. To 

obtain a copy of the ICR, contact the 

PRA addressee below or go to 

RegInfo.gov. The Department has 

submitted a copy of the rule to the OMB 

in accordance with 44 U.S.C. 3507(d) for 

review of its information collections. 

The Department and OMB are 

particularly interested in comments 

that: 

• Evaluate whether the collection of 

information is necessary for the 

functions of the agency, including 

whether the information will have 

practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology 

(e.g., permitting electronically delivered 

responses). 

Commenters may send their views on 

the Departments’ PRA analysis in the 

same way they send comments in 

response to the proposed rule as a 

whole (for example, through the 

www.regulations.gov website), including 

as part of a comment responding to the 

broader proposed rule. Comments are 

due by January 2, 2024 to ensure their 

consideration. 

PRA Addressee: Address requests for 

copies of the ICR to James Butikofer, 

Office of Research and Analysis, U.S. 

Department of Labor, Employee Benefits 

Security Administration, 200 

Constitution Avenue NW, Room N– 

5718, Washington, DC 20210, or 

ebsa.opr@dol.gov. ICRs also are 

available at http://www.RegInfo.gov 

(http://www.reginfo.gov/public/do/ 

PRAMain). 

As discussed in detail above, PTE 84– 

24, as amended, would exclude 

investment advice fiduciaries from the 

existing relief provided in Section II, 

which would be redesignated as Section 

II(a) and add new Sections VI–VIII, 

which would provide relief for 

investment advice limited to the narrow 

category of transactions in which an 


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20For a more detailed discussion of the marginal 

costs associated with the proposed amendments to 

PTE 84–24, refer to the Notice of Proposed 

Rulemaking published elsewhere in today’s edition 

of the Federal Register. 

21 Internal Department calculation based on 2023 

labor cost data. For a description of the 

Department’s methodology for calculating wage 

rates, see https://www.dol.gov/sites/dolgov/files/ 

EBSA/laws-and-regulations/rules-and-regulations/ 

technical-appendices/labor-cost-inputs-used-inebsa-opr-ria-and-pra-burden-calculations-june2019.pdf. 

22 67 FR 17263 (Apr. 9, 2002). 

23The Department estimates approximately 

94.2% of Retirement Investors receive disclosures 

electronically, which is the sum of the estimated 

share of Retirement Investors receiving electronic 

disclosures under the 2002 electronic disclosure 

safe harbor (58.2%) and the estimated share of 

Retirement Investors receiving electronic 

disclosures under the 2020 electronic disclosure 

safe harbor (36.0%). 

24United States Post Service, First-Class Mail, 

(2023), https://www.usps.com/ship/first-classmail.htm. 

25 Insurance Information Institute, A Firm 

Foundation: How Insurance Supports the 

Economy—Captives by State, 2021–2022, https://

www.iii.org/publications/a-firm-foundation-howinsurance-supports-the-economy/a-50-statecommitment/captives-by-state (last visited August 

25, 2023). 

26 Insurance Information Institute, Facts + 

Statistics: Industry Overview- Insurance Industry ata-Glance, https://www.iii.org/fact-statistic/factsstatistics-industry-overview. 

27The number of captive insurance agents is 

estimated as: (3,328 captive agents × 47.4%) = 1,577 

captive insurance agents serving the annuity 

market. 

28 Internal Department of Labor calculations 

based on the number of unique service providers 

listed as pension consultants on the 2021 Form 

5500 Schedule C. 

29This estimate is based on 2014 data from SNL 

Financial on life insurance companies that reported 

receiving either individual or group annuity 

considerations. (See Employee Benefits Security 

Administration, Regulating Advice Markets 

Definition of the Term ‘‘Fiduciary’’ Conflicts of 

Interest—Retirement Investment Advice Regulatory 

Impact Analysis for Final Rule and Exemptions, 

(April 2016), https://www.dol.gov/sites/dolgov/files/ 

EBSA/laws-and-regulations/rules-and-regulations/ 

completed-rulemaking/1210-AB32-2/ria.pdf.) 

30Employee Benefits Security Administration, 

United States Department of Labor, Private Pension 

Plan Bulletin: Abstract of 2021 Form 5500 Annual 

Reports, Table A1 (2023; forthcoming). 

31Cerulli Associates, 2023 Retirement-End 

Investor, Exhibit 5.12. The Cerulli Report, (2023). 

32EBSA identified 57,575 new plans in its 2021 

Form 5500 filings, or 7.5 percent of all Form 5500 

pension plan filings. 

33 In 2020, 7 percent of traditional IRAs were held 

by insurance companies. (See Investment Company 

Institute, The Role of IRAs in US Households’ 

Saving for Retirement, 2020, 27(1) ICI Research 

Perspective (2021), https://www.ici.org/system/files/ 

attachments/pdf/per27-01.pdf.) This number has 

been adjusted downward to 3 percent to account for 

the fact that some transactions are not covered by 

this exemption. 

independent, insurance-only agent, or 

Independent Producer, provides 

investment advice to a Retirement 

Investor regarding an annuity or 

insurance contract. Additionally, as 

amended, the exemption requires the 

Independent Producers engaging in 

these transactions to adhere to certain 

Impartial Conduct Standards, including 

acting in the best interest of the plans 

and IRAs when providing advice. 

Financial institutions and investment 

professionals that engage in all other 

investment advice transactions, 

including those involving captive or 

career insurance agents would rely on 

PTE 2020–02 to receive exemptive relief 

for investment advice transactions. The 

amendment would revise the 

recordkeeping requirements for all 

entities relying on PTE 84–24. 

Additionally, for Independent 

Producers, the exemption would require 

entities to make certain new disclosures, 

conduct an annual retrospective review, 

and comply with policy and procedure 

requirements. 

These requirements are ICRs subject 

to the PRA. Readers should note that the 

burden discussed below conforms to the 

requirements of the PRA and is not the 

incremental burden of the changes.20

1.1 Preliminary Assumptions 

In the analysis discussed below, a 

combination of personnel would 

perform the tasks associated with the 

ICRs at an hourly wage rate of $158.94 

for an Independent Producer, $63.45 for 

clerical personnel, and $159.34 for a 

legal professional, and $128.11 for a 

senior executive.21

The Department does not have 

information on how many Retirement 

Investors, including plan beneficiaries 

and participants and IRA owners, 

receive disclosures electronically from 

investment advice fiduciaries. For the 

purposes of this analysis, the 

Department assumes that the percent of 

Retirement Investors receiving 

disclosures electronically would be 

similar to the percent of plan 

participants receiving disclosures 

electronically under the Department’s 

2020 electronic disclosure rules.22

Accordingly, the Department estimates 

that 94.2 percent of the disclosures sent 

to Retirement Investors would be sent 

electronically, and the remaining 5.8 

percent would be sent by mail.23 The 

Department requests comment on these 

assumptions. 

The Department assumes any 

documents sent by mail would be sent 

by First Class Mail, incurring a postage 

cost of $0.66 for each piece of mail.24

Additionally, the Department assumes 

that documents sent by mail would 

incur a material cost of $0.05 for each 

page. 

1.2 Costs Associated With Satisfying 

Conditions for Transactions Described 

in Section III(a)–(f) 

Insurance agents and brokers, pension 

consultants, insurance companies, and 

investment company principal 

underwriters are expected to continue to 

take advantage of the exemption for 

transactions described in Section III(a)– 

(f). The Department estimates that 2,986 

insurance agents and brokers, pension 

consultants, and insurance companies 

will continue to take advantage of the 

exemption for transactions described in 

Section III(a)–(f). This estimate is based 

on the following assumptions: 

• According to the Insurance 

Information Institute, in 2022, there 

were 3,328 captive agents, which are 

insurance agents who work for only one 

insurance company.25 The Insurance 

Information Institute also found that life 

and annuity insurers accounted for 47.4 

percent of all net premiums for the 

insurance industry in 2022.26 Thus, the 

Department estimates there are 1,577 

insurance agents and brokers relying on 

the existing provisions.27

• The Department expects that 

pension consultants would continue to 

rely on the existing PTE 84–24. Based 

on 2021 Form 5500 data, the 

Department estimates that 1,011 

pension consultants serve the retirement 

market.28

• In the Department’s 2016 

Regulatory Impact Analysis, it estimated 

that 398 insurance companies wrote 

annuities.29 The Department requests 

information on how the number of 

insurance companies underwriting 

annuities has changed since then. 

In addition, investment company 

principals may rely on the exemption. 

In the Department’s experience, 

investment company principal 

underwriters almost never use PTE 84– 

24. Therefore, the Department assumes 

that 20 investment company principal 

underwriters will engage in one 

transaction annually under PTE 84–24, 

10 of which are assumed to service 

plans and 10 are assumed to service 

IRAs. 

The Department requests comments 

on how many entities currently rely on 

PTE 84–24 for transactions that do not 

involve investment advice and would 

continue to rely on the exemption as 

amended. 

Further, the Department estimates 

that there are approximately 765,124 

ERISA covered pension plans 30 and 

approximately 67.8 million IRAs.31 The 

Department estimates that 7.5 percent of 

plans are new accounts or new financial 

advice relationships 32 and that 3 

percent of plans will use the exemption 

for covered transactions.33 Based on 

these assumptions, the Department 

estimates that 1,722 plans would be 


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34 765,124 plans × 7.5 percent of plans are new 

× 3 percent of plans with relationships with 

insurance agents or pension consultants = 1,722 

plans. 

35Cerulli Associates, U.S. Retirement EndInvestor 2023: Fostering Comprehensive 

Relationships, The Cerulli Report. 

36The Department lacks data on the number of 

IRA owners that own multiple IRAs. To provide 

scope of magnitude, one source reported that in 

2019, 19 percent of IRA owners contributed to both 

a traditional IRA and Roth IRA. (See Investment 

Company Institute, The Role of IRAs in US 

Households’ Saving for Retirement, 2020, 27(1) ICI 

Research Perspective (2021), https://www.ici.org/ 

system/files/attachments/pdf/per27-01.pdf.) This 

statistic does not account for individuals who own 

multiple IRAs of each type or those who did not 

contribute in 2019, but it provides a lower bound. 37 In 2020, 7 percent of traditional IRAs were held 

by insurance companies. (See Investment Company 

Institute, The Role of IRAs in US Households’ 

Saving for Retirement, 2020, 27(1) ICI Research 

Perspective (2021), https://www.ici.org/system/files/ 

attachments/pdf/per27-01.pdf.) This number has 

been adjusted downward to 3 percent to reflect the 

removal of transactions not covered by this 

exemption. The number of IRAs affected is 

estimated as: (83,252,750 IRAs × 2.1% IRAs 

assumed to be new IRAs × 3% of IRAs held by 

insurance companies) = 52,449 IRAs. 

38This includes 2,986 insurance agents and 

brokers, pension consultants, and insurance 

companies and 10 investment company 

underwriters servicing IRAs. 

39The burden is estimated as: (1,722 plans × 5 

hours) + (2,996 financial institutions × 3 hours) = 

17,598 hours. A labor rate of approximately $159.34 

is used for a legal professional. The labor rate is 

applied in the following calculation: [(1,722 plans 

× 5 hours) + (2,996 financial institutions × 3 hours)] 

× $159.34 per hour = $2,804,065. 

40The burden is estimated as: ((52,449 IRAs × 5.8 

percent paper × 2 minutes per plan) ÷ 60 minutes) 

= 101 hours. A labor rate of $63.45 is used for a 

clerical worker. The labor rate is applied in the 

following calculation: ((52,449 IRAs × 5.8 percent 

paper × 2 minutes per plan) ÷ 60 minutes) × $63.45 

per hour = $6,434. 

41The material cost is estimated as: (52,449 IRA 

authorizations × 5.8 percent paper) × [$0.66 + ($0.05 

× 2)] = $2,312. 

affected by the proposed amendments to 

PTE 84–24.34

The proposed amendments to 84–24 

would also affect new IRA accounts. 

The Department does not have data on 

the number of new IRA accounts that 

are opened each year. However, in 2022, 

of the 67.8 million IRA owners, 1.4 

million, or approximately 2.1 percent, 

opened an IRA for the first time.35

Inferring from this statistic, the 

Department estimates that 2.1 percent of 

IRA accounts are new each year. The 

Department acknowledges that some 

IRA owners may have multiple IRAs, 

and as such, this statistic may 

underestimate the percentage of new 

IRAs opened.36 Additionally, the 

Department estimates that about 3 

percent of these new IRAs, or 

approximately 52,000 IRAs, would use 

PTE 84–24 for covered transactions.37

The proposed amendment would 

exclude entities currently relying on the 

exemption, under the existing 

provisions for investment advice. As 

such, the Department acknowledges that 

the estimates discussed above may 

overestimate the entities able to rely on 

the exemption for relief for the 

transactions described in Section III(a)– 

(f). The Department requests comment 

or data on whether the relief in 

proposed Section II(a) for the covered 

transactions in Section III(a)–(f) would 

still be utilized after investment advice 

is excluded. 

1.2.1. Written Authorization From the 

Independent Plan Fiduciary 

Based on the estimates discussed 

above, the Department estimates that 

authorizing fiduciaries for 1,722 plans 

and authorizing fiduciaries for 52,449 

IRA holders would be required to send 

an advance written authorization to the 

2,996 financial institutions for IRAs 38

for exemptive relief for the transactions 

described in Section III(a)–(f). 

In the plan universe, it is assumed 

that a legal professional would spend 

five hours per plan reviewing the 

disclosures and preparing an 

authorization form. In the IRA universe, 

it is assumed that a legal professional 

working on behalf of the financial 

institution for IRAs will spend three 

hours drafting an authorization form for 

IRA holders to sign. This results in an 

hour burden of 17,598 hours with an 

equivalent cost of $2.8 million.39

The Department expects that plans 

will send the written authorization 

through already established electronic 

means, and thus, the Department does 

not expect plans to incur any cost to 

send the authorization. The Department 

expects that 94.2 percent of written 

authorization for IRAs will be sent 

electronically at no additional burden. 

The remaining 5.8 percent of 

authorizations will be mailed. For paper 

authorizations, the Department assumes 

that clerical staff will spend two 

minutes preparing and sending the 

authorization resulting in an hour 

burden of approximately 101 hours with 

an equivalent cost of $6,434.40

In total, as presented in the table 

below, the written authorization 

requirement, under the new conditions 

of relief, is expected to result in an 

annual total hour burden of 17,699 

hours with an equivalent cost of 

$2,810,499. 

TABLE 1—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE WRITTEN AUTHORIZATION

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal .............................................................................. 17,598 $2,804,065 17,598 $2,804,065 

Clerical ........................................................................... 101 6,434 101 6,434 

Total ........................................................................ 17,699 2,810,499 17,699 2,810,499 

The Department assumes 5.8 percent 

of authorizations for IRAs would be 

distributed by mail and that the 

authorization will include two pages. 

Accordingly, the Department estimates 

an annual cost burden of approximately 

$2,312.41

TABLE 2—MATERIAL AND POSTAGE COST ASSOCIATED WITH THE WRITTEN AUTHORIZATION

Activity 

Year 1 Subsequent years 

Pages Cost Pages Cost 

Material and Postage Cost ...................................................... 2 $2,312 2 $2,312 


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42This includes 2,986 insurance agents and 

brokers, pension consultants, and insurance 

companies and 20 investment company 

underwriters servicing plans and IRAs. 

43The burden is estimated as: [2,996 financial 

institutions × (1 hour for plans + 1 hour for IRAs)] 

= 5,992 hours. A labor rate of approximately 

$159.34 is used for a legal professional. The labor 

rate is applied in the following calculation: [2,996 

financial institutions × (1 hour for plans + 1 hour 

for IRAs)] × $159.34 per hour = $954,765. 

44The burden is estimated as: {[(52,449 IRAs + 

10 investment company principal underwriters for 

IRAs) × 5.8 percent paper × 2 minutes] ÷ 60 minutes 

= 101 hours. A labor rate of $63.45 is used for a 

clerical worker. The labor rate is applied in the 

following calculation: {[(52,449 IRAs + 10 

investment company principal underwriters for 

IRAs) × 5.8 percent paper × 2 minutes] ÷ 60 

minutes} × $63.45 = $6,435. 

45The material cost is estimated as: [(52,449 IRA 

authorizations + 10 investment company principal 

underwriters for IRAs) × 5.8 percent paper] × [$0.66 

+ ($0.05 × 7)] = $2,313. 

TABLE 2—MATERIAL AND POSTAGE COST ASSOCIATED WITH THE WRITTEN AUTHORIZATION—Continued 

Activity 

Year 1 Subsequent years 

Pages Cost Pages Cost 

Total .................................................................................. 2 2,312 2 2,312 

1.2.2. Disclosure 

Based on the estimates discussed 

above, the Department estimates that 

approximately 3,006 financial 

institutions 42 would continue to utilize 

the exemption for exemptive relief for 

the transactions described in Section 

III(a)–(f) for each plan and IRA. In total, 

the Department estimates that 2,996 

entities would prepare disclosures for 

plans and 2,996 entities would prepare 

disclosures for IRAs. The Department 

assumes that an in-house attorney will 

spend one hour of legal staff time 

drafting the disclosure for plans and one 

hour of legal staff time drafting the 

disclosure for IRAs. This results in an 

hour burden of 5,992 hours with an 

equivalent cost of $954,765.43

The Department expects that the 

disclosures for plans would be 

distributed through already established 

electronic means, and thus, the 

Department does not expect plans to 

incur any cost to send the disclosures. 

The Department expects that 94.2 

percent of disclosures for IRAs will be 

sent electronically at no additional 

burden. The remaining 5.8 percent of 

authorizations will be mailed. For paper 

copies, a clerical staff member is 

assumed to require two minutes to 

prepare and mail the required 

information to the plan fiduciary. This 

information will be sent to the 52,449 

IRAs plus the 10 investment company 

principal underwriters for IRAs entering 

into an agreement with an insurance 

agent, pension consultant, or mutual 

fund principal underwriter, and based 

on the above, the Department estimates 

that this requirement results in an hour 

burden of 84 hours with an equivalent 

cost of $6,435.44

In total, as presented in the table 

below, providing the pre-authorization 

materials is expected to impose an 

annual total hour burden of 6,093 hours 

with an equivalent cost of $961,200. 

TABLE 3—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE DISCLOSURE

Activity 

Year 1 Subsequent years 

Burden hours Equivalent 

burden cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 5,992 $954,765 5,992 $954,765 

Clerical ..................................................................................... 101 6,435 101 6,435 

Total .................................................................................. 6,093 961,200 6,093 961,200 

The Department assumes that this 

information will include seven pages 

with 94.2 percent of disclosures 

distributed electronically through 

traditional electronic methods at no 

additional burden, and the remaining 

5.8 percent of disclosures will be 

mailed. Accordingly, the Department 

estimates an annual cost burden of 

approximately $2,313.45

TABLE 4—MATERIAL AND POSTAGE COST ASSOCIATED WITH THE DISCLOSURE

Year 1 Subsequent years 

Pages Equivalent 

burden cost Pages Equivalent burden cost 

Material and Postage Cost ...................................................... 7 $2,313 7 $2,313 

Total .................................................................................. 7 2,313 7 2,313 

1.3 Costs Associated With Satisfying 

Conditions for Transactions Described 

in Section III(g) 

The amendment would provide 

investment advice fiduciaries with relief 

for Independent Producers for 

transactions in which the Independent 

Producer receives an insurance sales 

commission as a result of the provision 

of investment advice, regarding the 

purchase of an annuity contract of a 

financial institution that is not an 

Affiliate. The Department expects that 

the financial institutions covered by this 

proposal would be insurance companies 

that directly write annuities. The 

proposed amendments outline 

conditions pertaining to disclosure, 


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76018 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

46Annemarie McPherson Spears, 7 Findings From 

the 2022 Agency Universe Study, (October 13, 

2022), https://www.iamagazine.com/news/7- 

findings-from-the-2022-agency-universe-study?__

hstc=79369803.5fd6a87d75ca

95f942e9dc33fed281b9.1691447156981.

1691447156981.1691447156981.1&__

hssc=79369803.3.1691447156981&__

hsfp=2180945085. 

47This estimate is based on 2014 data from SNL 

Financial on life insurance companies reported 

receiving either individual or group annuity 

considerations. (See Conflict of Interest Final Rule, 

Regulatory Impact Analysis for Final Rule and 

Exemptions, U.S. Department of Labor (April 2016), 

www.dol.gov/sites/dolgov/files/EBSA/laws-andregulations/rules-and-regulations/completedrulemaking/1210–AB32–2/ria.pdf). 

48Ramnath Balasubramanian, Rajiv Dattani, 

Asheet Mehta, & Andrew Reich, Unbundling Value: 

How Leading Insurers Identify Competitive 

Advantage, McKinsey & Company, (June 2022), 

https://www.mckinsey.com/industries/financialservices/our-insights/unbundling-value-howleading-insurers-identify-competitive-advantage; 

Sheryl Moore, The Annuity Model Is Broken, Wink 

Intel, (June 2022), https://www.winkintel.com/2022/ 

06/the-annuity-model-is-broken-reprint/. 

49According to the Insurance Information 

Institute, in 2022, 20 percent of individual 

annuities were sold through independent brokerdealers, 18 percent through independent agents, 15 

percent through career agents, 24 percent through 

banks, 17 percent through full-service national 

broker-dealers, 3 percent through direct-response, 

and 2 percent through other methods. For the 

purposes of this analysis, the Department considers 

those sales made by career agents and full-service 

national broker-dealers to be ‘‘captive,’’ and those 

made by independent broker-dealers and 

independent agents to be ‘‘independent.’’ The 

Department assumes that 46 percent of sales by 

banks are captive, while 54 percent of sales by 

banks are independent. As such, the Department 

assumes that 46 percent of sales are sold through 

captive channels {[15% + 17% + (46% × 24%)]/ 

(100%¥6%)}, while 54 percent of sales are sold 

through independent channels {[20% + 18% + 

(54% × 24%)]/(100%¥6%)}. 

50The number of insurance companies using 

captive distribution channels is estimated as (398 

× 46%) = 183 insurance companies. The number of 

insurance companies using independent 

distribution channels is estimated as (398¥183) = 

215 insurance companies. 

51LIMRA estimates that, in 2016, 70 insurers had 

more than $38.5 million in sales, which is the Small 

Business Administration’s threshold for a large 

entity within the insurance industry. (See LIMRA, 

U.S. Individual Annuity Yearbook: 2016 Data, 

LIMRA Secure Retirement Institute (2017)). 

52The number of large insurance companies 

using a captive distribution channel is estimated as: 

(70 large insurance companies × 46%) = 32 

insurance companies. The number of small 

insurance companies using a captive distribution 

channel is estimated as: (183 insurance 

companies—32 large insurance companies) = 151 

small insurance companies. 

53The number of large insurance companies 

using an independent distribution channel is 

estimated as: (70 large insurance companies × 54%) 

= 38 insurance companies. The number of small 

insurance companies using an independent 

distribution channel is estimated as: (215 insurance 

companies¥38 large insurance companies) = 177 

small insurance companies. 

policies and procedures, and 

retrospective reviews that need to be 

satisfied to rely on the exemption. These 

conditions are tailored to protect 

Retirement Investors from the specific 

conflicts that arise for Independent 

Producers when providing investment 

advice to Retirement Investors regarding 

the purchase of an annuity. 

The Independent Insurance Agents 

and Brokers of America estimated that 

there were 40,000 Independent 

Producers in 2022.46 The Department 

does not have data on what percent of 

Independent Producers service the 

retirement market. For the purposes of 

this analysis, the Department assumes 

that 10 percent, or 4,000, of these 

Independent Producers service the 

retirement market. The Department 

requests comment on this assumption. 

Insurance companies are primarily 

regulated by states and no single 

regulator records a nationwide count of 

insurance companies. Although state 

regulators track insurance companies, 

the total number of insurance 

companies cannot be calculated by 

aggregating individual state totals, 

because individual insurance 

companies often operate in multiple 

states. In the Department’s 2016 

Regulatory Impact Analysis, it estimated 

that 398 insurance companies wrote 

annuities.47 The Department requests 

information on how the number of 

insurance companies underwriting 

annuities has changed since then. 

Some of these insurance companies 

may not sell any annuity contracts in 

the IRA or plans. Because of these data 

limitations, the Department includes all 

398 insurance companies in its cost 

estimate, though this likely represents 

an upper bound. 

Insurance companies sell insurance 

products through (1) captive insurance 

agents that work for an insurance 

company as employees or as 

independent contractors who 

exclusively sell the insurance 

company’s products and (2) 

independent agents who sell multiple 

insurance companies’ products. In 

recent years, the market has seen a shift 

away from captive distribution toward 

independent distribution.48

The Department does not have data 

on the number of insurance companies 

using captive agents or Independent 

Producers. Based on data on the sales of 

individual annuities by distribution 

channel, the Department estimates that 

approximately 46 percent of insurance 

companies underwriting annuities sell 

annuities through captive distribution 

channels, while 54 percent sell 

annuities through independent 

distribution channels.49 For the 

purposes of this analysis, the 

Department estimates that 215 

insurance companies distribute 

annuities through independent channels 

and would rely on PTE 84–24 for 

transactions involving investment 

advice.50

The Department estimates that 70 of 

the 398 insurance companies are large 

entities.51 For the purposes of this 

analysis, the Department assumes the 

percent of small insurance companies 

using each distribution channel is the 

same as for all insurance companies. 

That is, the Department assumes that 46 

percent of insurance companies (183 

insurance companies) sell annuities 

through captive distribution channels, 

of which 151 are estimated to be small 

insurance companies and the remaining 

32 large insurance companies.52

Additionally, 54 percent (215 insurance 

companies) sell annuities through 

independent distribution channels, of 

which 177 are estimated to be small 

insurance companies and the remaining 

38 are large.53 The Department 

recognizes that the distribution of sales 

by distribution channel is likely 

different from the distribution of 

insurance companies by distribution 

channel. The Department requests 

comment on how many insurance 

companies sell annuities through 

captive and independent distribution 

channels. The Department also requests 

comment on whether, or how many, 

insurance companies may rely on both 

methods of distribution. 

1.3.1 Disclosures 

As discussed above, the Department 

assumes that 4,000 Independent 

Producers service the retirement market, 

selling the products of 215 insurance 

companies. For more generalized 

disclosures, the Department assumes 

that insurance companies would 

prepare and provide disclosures to 

Independent Producers selling their 

products. However, some of the 

disclosures are tailored specifically to 

the Independent Producer. The 

Department assumes that these 

disclosures would need to be prepared 

by the Independent Producer 

themselves. The Department recognizes 

that some may rely on intermediaries in 

the distribution channel to prepare more 

specific disclosures; however, the 

Department expects that the costs 

associated with the preparation would 

be covered by commissions retained by 

the intermediary for its services. 

1.3.1.1. Written Acknowledgement That 

the Independent Producer Is a Fiduciary 

by the Independent Producer 

The Department is including a model 

statement in the preamble to PTE 84–24 

that details what should be included in 

a fiduciary acknowledgment for 


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54 85 FR 82798, 82827 (Dec. 18, 2020). The model 

statement was also included in Frequently Asked 

Questions in April 2021, New Fiduciary Advice 

Exemption: PTE 2020–02 Improving Investment 

Advice for Workers & Retirees Frequently Asked 

Questions, Q13, (April 2021), https://www.dol.gov/ 

sites/dolgov/files/ebsa/about-ebsa/our-activities/ 

resource-center/faqs/new-fiduciary-adviceexemption.pdf. 

55The burden is estimated as: {[(215 financial 

institutions + 200 Independent Producers) × (10 

minutes)] ÷ 60 minutes} = 69 hours. A labor rate 

of approximately $159.34 is used for a legal 

professional. The labor rate is applied in the 

following calculation: {[(215 financial institutions + 

200 Independent Producers) × (10 minutes)] ÷ 60 

minutes} × $159.34 = $11,021. 

56The burden is estimated as: {[(215 financial 

institutions + 200 Independent Producers) × (30 

minutes)] ÷ 60 minutes} = 208 hours. A labor rate 

of approximately $159.34 is used for a legal 

professional. The labor rate is applied in the 

following calculation: {[(215 financial institutions + 

200 Independent Producers) × (30 minutes)] ÷ 60 

minutes} × $159.34 = $33,063. 

57The burden is estimated as: (4,000 Independent 

Producers × 0.5 hours) = 2,000 hours. A labor rate 

of approximately $159.34 is used for a legal 

professional. The labor rate is applied in the 

following calculation: (4,000 Independent 

Producers × 0.5 hours) × $159.34 = $318,680. 

financial institutions.54 The Department 

assumes that the time associated with 

preparing the disclosures would be 

minimal. Further, these disclosures are 

expected to be uniform in nature. 

Accordingly, the Department estimates 

that these disclosures would not take a 

significant amount of time to prepare. 

Due to the nature of Independent 

Producers, the Department assumes that 

most financial institutions would make 

draft disclosures available to 

Independent Producers pertaining to 

their fiduciary status. However, the 

Department expects that a small 

percentage of Independent Producers 

may draft their own disclosures. The 

Department assumes that an in-house 

attorney for all 215 financial institutions 

as well as 5 percent of Independent 

Producers, or 200 Independent 

Producers, would spend 10 minutes of 

legal staff time to produce a written 

acknowledgement in the first year. This 

results in an estimated hour burden of 

approximately 69 with an equivalent 

cost of $11,021 in the first year.55

TABLE 5—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE FIDUCIARY ACKNOWLEDGEMENT

Activity 

Year 1 Subsequent years 

Burden hours Equivalent 

burden cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 69 $11,021 0 $0 

Total .................................................................................. 69 11,021 0 0 

1.3.1.2 Written Statement of the Best 

Interest Standard of Care Owed by the 

Independent Producer 

As discussed above, the Department 

assumes that 4,000 Independent 

Producers service the retirement market, 

selling the products of 215 financial 

institutions. Due to the nature of 

Independent Producers, the Department 

assumes that most financial institutions 

would make draft disclosures available 

to Independent Producers, pertaining to 

the annuities they offer. The Department 

assumes that an in-house attorney for all 

215 financial institutions as well as 5 

percent of Independent Producers, or 

200 Independent Producers, would 

spend 30 minutes of legal staff time to 

prepare the statement in the first year. 

This results in an hour burden of 208 

hours with an equivalent cost of $33,063 

in the first year.56

TABLE 6—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE WRITTEN STATEMENT OF THE BEST INTEREST

STANDARD OF CARE OWED

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 208 $33,063 0 $0 

Total .................................................................................. 208 33,063 0 0 

1.3.1.2. Written Description of the 

Services Provided and the Products the 

Independent Producer Is Licensed and 

Authorized To Sell 

As discussed above, the Department 

assumes that 4,000 Independent 

Producers service the retirement market, 

selling the products of 215 insurance 

companies. For disclosures tailored 

more specifically to an individual 

Independent Producer, the Department 

assumes that the disclosure would need 

to be prepared by the Independent 

Producer. The Department recognizes 

that many Independent Producers may 

not have the internal resources to 

prepare such disclosure. The 

Department expects that some may rely 

on intermediaries in the distribution 

channel to prepare the disclosures and 

some may seek external legal support. 

However, the Department expects that 

the costs associated with the 

preparation would be covered by 

commission retained by the 

intermediary for its services or by the 

fee paid to external legal support. As 

such, the Department still attributes this 

cost back to the Independent Producer. 

The Department requests comment on 

this assumption. 

Accordingly, the Department assumes 

that all 4,000 Independent Producers in 

this analysis would need to prepare the 

disclosure. The Department assumes 

that, for each of these Independent 

Producers, an attorney would spend 30 

minutes of legal staff time drafting the 

written description. This results in an 

hour burden of 2,000 hours with an 

equivalent cost of $318,680 in the first 

year.57


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58The burden is estimated as: (4,000 Independent 

Producers × 1 hour) = 4,000 hours. A labor rate of 

approximately $159.34 is used for a legal 

professional. The labor rate is applied in the 

following calculation: (4,000 hours × $159.34) = 

$637,360. 

59 In 2020, 7 percent of traditional IRAs were held 

by insurance companies. (See Investment Company 

Institute, The Role of IRAs in US Households’ 

Saving for Retirement, 2020, 27(1) ICI Research 

Perspective (2021). https://www.ici.org/system/files/ 

attachments/pdf/per27-01.pdf.) This number has 

been adjusted downward to 3 percent to reflect the 

removal of transactions not covered by this 

exemption.). The number of IRAs affected is 

estimated as: (83,252,750 IRAs × 2.1% IRAs 

assumed to be new IRAs × 3% of IRAs held by 

insurance companies) = 52,449 IRAs. 

60The burden is estimated as: (52,449 rollovers × 

1 hour) = 52,449 hours. A labor rate of 

approximately $158.94 is used for an Independent 

Producer. The labor rate is applied in the following 

calculation: (52,449 rollovers × 1 hour) × $158.94 

= $8,336,244. 

TABLE 7—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE WRITTEN DESCRIPTION OF SERVICE PROVIDED

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 2,000 $318,680 0 $0 

Total .................................................................................. 2,000 318,680 0 0 

1.3.1.4. A Written Statement of the 

Independent Producer’s Material 

Conflicts of Interest and the Amount of 

the Insurance Commission that Would 

Be Paid to the Independent Producer in 

Connection With the Purchase by a 

Retirement Investor of the 

Recommended Annuity 

As discussed above, for disclosures 

tailored more specifically to an 

individual Independent Producer, the 

Department assumes that the disclosure 

would need to be prepared by the 

Independent Producer. The Department 

recognizes that many Independent 

Producers may not have the internal 

resources to prepare such disclosure, 

however they may already have a 

similar statement to satisfy other legal 

requirements. The Department expects 

that some may rely on intermediaries in 

the distribution channel to prepare the 

disclosures and some may seek external 

legal support. However, the Department 

expects that the costs associated with 

the preparation would be covered by the 

commission retained by the 

intermediary for its services or by the 

fee paid to external legal support. As 

such, the Department still attributes this 

cost back to the Independent Producer. 

The Department requests comment on 

this assumption. 

Accordingly, the Department assumes 

that all 4,000 Independent Producers in 

this analysis would need to prepare the 

disclosure. The Department assumes 

that, for each of these entities, an 

attorney would spend one hour of legal 

staff time drafting the written 

description. This results in an hour 

burden of 4,000 hours with an 

equivalent cost of $637,360 in the first 

year.58

TABLE 8—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE WRITTEN STATEMENT OF THE INDEPENDENT

PRODUCER’S MATERIAL CONFLICTS OF INTEREST

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 4,000 $637,360 0 $0 

Total .................................................................................. 4,000 637,360 0 0 

1.3.1.5 Before Recommending an 

Annuity, Engaging in a Rollover, or 

Making a Recommendation to a Plan 

Participant as to the Post-Rollover 

Investment of Assets Currently Held in 

a Plan, the Independent Producer Must 

Document Its Conclusions as to Whether 

a Rollover Is in the Investor’s Best 

Interest 

The proposed amendment would 

require an Independent Producer to 

provide a disclosure to investors that 

documents their consideration as to 

whether a recommended annuity or 

rollover is in the Retirement Investor’s 

best interest. Due to the nature of this 

disclosure, the Department assumes that 

the content of the disclosure would 

need to be prepared by the Independent 

Producer. The Department recognizes 

that some may rely on intermediaries in 

the distribution channel, and some may 

seek external legal support to assist with 

drafting the disclosures. However, the 

Department expects that most 

Independent Producers would prepare 

the disclosure themselves. The 

Department requests comment on this 

assumption. 

For the purposes of this analysis, the 

Department uses its estimate for the 

number of new IRA accounts held by 

insurance companies as a proxy for the 

number of Retirement Investors that 

have relationships with Independent 

Producers that would engage in 

transactions covered under the 

exemption. As such, the Department 

estimates that 52,449 Retirement 

Investors would receive documentation 

on whether the recommended annuity is 

in their best interest each year. 59

The Department assumes that, for 

each of these Retirement Investors, an 

Independent Producer would spend one 

hour of a financial manager’s time 

drafting the documentation. This results 

in an estimated hour burden of 52,449 

hours with an equivalent cost of $8.3 

million annually.60


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61This is estimated as: (52,449 Retirement 

Investors × 5.8%) = 3,042 paper disclosures. 

62This is estimated as: [(3,042 paper disclosures 

× 5 minutes) ÷ 60 minutes] = 254 hours. A labor 

rate of $63.45 is used for a clerical worker. The 

labor rate is applied in the following calculation: 

[(3,042 paper disclosures × 5 minutes) ÷ 60 minutes] 

× $63.45 = $16,085. 

63This is estimated as: 3,042 rollovers resulting 

in a paper disclosure × [$0.66 postage + ($0.05 per 

page × 7 pages)] = $3,072. 

64The number of large insurance companies 

using an independent distribution channel is 

estimated as: (70 large insurance companies × 54%) 

= 38 insurance companies. The number of small 

insurance companies using an independent 

distribution channel is estimated as: (215 insurance 

companies¥38 large insurance companies) = 177 

small insurance companies. 

65This is estimated as: [(177 small insurance 

companies × 5 hours) + (38 large insurance 

companies × 10 hours)] = 1,265 hours. A labor rate 

of $159.34 is used for a legal professional. The labor 

rate is applied in the following calculation: [(177 

small insurance companies × 5 hours) + (38 large 

insurance companies × 10 hours)] × $159.34 = 

$201,565. 

TABLE 9—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE ROLLOVER DOCUMENTATION

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Insurance Sales Agent ............................................................ 52,449 $8,336,244 52,449 $8,336,244 

Total .................................................................................. 52,449 8,336,244 52,449 8,336,244 

1.3.1.6 Mailing Cost for Disclosures 

Sent From Independent Producers to 

Retirement Investors 

As discussed at the beginning of the 

cost section, The Department assumes 

that 5.8 percent of disclosures would be 

mailed. Accordingly, of the estimated 

52,449 affected Retirement Investors, 

3,042 Retirement Investors are estimated 

to receive paper disclosures.61 For paper 

copies, a clerical staff member is 

assumed to require five minutes to 

prepare and mail the required 

information to the Retirement Investor. 

This requirement results in an estimated 

hour burden of 254 hours with an 

equivalent cost of $16,085.62

TABLE 10—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH PREPARING THE DISCLOSURES

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Clerical ..................................................................................... 254 $16,085 254 $16,085 

Total .................................................................................. 254 16,085 254 16,085 

The Department assumes that this 

information would include seven pages, 

resulting in an annual cost burden for 

material and paper costs of $3,072.63

TABLE 11—MATERIAL COST ASSOCIATED WITH THE DISCLOSURES

Activity 

Year 1 Subsequent years 

Pages Equivalent burden 

cost Pages Equivalent burden cost 

Cost .......................................................................................... 7 $3,072 7 $3,072 

Total .................................................................................. 7 3,072 7 3,072 

Additionally, Independent Producers 

would be required to send the 

documentation to the insurance 

company. The Department expects that 

such documentation would be sent 

electronically and result in a de minimis 

burden. The Department requests 

comment on this assumption. 

1.3.2 Policies and Procedures 

1.3.2.1 Financial Institutions Must 

Establish, Maintain, and Enforce 

Written Policies and Procedures for the 

Review of Each Recommendation Before 

an Annuity Is Issued to a Retirement 

Investor, and the Financial Institution 

Review Its Policies and Procedures at 

Least Annually 

As discussed above, the Department 

estimates that 215 financial institutions 

would need to meet this requirement, of 

which 177 are estimated to be small and 

38 are estimated to be large.64 The 

Department assumes that, for each large 

insurance company, an in-house 

attorney would spend 10 hours of legal 

staff time drafting the written 

description, and for each small 

insurance company, an in-house 

attorney would spend 5 hours of legal 

staff time. This results in an hour 

burden of 1,265 hours with an 

equivalent cost of $201,565 in the first 

year.65

In the following years, the Department 

assumes for each insurance company, 

an in-house attorney would spend two 

hours of legal staff time reviewing the 

policies and procedures. This results in 

an hour burden of 430 hours with an 


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66This is estimated as: (215 insurance companies 

× 2 hours) = 430 hours. A labor rate of $159.34 is 

used for a legal professional. The labor rate is 

applied in the following calculation: (215 insurance 

companies × 2 hours) × $159.34 = $68,516. 67The number of requests in the first year is 

estimated as 215 insurance companies × (165 

requests in PTE 2020–02/19,290 financial 

institutions in PTE 2020–02) = 2 requests. The 

number of requests in subsequent years is estimated 

as: 215 insurance companies × (50 requests in PTE 

2020–02/19,290 financial institutions in PTE 2020– 

02) = 1 request. 

68The burden is estimated as: [(2 × 15 minutes) 

÷ 60 minutes] = 0.5 hours. A labor rate of $63.45 

is used for a clerical worker. The labor rate is 

applied in the following calculation: [(2 × 15 

minutes) ÷ 60 minutes] × $63.45 = $31.73. 

69The burden is estimated as: [(1 × 15 minutes) 

÷ 60 minutes] = 0.25 hours. A labor rate of $63.45 

is used for a clerical worker. The labor rate is 

applied in the following calculation: [(1 × 15 

minutes) ÷ 60 minutes] × $63.45 = $15.86. 

70NAIC Model Suitability Regulations, 

§ 6(F)(1)(d) (2010), https://naic.soutronglobal.net/ 

Portal/Public/en-GB/RecordView/Index/25201. 

71NAIC Model Suitability Regulations, 

§ 6(C)(1)(d) (2020), https://content.naic.org/sites/ 

default/files/inline-files/MDL-275.pdf. 

72As of October of 2021, only three states had not 

adopted some form of Model Regulation 275. (See 

A.D. Banker & Company, Annuity Best Interest State 

Map and FAQs, (October 2021), https://blog.

adbanker.com/annuity-best-interest-state-map-andfaqs). 

73This is estimated as: (4,000 Independent 

Producers × 3 insurance companies covered) = 

12,000 retrospective reviews. 

74This is estimated as: (12,000/215) = 55.81 

retrospective reviews, on average 

75This is estimated as: (12,000 retrospective 

reviews × 1 hour) = 12,000 hours. A labor rate of 

$159.34 is used for a legal professional. The labor 

rate is applied in the following calculation: (12,000 

retrospective reviews × 1 hour) × $159.34 = 

$1,912,080. 

equivalent cost of $68,516 in subsequent 

years.66

The proposed amendments would 

also require financial institutions to 

provide their complete policies and 

procedures to the Department upon 

request. As discussed above for PTE 

2020–02, the Department estimates that 

it would request 165 policies and 

procedures in the first year and 50 in 

subsequent years. Assuming that the 

number of requests for the entities 

covered under PTE 2020–02 is 

equivalent to the number of requests for 

the entities covered under PTE 84–24, 

the Department assumes that it will 

request two policies and procedures 

from insurers in the first year and one 

request in subsequent years, on 

average.67 This results in an estimated 

cost of approximately $32 in the first 

year 68 and $16 in subsequent years.69

Insurers would also be required to 

review each of the Independent 

Producer’s recommendations before an 

annuity is issued to a Retirement 

Investor to ensure compliance with the 

Impartial Conduct Standards and other 

conditions of this exemption. This 

requirement is consistent with the 

language in NAIC’s 2010 Model 

Regulation 275, Suitability in Annuity 

Transactions,70 and the 2020 revisions 

to Model Regulation 275, which 

expanded the suitability standard to a 

best interest standard.71 Most states 

have adopted some form of the Model 

Regulation 275.72 As such, the 

Department expects that reviewing 

recommendations before an annuity is 

issued is common industry practice. 

Accordingly, the Department expects 

that financial institutions would incur a 

de minimis burden to comply with the 

proposed amendments, when already 

complying with Model Regulation 275. 

The Department requests comment on 

this assumption. 

TABLE 12—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH POLICIES AND PROCEDURES

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 1,265 $201,565 430 $68,516 

Clerical ..................................................................................... 1 32 1 16 

Total .................................................................................. 1,266 201,597 430 68,532 

1.3.3. Retrospective Review 

The proposed amendment would 

require financial institutions to conduct 

a retrospective review at least annually. 

The review would be required to be 

reasonably designed to prevent 

violations of and achieve compliance 

with (1) the Impartial Conduct 

Standards, (2) the terms of this 

exemption, and (3) the policies and 

procedures governing compliance with 

the exemption. The review would be 

required to evaluate the effectiveness of 

the supervision system, any 

noncompliance discovered in 

connection with the review, and 

corrective actions taken or 

recommended, if any. Financial 

institutions would also be required to 

provide the Independent Producer with 

the underlying methodology and results 

of the retrospective review. 

1.3.3.1. The Insurance Company Must 

Conduct a Retrospective Review, at 

Least Annually, for Each Independent 

Producer That Sells the Insurance 

Company’s Annuity Contracts 

The Department estimates that 215 

financial institutions would need to 

meet this requirement. For this 

requirement the information collection 

is documenting the findings of the 

retrospective review. The Departments 

lacks data on, for a given insurance 

company, how many Independent 

Producers, on average, sell their 

annuities. For the purposes of this 

analysis, the Department assumes that, 

on average, each Independent Producer 

sells the products of three financial 

institutions. From each of these 

financial institutions, they may sell 

multiple products. As such, the 

Department assumes that each year, 

insurance companies would need to 

prepare a total of 12,000 retrospective 

reviews,73 or on average, each insurance 

company would need to prepare 

approximately 56 retrospective 

reviews.74 The Department requests 

comment on this estimate. The 

Department assumes that, for each 

Independent Producer selling an 

insurance company’s products, an inhouse attorney at the insurance 

company would spend one hour of legal 

staff time, on average, drafting the 

retrospective review. This results in an 

estimated hour burden of 12,000 hours 

with an equivalent cost of $1.9 

million.75


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76This is estimated as: [(12,000 retrospective 

reviews × 15 minutes) ÷ 60 minutes] = 3,000 hours. 

A labor rate of $128.11 is used for a Senior 

Executive Officer. The labor rate is applied in the 

following calculation: [(12,000 retrospective 

reviews × 15 minutes) ÷ 60 minutes] × $128.11 = 

$384,330. 

77This is estimated as: [(12,000 retrospective 

reviews × 5 minutes) ÷ 60 minutes] = 1,000 hours. 

A labor rate of $63.45 is used for a clerical worker. 

The labor rate is applied in the following 

calculation: [(12,000 retrospective reviews × 5 

minutes) ÷ 60 minutes] × $63.45 = $63,450. 

TABLE 13—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE RETROSPECTIVE REVIEW

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden Hours Equivalent burden cost 

Legal ........................................................................................ 12,000 $1,912,080 12,000 $1,912,080 

Total .................................................................................. 12,000 1,912,080 12,000 1,912,080 

1.3.3.2. Certification by the Senior 

Executive Officer of the Insurance 

Company 

The Department assumes it would 

take a Senior Executive Officer 15 

minutes to certify the report. This 

results in an annual hour burden of 

3,000 hours with an equivalent cost of 

$384,330.76

TABLE 14—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE CERTIFICATION BY THE SENIOR EXECUTIVE

OFFICER

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Senior Executive Officer .......................................................... 3,000 $384,330 3,000 $384,330 

Total .................................................................................. 3,000 384,330 3,000 384,330 

1.3.3.3. The Insurance Company 

Provides to the Independent Producer 

the Methodology and Results of the 

Retrospective Review 

The Department assumes that the 

insurance company would provide the 

methodology and results electronically. 

The Department requests comment on 

this assumption. The Department 

estimates that it would take clerical staff 

five minutes to prepare and send each 

of the estimated 12,000 retrospective 

reviews. This results in an annual hour 

burden of 1,000 hours with an 

equivalent cost of $63,450.77 The 

Department expects that the results 

would be provided electronically, thus 

the Department does not expect there to 

be any material costs with providing 

Independent Producers with the 

retrospective review. 

TABLE 15—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE PROVISION OF THE RESULTS OF THE

RETROSPECTIVE REVIEW

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Clerical ..................................................................................... 1,000 $63,450 1,000 $63,450 

Total .................................................................................. 1,000 63,450 1,000 63,450 

1.3.4. Recordkeeping Requirement 

The proposed amendment would 

change the current recordkeeping 

requirements to incorporate a new 

provision that is similar to the 

recordkeeping provision in PTE 2020– 

02. This requirement would replace the 

more limited existing recordkeeping 

requirement in current version of PTE 

84–24, which requires sufficient records 

to demonstrate that the conditions of the 

exemption have been met. The 

Department does not have data on how 

many pension consultants, insurance 

companies, and investment company 

principal underwriters would continue 

to rely on PTE 84–24 as amended 

without also complying with the 

amended PTE 2020–02. In this analysis, 

the Department assumes that all of the 

pension consultants and investment 

company principal underwriters 

continuing to rely on the amended PTE 

84–24 would also rely on the amended 

PTE 2020–02. Thus, to avoid double 

counting the compliance cost, this 

analysis does not include the cost 

associated with the proposed 

recordkeeping requirement for these 

entities. 


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78This is estimated as: (4,000 Independent 

Producers + 215 insurance companies) × 2 hours = 

8,430 hours. A labor rate of $158.94 is used for an 

Independent Producer and a rate of $159.34 for an 

insurance company legal professional. The labor 

rate is applied in the following calculation: [(4,000 

Independent Producers × 2 hours × $158.94) + (215 

insurance companies × 2 hours × $159.34)] = 

$1,340,036. 

79The burden is estimated as: {[(4,000 

Independent Producers × 10 requests) × 30 minutes] 

÷ 60 minutes} = 20,000 hours. A labor rate of 

$158.94 is used for an Independent Producer. The 

labor rate is applied in the following calculation: 

{[(4,000 Independent Producers × 10 requests) × 30 

minutes] ÷ 60 minutes} × $158.94 = $3,178,800. 

80 5 U.S.C. 601 et seq. 

81 5 U.S.C. 601(2), 603(a); see also 5 U.S.C. 551. 

82Public Law 104–4, 109 Stat. 48 (Jan. 4, 1995). 

For this analysis, the Department 

considers the cost for insurance 

companies and Independent Producers 

complying with the proposed 

recordkeeping requirements. The 

Department estimates that the 

additional time needed to maintain 

records for the financial institutions to 

be consistent with the exemption would 

take an Independent Producer 2 hours, 

resulting in an hour burden of 8,430 

hours and an equivalent cost of $1.3 

million.78

TABLE 16—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE RECORDKEEPING REQUIREMENT

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Legal ........................................................................................ 8,430 $1,340,036 8,430 $1,340,036 

Total .................................................................................. 8,430 1,340,036 8,430 1,340,036 

For the purposes of this analysis, the 

Department assumes that, on average, an 

Independent Producer would receive 10 

requests per year and that preparing and 

sending each request would take a legal 

professional, on average, 30 minutes. 

Based on these assumptions, the 

Department estimates that the proposed 

amendments would result in an annual 

hour burden of 20,000 hours with an 

equivalent cost of approximately $3.2 

million.79 The Department requests 

comment on how often financial 

institutions would receive requests for 

records and how long the preparation of 

such records would take. 

TABLE 17—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH THE RECORDKEEPING REQUIREMENT

Activity 

Year 1 Subsequent years 

Burden hours Equivalent burden 

cost Burden hours Equivalent burden cost 

Independent Producer ............................................................. 20,000 $3,178,800 20,000 $3,178,800 

Total .................................................................................. 20,000 3,178,800 20,000 3,178,800 

1.4. Overall Summary 

These paperwork burden estimates 

are summarized as follows: 

Type of Review: Revision of an 

Existing Collection. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Title: Prohibited Transaction 

Exemption (PTE) 84–24 for Certain 

Transactions Involving Insurance 

Agents and Brokers, Pension 

Consultants, Insurance Companies, and 

Investment Company Principal 

Underwriters. 

OMB Control Number: 1210–0158. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

7,221. 

Estimated Number of Annual 

Responses: 119,376. 

Frequency of Response: Initially, 

Annually, When engaging in exempted 

transaction. 

Estimated Total Annual Burden 

Hours: 123,726 hours. 

Estimated Total Annual Burden Cost: 

$8,457. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(RFA) 80 imposes certain requirements 

on rules subject to the notice and 

comment requirements of section 553(b) 

of the Administrative Procedure Act or 

any other law.81 Under section 603 of 

the RFA, agencies must submit an initial 

regulatory flexibility analysis (IRFA) of 

a proposal that is likely to have a 

significant economic impact on a 

substantial number of small entities, 

such as small businesses, organizations, 

and governmental jurisdictions. This 

proposed amended exemption, along 

with related amended exemptions and a 

proposed rule amendment published 

elsewhere in this issue of the Federal 

Register, is part of a rulemaking 

regarding the definition of fiduciary 

investment advice, which the 

Department has determined likely will 

have a significant economic impact on 

a substantial number of small entities. 

The impact of this proposed amendment 

on small entities is included in the IRFA 

for the entire project, which can be 

found in the related notice of proposed 

rulemaking found elsewhere in this 

edition of the Federal Register. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 82 requires each 

federal agency to prepare a written 

statement assessing the effects of any 

federal mandate in a proposed or final 

rule that may result in an expenditure 

of $100 million or more (adjusted 

annually for inflation with the base year 

1995) in any 1 year by state, local, and 

tribal governments, in the aggregate, or 

by the private sector. For purposes of 

the Unfunded Mandates Reform Act, as 

well as Executive Order 12875, this 

proposed amended exemption does not 

include any Federal mandate that will 

result in such expenditures. 


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83Reorganization Plan No. 4 of 1978 (5 U.S.C. 

App. 1 (2018)) generally transferred the authority of 

the Secretary of the Treasury to grant administrative 

exemptions under Code section 4975 to the 

Secretary of Labor. 

Federalism Statement 

Executive Order 13132 outlines 

fundamental principles of federalism. It 

also requires federal agencies to adhere 

to specific criteria in formulating and 

implementing policies that have 

‘‘substantial direct effects’’ on the states, 

the relationship between the national 

government and states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with State and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of State and local officials in 

the preamble to the final regulation. 

Notwithstanding this, ERISA section 

514 provides, with certain exceptions 

specifically enumerated, that the 

provisions of Titles I and IV of ERISA 

supersede any and all laws of the States 

as they relate to any employee benefit 

plan covered under ERISA. 

The Department does not intend this 

exemption to change the scope or effect 

of ERISA section 514, including the 

savings clause in ERISA section 

514(b)(2)(A) for State regulation of 

securities, banking, or insurance laws. 

Ultimately, the Department does not 

believe this proposed class exemption 

has federalism implications because it 

has no substantial direct effect on the 

States, on the relationship between the 

National government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. 

General Information 

The attention of interested persons is 

directed to the following: (1) The fact 

that a transaction is the subject of an 

exemption under ERISA section 408(a) 

and Code section 4975(c)(2) does not 

relieve a fiduciary, or other party in 

interest or disqualified person with 

respect to a Plan, from certain other 

provisions of ERISA and the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of ERISA 

section 404 which require, among other 

things, that a fiduciary act prudently 

and discharge his or her duties 

respecting the Plan solely in the 

interests of the participants and 

beneficiaries of the Plan. Additionally, 

the fact that a transaction is the subject 

of an exemption does not affect the 

requirement of Code section 401(a) that 

the Plan must operate for the exclusive 

benefit of the employees of the 

employer maintaining the Plan and their 

beneficiaries; (2) Before the proposed 

exemption may be granted under ERISA 

section 408(a) and Code section 

4975(c)(2), the Department must find 

that it is administratively feasible, in the 

interests of Plans and their participants 

and beneficiaries and IRA owners, and 

protective of the rights of participants 

and beneficiaries of the Plan and IRA 

owners; (3) If granted, the proposed 

exemption is applicable to a particular 

transaction only if the transaction 

satisfies the conditions specified in the 

exemption; and (4) The proposed 

exemption, if granted, is supplemental 

to, and not in derogation of, any other 

provisions of ERISA and the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction. 

The Department is proposing the 

following amendment on its own 

motion, pursuant to its authority under 

ERISA section 408(a) and Code section 

4975(c)(2) and in accordance with 

procedures set forth in 29 CFR part 

2570, subpart B (76 FR 66637 (October 

27, 2011)).83

Proposed Amendment to PTE 84–24 

Section I—Retroactive Application 

The restrictions of sections 

406(a)(1)(A) through (D) and 406(b) of 

the Act and the taxes imposed by 

section 4975 of the Code do not apply 

to any of the transactions described in 

section III of this exemption in 

connection with purchases made before 

November 1, 1977, if the conditions set 

forth in section IV are met. 

Section II—Prospective Application 

(a) Except for fiduciaries providing 

investment advice within the meaning 

of ERISA section 3(21)(A)(ii) or Code 

section 4975(e)(3)(B) and regulations 

thereunder, the restrictions of section 

406(a)(1)(A) through (D) and 406(b) of 

the Act and the taxes imposed by 

section 4975 of the Code do not apply 

to any of the transactions described in 

section III(a)–(f) of this exemption in 

connection with purchases made after 

October 31, 1977, if the conditions set 

forth in sections IV, V and IX are met. 

(b) Effective on the date that is 60 

days after the publication of a final 

amendment in the Federal Register, the 

restrictions of ERISA sections 

406(a)(1)(D) and 406(b) and the taxes 

imposed by Code section 4975(a) and (b) 

by reason of Code sections 4975(c)(1)(E) 

and (F) for fiduciaries providing 

investment advice within the meaning 

of ERISA section 3(21)(A)(ii) or Code 

section 4975(e)(3)(B) and regulations 

thereunder will not apply if the 

fiduciaries are Independent Producers, 

the transactions meet the requirements 

described in Section III(g), the 

conditions set forth in Sections VI, VII 

and IX are satisfied, and the 

Independent Producer and Insurer are 

not ineligible under Section VIII. 

Section III—Transactions 

(a) The receipt, directly or indirectly, 

by an insurance agent or broker or a 

pension consultant of a Mutual Fund 

Commission or an Insurance Sales 

Commission from an insurance 

company in connection with the 

purchase, with plan assets, of an 

insurance or annuity contract. 

(b) The receipt of a Mutual Fund 

Commission by a Principal Underwriter 

for an investment company registered 

under the Investment Company Act of 

1940 (hereinafter referred to as an 

investment company) in connection 

with the purchase, with plan assets, of 

securities issued by an investment 

company. 

(c) The effecting by an insurance 

agent or broker, pension consultant or 

investment company Principal 

Underwriter of a transaction for the 

purchase, with plan assets, of an 

insurance or annuity contract or 

securities issued by an investment 

company. 

(d) The purchase, with plan assets, of 

an insurance or annuity contract from 

an insurance company. 

(e) The purchase, with plan assets, of 

an insurance or annuity contract from 

an insurance company which is a 

fiduciary or a service provider (or both) 

with respect to the plan solely by reason 

of the sponsorship of a Pre-approved 

Plan. 

(f) The purchase, with plan assets, of 

securities issued by an investment 

company from, or the sale of such 

securities to, an investment company or 

an investment company Principal 

Underwriter, when such investment 

company, Principal Underwriter, or the 

investment company investment adviser 

is a fiduciary or a service provider (or 

both) with respect to the plan solely by 

reason of: (1) the sponsorship of a Preapproved plan; or (2) the provision of 

Nondiscretionary Trust Services to the 

plan; or (3) both (1) and (2). 

(g) The receipt, directly or indirectly, 

by an Independent Producer of an 

Insurance Sales Commission as a result 


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of the provision of investment advice 

within the meaning of ERISA section 

3(21)(A)(ii) and Code section 

4975(e)(3)(B), regarding the purchase of 

a non-security annuity contract or other 

insurance product not regulated by the 

Securities and Exchange Commission 

(SEC) of an Insurer that is not an 

Affiliate, including as part of a rollover 

from a Plan to an IRA as defined in 

Code section 4975(e)(1)(B) or (C). 

Section IV—Conditions With Respect to 

Transactions Described in Section 

III(a)–(f) 

The following conditions apply solely 

to a transaction described in Section 

III(a)–(f): 

(a) The transaction is effected by the 

insurance agent or broker, pension 

consultant, insurance company or 

investment company Principal 

Underwriter in the ordinary course of its 

business as such a person. 

(b) The transaction is on terms at least 

as favorable to the plan as an arm’slength transaction with an unrelated 

party would be. 

(c) The combined total of all fees, 

commissions and other consideration 

received by the insurance agent or 

broker, pension consultant, insurance 

company, or investment company 

Principal Underwriter: 

(1) For the provision of services to the 

plan; and 

(2) In connection with the purchase of 

insurance or annuity contracts or 

securities issued by an investment 

company is not in excess of ‘‘reasonable 

compensation’’ within the 

contemplation of section 408(b)(2) and 

408(c)(2) of the Act and sections 

4975(d)(2) and 4975(d)(10) of the Code. 

If such total is in excess of ‘‘reasonable 

compensation,’’ the ‘‘amount involved’’ 

for purposes of the civil penalties of 

section 502(i) of the Act and the excise 

taxes imposed by section 4975(a) and (b) 

of the Code is the amount of 

compensation in excess of ‘‘reasonable 

compensation.’’ 

Section V—Conditions for Transactions 

Described in Section III(a) Through (d) 

The following conditions apply solely 

to a transaction described in subsections 

(a), (b), (c) or (d) of section III: 

(a) The insurance agent or broker, 

pension consultant, insurance company, 

or investment company Principal 

Underwriter is not 

(1) a trustee of the plan (other than a 

Nondiscretionary Trustee who does not 

render investment advice with respect 

to any assets of the plan), 

(2) a plan administrator (within the 

meaning of section 3(16)(A) of the Act 

and section 414(g) of the Code), 

(3) a fiduciary who is authorized to 

manage, acquire, or dispose of the plan’s 

assets on a discretionary basis, or 

(4) for transactions described in 

sections III (a) through (d) entered into 

after December 31, 1978, an employer 

any of whose employees are covered by 

the plan. 

Notwithstanding the above, an 

insurance agent or broker, pension 

consultant, insurance company, or 

investment company Principal 

Underwriter that is affiliated with a 

trustee or an investment manager 

(within the meaning of section VI(b)) 

with respect to a plan may engage in a 

transaction described in section III(a) 

through (d) of this exemption on behalf 

of the plan if such trustee or investment 

manager has no discretionary authority 

or control over the plan assets involved 

in the transaction other than as a 

Nondiscretionary Trustee. 

(b)(1) With respect to a transaction 

involving the purchase with plan assets 

of an insurance or annuity contract or 

the receipt of an Insurance Sales 

Commission thereon, the insurance 

agent or broker or pension consultant 

provides to an independent fiduciary or 

IRA owner with respect to the plan prior 

to the execution of the transaction the 

following information in writing and in 

a form calculated to be understood by a 

plan fiduciary who has no special 

expertise in insurance or investment 

matters: 

(A) If the agent, broker, or consultant 

is an affiliate of the insurance company 

whose contract is being recommended, 

or if the ability of such agent, broker or 

consultant to recommend insurance or 

annuity contracts is limited by any 

agreement with such insurance 

company, the nature of such affiliation, 

limitation, or relationship; 

(B) The Insurance Sales Commission, 

expressed as a percentage of gross 

annual premium payments for the first 

year and for each of the succeeding 

renewal years, that will be paid by the 

insurance company to the agent, broker 

or consultant in connection with the 

purchase of the recommended contract; 

and 

(C) For purchases made after June 30, 

1979, a description of any charges, fees, 

discounts, penalties or adjustments 

which may be imposed under the 

recommended contract in connection 

with the purchase, holding, exchange, 

termination or sale of such contract. 

(2) Following the receipt of the 

information required to be disclosed in 

subsection (b)(1), and prior to the 

execution of the transaction, the 

independent fiduciary or IRA owner 

acknowledges in writing receipt of such 

information and approves the 

transaction on behalf of the plan. Such 

fiduciary may be an employer of 

employees covered by the plan, but may 

not be an insurance agent or broker, 

pension consultant or insurance 

company involved in the transaction. 

Such fiduciary may not receive, directly 

or indirectly (e.g., through an Affiliate), 

any compensation or other 

consideration for his or her own 

personal account from any party dealing 

with the plan in connection with the 

transaction. 

(c)(1) With respect to a transaction 

involving the purchase with plan assets 

of securities issued by an investment 

company or the receipt of a Mutual 

Fund Commission thereon by an 

investment company Principal 

Underwriter, the investment company 

Principal Underwriter provides to an 

Independent fiduciary or IRA owner 

with respect to the plan, prior to the 

execution of the transaction, the 

following information in writing and in 

a form calculated to be understood by a 

plan fiduciary who has no special 

expertise in insurance or investment 

matters: 

(A) If the person recommending 

securities issued by an investment 

company is the Principal Underwriter of 

the investment company whose 

securities are being recommended, the 

nature of such relationship and of any 

limitation it places upon the Principal 

Underwriter’s ability to recommend 

investment company securities; 

(B) The Mutual Fund Commission, 

expressed as a percentage of the dollar 

amount of the plan’s gross payment and 

of the amount actually invested, that 

will be received by the Principal 

Underwriter in connection with the 

purchase of the recommended securities 

issued by the investment company; and 

(C) For purchases made after 

December 31, 1978, a description of any 

charges, fees, discounts, penalties, or 

adjustments which may be imposed 

under the recommended securities in 

connection with the purchase, holding, 

exchange, termination or sale of such 

securities. 

(2) Following the receipt of the 

information required to be disclosed in 

subsection (c)(1), and prior to the 

execution of the transaction, the 

independent fiduciary or IRA owner 

approves the transaction on behalf of 

the plan. Unless facts or circumstances 

would indicate the contrary, such 

approval may be presumed if the 

fiduciary or IRA owner permits the 

transaction to proceed after receipt of 

the written disclosure. Such fiduciary 

may be an employer of employees 

covered by the plan, but may not be a 

Principal Underwriter involved in the 


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transaction. Such fiduciary may not 

receive, directly or indirectly (e.g., 

through an affiliate), any compensation 

or other consideration for his or her own 

personal account from any party dealing 

with the plan in connection with the 

transaction. 

(d) With respect to additional 

purchases of insurance or annuity 

contracts or securities issued by an 

investment company, the written 

disclosure required under subsections 

(b) and (c) of this section V need not be 

repeated, unless— 

(1) More than three years have passed 

since such disclosure was made with 

respect to the same kind of contract or 

security, or 

(2) The contract or security being 

recommended for purchase or the 

commission with respect thereto is 

materially different from that for which 

the approval described in subsections 

(b) and (c) of this section was obtained. 

Section VI—Conditions for Transactions 

Described in Section III(g) 

The following conditions apply solely 

to a transaction described in subsection 

(g) of section III: 

(a) The Independent Producer is 

authorized to sell annuities from two or 

more unrelated Insurers. 

(b) The Independent Producer and the 

Insurer satisfy the applicable conditions 

in Sections VII and IX and are not 

ineligible under Section VIII. The 

Insurer will not necessarily become a 

fiduciary under ERISA or the Code 

merely by complying with the 

exemption’s conditions. 

(c) Exclusions. 

The relief in Section III(g) is not 

available if: 

(1) The Plan is covered by Title I of 

ERISA and the Independent Producer, 

Insurer, or any Affiliate is: 

(A) the employer of employees 

covered by the Plan, or 

(B) the Plan’s named fiduciary or 

administrator; provided however that a 

named fiduciary or administrator or 

their Affiliate may rely on the 

exemption if it is selected to provide 

investment advice by a fiduciary who: 

(i) is not the Insurer, Independent 

Producer, or an Affiliate; 

(ii) does not have a relationship to or 

an interest in the Insurer, Independent 

Producer, or any Affiliate that might 

affect the exercise of the fiduciary’s best 

judgment in connection with 

transactions covered by the exemption; 

(iii) does not receive and is not 

projected to receive within the current 

federal income tax year, compensation 

or other consideration for their own 

account from the Insurer, Independent 

Producer, or an Affiliate in excess of 

two (2) percent of the fiduciary’s annual 

revenues based upon its prior income 

tax year; or 

(iv) is not the IRA owner or 

beneficiary; or 

(2) The Independent Producer 

transaction involves the Independent 

Producer and Insurer acting in a 

fiduciary capacity other than as an 

investment advice fiduciary within the 

meaning of ERISA section 3(21)(A)(ii) 

and Code section 4975(e)(3)(B). 

Section VII—Investment Advice 

Arrangement 

Section VII(a) requires Independent 

Producers to comply with Impartial 

Conduct Standards, including a Best 

Interest standard, when providing 

fiduciary investment advice to 

Retirement Investors. Section VII(b) 

requires Independent Producers to 

provide to Retirement Investors a 

written acknowledgement that the 

Independent Producer is a fiduciary 

under Title I of ERISA and/or the Code, 

a written statement of the Best Interest 

standard of care, a written description of 

the services they will provide and the 

products they are licensed and 

authorized to sell, and a written 

statement of their material Conflicts of 

Interest and the amount of the Insurance 

Commission that will be paid to them in 

connection with the purchase of the 

recommended annuity by a Retirement 

Investor. In addition, before the sale of 

a recommended annuity, Independent 

Producers must consider and document 

their conclusions as to whether the 

recommended annuity is in the Best 

Interest of the Retirement Investor. 

Independent Producers recommending a 

rollover must also provide additional 

disclosure as set forth in subsection (b), 

below. Section VII(c) requires Insurers 

to adopt policies and procedures 

prudently designed to ensure 

compliance with the Impartial Conduct 

Standards and other conditions of this 

exemption. Section VII(d) requires the 

Insurer to conduct a retrospective 

review, at least annually, that is 

reasonably designed to detect and 

prevent violations of, and achieve 

compliance with, the Impartial Conduct 

Standards and the terms of this 

exemption. Section VII(e) allows 

Independent Producers to correct 

certain violations of the exemption 

conditions and maintain relief under the 

exemption. In complying with this 

Section VII, the Independent Producer 

may reasonably rely on factual 

representations from the Insurer, and 

Insurers may rely on factual 

representations from the Independent 

Producer, as long as they do not have 

knowledge that such factual 

representations are incomplete or 

inaccurate. 

(a) Impartial Conduct Standards 

(1) The Independent Producer’s 

investment advice is, at the time it is 

provided, in the Retirement Investor’s 

Best Interest. As defined in Section X(b), 

advice is in the Retirement Investor’s 

Best Interest if it (A) 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 in the conduct of an enterprise of a 

like character and with like aims, based 

on the investment objectives, risk 

tolerance, financial circumstances, and 

needs of the Retirement Investor, and 

(B) does not place the financial or other 

interests of the Independent Producer, 

Insurer or any Affiliate, Related Entity, 

or other party ahead of the Retirement 

Investor’s interests, or subordinate the 

Retirement Investor’s interests to those 

of the Independent Producer, Insurer or 

any Affiliate, Related Entity, or other 

party. For example, in choosing between 

annuity products offered by Insurers, 

whose products the Independent 

Producer is authorized to sell, it is not 

permissible for the Independent 

Producer to recommend a product that 

is worse for the Retirement Investor, but 

better or more profitable for the 

Independent Producer or the Insurer; 

(2) The Independent Producer 

receives no compensation in connection 

with the transaction other than the 

Insurance Sales Commission, and the 

Insurance Sales Commission does not 

exceed reasonable compensation within 

the meaning of ERISA section 408(b)(2) 

and Code section 4975(d)(2); and 

(3) The Independent Producer’s 

statements to the Retirement Investor 

about the recommended transaction and 

other relevant matters are not, at the 

time the statements are made, materially 

misleading. For purposes of this 

subsection, the term ‘‘materially 

misleading’’ includes omitting 

information that is needed to make the 

statement not misleading in light of the 

circumstances under which it was 

made. 

(b) Disclosure 

Prior to engaging in a transaction 

described in Section III(g), the 

Independent Producer provides the 

disclosures set forth in paragraphs (1)– 

(5) to the Retirement Investor: 

(1) A written acknowledgment that 

the Independent Producer is a fiduciary 

under Title I and the Code, as 

applicable, with respect to any 

investment recommendation provided 


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by the Independent Producer to the 

Retirement Investor; 

(2) A written statement of the Best 

Interest standard of care owed by the 

Independent Producer to the Retirement 

Investor; 

(3) A written description of the 

services to be provided and the 

Independent Producer’s material 

Conflicts of Interest that is accurate and 

not misleading in any material respects. 

The description will include the 

products the Independent Producer is 

licensed and authorized to sell. The 

description must inform the Retirement 

Investor in writing of any limits on the 

range of insurance products 

recommended. The Independent 

Producer must identify the specific 

Insurers and specific insurance products 

available for recommendation. 

(4) A written statement of the amount 

of the Insurance Commission that will 

be paid to the Independent Producer in 

connection with the purchase by a 

Retirement Investor of the 

recommended annuity. The statement 

must disclose the amount of expected 

Insurance Sales Commission, expressed 

both in dollars and as a percentage of 

gross annual premium payments, if 

applicable, for the first year and for each 

of the succeeding years. 

(5) A written statement that the 

Retirement Investor has the right to 

obtain specific information regarding 

costs, fees, and compensation, described 

in dollar amounts, percentages, 

formulas, or other means reasonably 

designed to present materially accurate 

disclosure of their scope, magnitude, 

nature with in sufficient detail to permit 

the Retirement Investor to make an 

informed judgment about the costs of 

the transaction and about the 

significance and severity of the Conflicts 

of Interest, and describe how the 

Retirement Investor can get the 

information, free of charge. 

(6) Before the sale of a recommended 

annuity, the Independent Producer 

considers and documents its 

conclusions as to whether the 

recommended annuity is in the Best 

Interest of the Retirement Investor and 

provides that documentation to both the 

Retirement Investor and to the Insurer; 

(7) Rollover disclosure. Before 

engaging in a rollover or making a 

recommendation to a Plan participant as 

to the post-rollover investment of assets 

currently held in a Plan, the 

Independent Producer must consider 

and document its conclusions as to 

whether a rollover is in the Retirement 

Investor’s Best Interest and provide that 

documentation to both the Retirement 

Investor and to Insurer. Relevant factors 

to consider must include to the extent 

applicable, but in any event are not 

limited to: 

(A) the alternatives to a rollover, 

including leaving the money in the 

Plan, if applicable; 

(B) the comparative fees and 

expenses; 

(C) whether an employer or other 

party pays for some or all administrative 

expenses; and 

(D) the different levels of fiduciary 

protection, services, and investments 

available. 

(6) Independent Producers and 

Insurers may rely in good faith on 

information and assurances from the 

other entities that are not Affiliates as 

long as they do not know (or have a 

reason to know) that such information is 

incomplete or inaccurate. 

(8) The Independent Producer is not 

required to disclose information 

pursuant to this Section VII(b) if such 

disclosure is otherwise prohibited by 

law. 

(c) Policies and Procedures 

(1) The Insurer establishes, maintains, 

and enforces written policies and 

procedures for the review of each 

recommendation before an annuity is 

issued to a Retirement Investor pursuant 

to an Independent Producer’s 

recommendation that are prudently 

designed to ensure compliance with the 

Impartial Conduct Standards and other 

exemption conditions. The Insurer’s 

prudent review of the Independent 

Producer’s specific recommendations 

must be made without regard to the 

Insurer’s own interests. An Insurer is 

not required to supervise an 

Independent Producer’s 

recommendations to Retirement 

Investors of products other than 

annuities offered by the Insurer. 

(2) The Insurer’s policies and 

procedures mitigate Conflicts of Interest 

to the extent that a reasonable person 

reviewing the policies and procedures 

and incentive practices as a whole 

would conclude that they do not create 

an incentive for the Independent 

Producer to place its interests, or those 

of the Insurer, or any Affiliate or Related 

Entity, ahead of the interests of the 

Retirement Investor. The Insurer’s 

procedures identify and eliminate 

quotas, appraisals, performance or 

personnel actions, bonuses, contests, 

special awards, differential 

compensation, or other similar actions 

or incentives that are intended, or that 

a reasonable person would conclude are 

likely, to result in recommendations 

that are not in the Retirement Investor’s 

Best Interest, or that subordinate the 

interests of the Retirement Investor to 

the Independent Producer’s own 

interests, or those of the Insurer, or to 

make recommendations based on the 

Independent Producer’s considerations 

of factors or interests other than the 

investment objectives, risk tolerance, 

financial circumstances, and needs of 

the Retirement Investor. 

(3) The Insurer’s policies and 

procedures include a prudent process 

for determining whether to authorize an 

Independent Producer to sell the 

Insurer’s annuity contracts to 

Retirement Investors, and for taking 

action to protect Retirement Investors 

from Independent Producers who have 

failed or are likely to fail to adhere to 

the Impartial Conduct Standards, or 

who lack the necessary education, 

training, or skill. A prudent process 

includes careful review of customer 

complaints, disciplinary history, and 

regulatory actions concerning the 

Independent Producer, as well as the 

Insurer’s review of the Independent 

Producer’s training, education, and 

conduct with respect to the Insurer’s 

own products. The Insurer must 

document the basis for its initial 

determination that it can rely on the 

Independent Producer to adhere to the 

Impartial Conduct Standards, and must 

review that determination at least 

annually as part of the retrospective 

review set forth in subsection (d) below. 

(4) Insurers must provide their 

complete policies and procedures to the 

Department within 10 business days of 

request. 

(d) Retrospective Review 

(1) The Insurer conducts a 

retrospective review, at least annually, 

that is reasonably designed to detect and 

prevent violations of, and achieve 

compliance with the conditions of the 

exemption, including the Impartial 

Conduct Standards, and the policies and 

procedures governing compliance with 

the exemption, including the 

effectiveness of the supervision system, 

the exceptions found, and corrective 

action taken or recommended, if any. 

The retrospective review must also 

include a review of Independent 

Producers’ rollover recommendations 

and the required rollover disclosure. As 

part of this review, the Insurer must 

prudently determine whether to 

continue to permit individual 

Independent Producers to sell the 

Insurer’s annuity contracts to 

Retirement Investors. Additionally, the 

Insurer updates the policies and 

procedures as business, regulatory, and 

legislative changes and events dictate, 

and to ensure they remain prudently 

designed, effective, and compliant with 

Section VII(c). 


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(2) The Insurer annually provides a 

written report to a Senior Executive 

Officer which details the review. 

(3) The Insurer provides to the 

Independent Producer the methodology 

and results of the retrospective review; 

(4) A Senior Executive Officer of the 

Insurer certifies, annually, that: 

(A) The officer has reviewed the 

report of the retrospective review report; 

(B) The Insurer has filed (or will file 

timely, including extensions) Form 5330 

reporting any non-exempt prohibited 

transaction discovered by the Insurer in 

connection with investment advice 

covered under Code section 

4975(e)(3)(B), advised the Independent 

Producer of the violation and any 

resulting excise taxes owed under Code 

section 4975, and notified the 

Department of Labor of the violation via 

email to PTE_84-24@dol.gov. 

(C) The Insurer has established 

policies and procedures prudently 

designed to ensure that Independent 

Producers achieve compliance with the 

conditions of this exemption, and has 

updated and modified the policies and 

procedures as appropriate after 

consideration of the findings in the 

retrospective review report; and 

(D) The Insurer has in place a prudent 

process to modify such policies and 

procedures as set forth in Section 

II(d)(1). 

(5) The review, report, and 

certification are completed no later than 

six months following the end of the 

period covered by the review. 

(6) The Insurer retains the report, 

certification, and supporting data for a 

period of six years and makes the report, 

certification, and supporting data 

available to the Department, within 10 

business days of request, to the extent 

permitted by law. 

(e) Self-Correction 

A non-exempt prohibited transaction 

will not occur due to a violation of the 

exemption’s conditions with respect to 

a transaction, provided: 

(1) Either the Independent Producer 

has refunded any charge to the 

Retirement Investor or the Insurer has 

rescinded a mis-sold annuity, canceling 

the contract and waiving the surrender 

charges; 

(2) The Independent Producer notifies 

the Department of Labor of the violation 

and the refund or rescission via email to 

PTE_84-24@dol.gov within 30 days of 

correction; 

(3) The correction occurs no later than 

90 days after the Independent Producer 

learned of the violation or reasonably 

should have learned of the violation; 

and 

(4) The Independent Producer notifies 

the person(s) at the Insurer responsible 

for conducting the retrospective review 

during the applicable review cycle and 

the violation and correction is 

specifically set forth in the written 

report of the retrospective review 

required under Section VII(d)(2). 

Section VIII—Eligibility 

(a) Independent Producer 

Subject to the timing and scope 

provisions set forth in subsection (3), 

and the opportunity to be heard as set 

forth in subsection (c), an Independent 

Producer will be ineligible to rely on the 

relief for transactions described in 

Section III(g), if within 10 years 

preceding the transaction, the 

Independent Producer is described in 

(1) or (2): 

(1) The Independent Producer has 

been convicted either: 

(A) by a U.S. federal or state court as 

a result of any felony involving abuse or 

misuse of such person’s employee 

benefit plan position or employment, or 

position or employment with a labor 

organization; any felony arising out of 

the conduct of the business of a broker, 

dealer, investment adviser, bank, 

insurance company or fiduciary; income 

tax evasion; any felony involving 

larceny, theft, robbery, extortion, 

forgery, counterfeiting, fraudulent 

concealment, embezzlement, fraudulent 

conversion, or misappropriation of 

funds or securities; conspiracy or 

attempt to commit any such crimes or 

a crime in which any of the foregoing 

crimes is an element; or a crime that is 

identified or described in ERISA section 

411; or 

(B) by a foreign court of competent 

jurisdiction as a result of any crime, 

however denominated by the laws of the 

relevant foreign or state government, 

that is substantially equivalent to an 

offense described in (A). 

For purposes of this section (a)(1), a 

person shall be deemed to have been 

convicted of a crime as of the 

‘‘conviction date,’’ which is the date of 

the judgment of the trial court (or the 

date of the judgment of any court in a 

foreign jurisdiction that is the 

equivalent of a U.S. federal or state trial 

court), regardless of whether that 

judgment remains under appeal. 

(2) The Independent Producer has 

received a written ineligibility notice 

issued by the Department for: 

(A) engaging in a systematic pattern or 

practice of violating the conditions of 

this exemption in connection with 

otherwise non-exempt prohibited 

transactions; 

(B) intentionally violating, or 

knowingly participating in violations of, 

the conditions of this exemption in 

connection with otherwise non-exempt 

prohibited transactions; 

(C) engaging in a systematic pattern or 

practice of failing to correct prohibited 

transactions, report those transactions to 

the IRS on Form 5330, and pay the 

resulting excise taxes imposed by Code 

section 4975 in connection with nonexempt prohibited transactions 

involving investment advice under Code 

section 4975(e)(3)(B); or 

(D) providing materially misleading 

information to the Department in 

connection with the conditions of the 

exemption. 

(3) Ineligibility shall begin six months 

after: 

(A) the conviction date defined in 

Section (a)(1); 

(B) the date of the Department’s 

written determination under Section 

(c)(1)(C) on a petition regarding a 

foreign conviction; or 

(C) the date of the written ineligibility 

notice described in subsection (a)(2). 

(4) An Independent Producer shall 

become eligible to rely on this 

exemption again only upon the earliest 

of the following: 

(A) the date of a subsequent judgment 

reversing such person’s conviction; 

(B) 10 years after the person became 

ineligible under Section VIII(a)(3) or 10 

years after the person was released from 

imprisonment as a result of a crime 

described in (a)(1) if later; or 

(C) the date, if any, the Department 

grants an individual exemption which 

may impose additional conditions) to 

the person permitting its continued 

reliance on this exemption, 

notwithstanding the conviction. 

(b) Insurers 

Subject to the timing and scope 

provisions set forth in subsection (3), 

and the opportunity to be heard as set 

forth in subsection (c), an entity will be 

ineligible to serve as an Insurer if, 

within the 10 years preceding the 

transaction: 

(1) The Insurer or the Affiliate has 

been convicted: 

(A) by a U.S. federal or state court of 

any felony involving abuse or misuse of 

such person’s employee benefit plan 

position or employment, or position or 

employment with a labor organization; 

any felony arising out of the conduct of 

the business of a broker, dealer, 

investment adviser, bank, insurance 

company or fiduciary; income tax 

evasion; any felony involving the 

larceny, theft, robbery, extortion, 

forgery, counterfeiting, fraudulent 

concealment, embezzlement, fraudulent 

conversion, or misappropriation of 

funds or securities; conspiracy or 


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attempt to commit any such crimes or 

a crime in which any of the foregoing 

crimes is an element; or a crime that is 

identified or described in ERISA section 

411; or 

(B) by a foreign court of competent 

jurisdiction as a result of any crime, 

however denominated by the laws of the 

relevant foreign or state government, 

that is substantially equivalent to an 

offense described in (A). 

For purposes of this Section (b)(1), a 

person shall be deemed to have been 

convicted of a crime as of the 

‘‘conviction date,’’ which is the date of 

the judgment of the trial court (or the 

date of the judgment of any court in a 

foreign jurisdiction that is the 

equivalent of a U.S. federal or state trial 

court), regardless of whether that 

judgment remains under appeal. 

(2) The Insurer or an Affiliate has 

received a written ineligibility notice 

issued by the Department for: 

(A) engaging in a systematic pattern or 

practice of violating the conditions of 

this exemption in connection with 

otherwise non-exempt prohibited 

transactions; 

(B) intentionally violating, or 

knowingly participating in violation of, 

the conditions of this exemption in 

connection with otherwise non-exempt 

prohibited transactions; or 

(C) providing materially misleading 

information to the Department in 

connection with the conditions of the 

exemption. 

(3) Ineligibility shall begin six months 

after: 

(A) the conviction date as defined in 

Section (b)(1); 

(B) the Department’s written 

determination under Section (c)(1)(C) 

for a petition regarding a foreign 

conviction; or 

(C) the date of the written ineligibility 

notice described in subsection (b)(2) 

above. 

(4) An entity shall become eligible to 

act as an Insurer under this exemption 

again only upon the earliest of the 

following: 

(A) the date of a subsequent judgment 

reversing such person’s conviction; 

(B) 10 years after the person became 

ineligible under Section VIII(b)(3) or 10 

years after the person was released from 

imprisonment as a result of a crime 

described in (b)(1), if later; or 

(C) the date, if any, the Department 

grants an individual exemption (which 

may impose additional conditions) to 

the person permitting its continued 

reliance on this exemption, 

notwithstanding the conviction. 

(c) Opportunity To Be Heard 

(1) Foreign Convictions. 

(A) An Insurer, its Affiliate, or an 

Independent Producer that has been 

convicted by a foreign court of 

competent jurisdiction as provided in 

subsection (a)(1)(B) or (b)(1)(B), as 

applicable, may submit a petition to the 

Department that informs the Department 

of the conviction and seeks the 

Department’s determination that 

continued reliance on the exemption 

would not be contrary to the purposes 

of the exemption. Petitions must be 

submitted to the Department within 10 

business days after the conviction date 

by email at IIAWR@dol.gov. 

(B) Following receipt of the petition, 

the Department will provide the Insurer 

or Independent Producer with the 

opportunity to be heard, in person 

(including by phone or 

videoconference), in writing, or a 

combination thereof. The opportunity to 

be heard will be limited to one 

conference unless the Department 

determines in its sole discretion to 

allow additional conferences. 

(C) Following the hearing, the 

Department will issue a written 

determination to the Insurer or 

Independent Producer, as applicable, 

articulating the basis for its 

determination whether or not to allow 

the Insurer or Independent Producer to 

continue relying on PTE 84–24. 

(2) Written Ineligibility Notice. Prior 

to issuing a written ineligibility notice, 

the Department will issue a written 

warning to the Independent Producer or 

Insurer, as applicable, identifying 

specific conduct implicating subsection 

(a)(2) or (b)(2), as applicable, and 

providing a six-month opportunity to 

cure. At the end of the six-month 

period, if the Department determines 

that the Independent Producer or 

Insurer has not taken appropriate action 

to prevent recurrence of the 

disqualifying conduct, it will provide 

the Independent Producer or Insurer 

with the opportunity to be heard, in 

person (including by phone or 

videoconference), or in writing, or a 

combination thereof, before the 

Department issues the written 

ineligibility notice. The opportunity to 

be heard will be limited to one 

conference unless the Department 

determines in its sole discretion to 

allow additional conferences. The 

written ineligibility notice will state the 

basis for the determination that the 

Independent Producer or Insurer 

engaged in conduct described in 

subsection (a)(2) or (b)(2), as applicable, 

and has not taken appropriate action to 

prevent recurrence of the disqualifying 

conduct. 

(3) Department’s Considerations. For 

hearings under (c)(1) and (c)(2), the 

Department will consider: the gravity of 

the offense; the degree to which the 

underlying conduct concerned 

individual misconduct, or, alternately, 

corporate managers or policy; recency of 

the conduct at issue; any remedial 

measures taken; and other factors the 

Department determines in its discretion 

are reasonable in light of the nature and 

purposes of the exemption. 

(d) Alternative Exemptions 

An Insurer or Independent Producer 

that is ineligible to rely on this 

exemption may rely on a statutory or 

separate administrative prohibited 

transaction exemption if one is available 

or seek an individual prohibited 

transaction exemption from the 

Department. To the extent an applicant 

seeks retroactive relief in connection 

with an exemption application, the 

Department will consider the 

application in accordance with its 

retroactive exemption policy as set forth 

in 29 CFR 2570.35(d). The Department 

may require additional prospective 

compliance conditions as a condition of 

retroactive relief. 

Section IX—Recordkeeping 

(a) The insurance agent or broker (or 

the insurance company whose contract 

is being described if designated by the 

agent or broker), pension consultant or 

investment company Principal 

Underwriter, Independent Producer or 

Insurer must maintain the records 

necessary to enable the persons 

described in subsection (a)(2) below to 

determine whether the conditions of 

this exemption have been met with 

respect to a transaction for a period of 

six years from the date of the transaction 

in a manner that is reasonably 

accessible for examination. No 

prohibited transaction will be 

considered to have occurred solely on 

the basis of the unavailability of such 

records if they are lost or destroyed due 

to circumstances beyond the control of 

the responsible party before the end of 

the six-year period. 

(1) No party, other than the party 

responsible for complying with this 

section IX, will be subject to the civil 

penalty that may be assessed under 

ERISA section 502(i) or the excise tax 

imposed by Code section 4975(a) and 

(b), if applicable, if the records are not 

maintained or available for examination 

as required by this section IX. 

(2) Except as provided in subsection 

(3), and notwithstanding any provisions 

of ERISA section 504(a)(2) and (b), the 

records are reasonably available at their 

customary location during normal 

business hours for examination by: 


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Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 76031 

(A) Any authorized employee of the 

Department or the Internal Revenue 

Service or another state or federal 

regulator; 

(B) Any fiduciary of a Plan that 

engaged in a transaction pursuant to this 

exemption; 

(C) Any contributing employer and 

any employee organization whose 

members are covered by a Plan that 

engaged in a transaction pursuant to this 

exemption; or 

(D) Any participant or beneficiary of 

a Plan or beneficial owner of an IRA 

acting on behalf of the IRA that engaged 

in a transaction pursuant to this 

exemption. 

(3) None of the persons described in 

subsection (2)(B)–(D) above are 

authorized to examine records regarding 

a transaction involving another 

Retirement Investor, privileged trade 

secrets or privileged commercial or 

financial information of the Insurer, or 

information identifying other 

individuals. 

(4) If a party refuses to disclose 

information to a person described in 

subsection (2)(B)–(D) above on the basis 

that the information is exempt from 

disclosure, the party must provide a 

written notice advising the requestor of 

the reasons for its refusal and that the 

Department may request that such 

information be produced to the 

Department by the end of the thirtieth 

(30th) day following the request. 

(b) A party’s failure to maintain the 

records necessary to determine whether 

the conditions of this exemption have 

been met will result in the loss of the 

exemption only for the transaction or 

transactions for which records are 

missing or have not been maintained. 

Such failure does not affect the relief for 

other transactions if the responsible 

party maintains required records for 

such transactions in compliance with 

this section IV. 

Section X—Definitions 

For purposes of this exemption, the 

terms ‘‘insurance agent or broker,’’ 

‘‘pension consultant,’’ ‘‘insurance 

company,’’ ‘‘investment company,’’ and 

‘‘Principal Underwriter’’ mean such 

persons and any Affiliates thereof. In 

addition, for purposes of this 

exemption: 

(a) ‘‘Affiliate’’ of a person means: 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person (For 

this purpose, ‘‘control’’ would mean the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual); 

(2) Any officer, director, partner, 

employee, or relative (as defined in 

ERISA section 3(15)), of the person; and 

(3) Any corporation or partnership of 

which the person is an officer, director, 

or partner. 

(b) Advice is in a Retirement 

Investor’s ‘‘Best Interest’’ if such advice 

(A) 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 in the conduct of an 

enterprise of a like character and with 

like aims, based on the investment 

objectives, risk tolerance, financial 

circumstances, and needs of the 

Retirement Investor, and (B) does not 

place the financial or other interests of 

the Independent Producer, Insurer or 

any Affiliate, Related Entity, or other 

party ahead of the interests of the 

Retirement Investor, or subordinate the 

Retirement Investor’s interests to those 

of the Independent Producer, Insurer or 

any Affiliate, Related Entity, or other 

party. 

(c) A ‘‘Conflict of Interest’’ is an 

interest that might incline an 

Independent Producer—consciously or 

unconsciously—to make a 

recommendation that is not in the Best 

Interest of the Retirement Investor. 

(d) ‘‘Independent Producer’’ means a 

person or entity that is licensed under 

the laws of a state to sell, solicit or 

negotiate insurance contracts, including 

annuities, and that sells to Retirement 

Investors products of multiple 

unaffiliated insurance companies but is 

not an employee of an insurance 

company (including a statutory 

employee under Code section 3121). 

(e) ‘‘Individual Retirement Account’’ 

or ‘‘IRA’’ means any plan that is an 

account or annuity described in Code 

section 4975(e)(1)(B) through (F). 

(f) ‘‘Insurer’’ means an insurance 

company qualified to do business under 

the laws of a state, that: (A) has obtained 

a Certificate of Authority from the 

insurance commissioner of its 

domiciliary state which has neither 

been revoked nor suspended; (B) has 

undergone and shall continue to 

undergo an examination by an 

independent certified public accountant 

for its last completed taxable year or has 

undergone a financial examination 

(within the meaning of the law of its 

domiciliary state) by the state’s 

insurance commissioner within the 

preceding five years, (C) is domiciled in 

a state whose law requires that an 

actuarial review of reserves be 

conducted annually and reported to the 

appropriate regulatory authority; (D) is 

not disqualified or barred from making 

investment recommendations by any 

insurance, banking, or securities law or 

regulatory authority (including any selfregulatory organization), that retains the 

Independent Producer as an 

independent contractor, agent or 

registered representative. 

(g) ‘‘Insurance Sales Commission’’ 

means a sales commission paid by the 

Insurance Company or an Affiliate to 

the Independent Producer for the 

service of recommending and/or 

effecting the purchase or sale of an 

insurance or annuity contract, including 

renewal fees and trailing fees, but 

excluding revenue sharing payments, 

administrative fees or marketing 

payments, payments from parties other 

than the Insurance Company or its 

Affiliates, or any other similar fees. 

(h) The term ‘‘Mutual Fund 

Commission’’ means a commission or 

sales load paid by either the Plan or the 

investment company for the service of 

effecting or executing the purchase of 

investment company securities, but 

does not include a 12b–1 fee, revenue 

sharing payment, administrative fee, or 

marketing fee. 

(i) The term ‘‘Nondiscretionary Trust 

Services’’ means custodial services, 

services ancillary to custodial services, 

none of which services are 

discretionary, duties imposed by any 

provisions of the Code, and services 

performed pursuant to directions in 

accordance with ERISA section 

403(a)(1). 

(j) The term ‘‘Nondiscretionary 

Trustee’’ of a plan means a trustee 

whose powers and duties with respect 

to the plan are limited to the provision 

of Nondiscretionary Trust Services. For 

purposes of this exemption, a person 

who is otherwise a Nondiscretionary 

Trustee will not fail to be a 

Nondiscretionary Trustee solely by 

reason of his having been delegated, by 

the sponsor of a Pre-approved Plan, the 

power to amend such plan. 

(k) ‘‘Plan’’ means any employee 

benefit plan described in ERISA section 

3(3) and any plan described in Code 

section 4975(e)(1)(A). 

(l) The term ‘‘Pre-approved Plan’’ 

means a plan which is approved by the 

Internal Revenue Service pursuant to 

the procedure described in Rev. Proc. 

2017–44, 2017–29 I.R.B. 92, or its 

successors. 

(m) A ‘‘Principal Underwriter’’ means 

a principal underwriter as that term is 

defined in section 2(a)(29) of the 

Investment Company Act of 1940 (15 

U.S.C. 80a–2(a)(29)). 

(n) A ‘‘Related Entity’’ is any party 

that is not an Affiliate, but in which the 

Independent Producer has an interest 

that may affect the exercise of its best 

judgment as a fiduciary. 


lotter on DSK11XQN23PROD with PROPOSALS3
76032 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

1Reorganization Plan No. 4 of 1978 (5 U.S.C. 

App. 1 (2018)) generally transferred the authority of 

the Secretary of the Treasury to grant administrative 

exemptions under Code section 4975 to the 

Secretary of Labor. 

(o) ‘‘Retirement Investor’’ means: 

(1) A participant or beneficiary of a 

Plan with authority to direct the 

investment of assets in their account or 

to take a distribution; 

(2) The beneficial owner of an IRA 

acting on behalf of the IRA; or 

(3) A fiduciary acting on behalf of a 

Plan or an IRA. 

(p) A ‘‘Senior Executive Officer’’ is 

any of the following: the chief 

compliance officer, the chief executive 

officer, president, chief financial officer, 

or one of the three most senior officers 

of the Insurer. 

Signed at Washington, DC, this 24th day of 

October, 2023. 

Lisa M. Gomez, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2023–23781 Filed 11–2–23; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

[Application No. D–12094] 

ZRIN 1210–ZA34 

Proposed Amendment to Prohibited 

Transaction Exemptions 75–1, 77–4, 

80–83, 83–1, and 86–128 

AGENCY: Employee Benefits Security 

Administration (EBSA), U.S. 

Department of Labor. 

ACTION: Notice of Proposed Amendment 

to Prohibited Transaction Exemptions 

75–1, 77–4, 80–83, 83–1, and 86–128. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

proposed amendments to Prohibited 

Transaction Exemptions (PTEs) 75–1, 

77–4, 80–83, 83–1, and 86–128, 

exemptions from certain prohibited 

transaction provisions of the Employee 

Retirement Income Security Act of 1974 

(ERISA) and the Internal Revenue Code 

of 1986 (the Code). The amendments 

would affect participants and 

beneficiaries of plans, IRA owners, and 

certain fiduciaries of plans and IRAs. 

DATES: Public Comments. Comments are 

due on or before January 2, 2024. 

Public Hearing. The Department 

anticipates holding a public hearing 

approximately 45 days following the 

date of publication in the Federal 

Register. Specific information regarding 

the date, location, and submission of 

requests to testify will be published in 

a notice in the Federal Register. 

Applicability Date. The Department 

proposes to make the final amendment 

effective 60 days after it is published in 

the Federal Register. 

ADDRESSES: All written comments 

concerning the proposed amendments 

should be sent to the Employee Benefits 

Security Administration, Office of 

Exemption Determinations, U.S. 

Department of Labor through the 

Federal eRulemaking Portal and 

identified by Application No. D–12094: 

Federal eRulemaking Portal: https://

www.regulations.gov. at Follow the 

instructions for submitting comments. 

Docket: For access to the docket to 

read background documents, including 

the plain-language summary of the 

proposal of not more than 100 words in 

length required by the Providing 

Accountability Through Transparency 

Act of 2023, or comments, go to the 

Federal eRulemaking Portal at https://

www.regulations.gov. 

See SUPPLEMENTARY INFORMATION

below for additional information 

regarding comments. 

FOR FURTHER INFORMATION CONTACT: 

Susan Wilker, telephone (202) 693– 

8540, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor (these are not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Comment Instructions 

Warning: All comments received will 

be included in the public record 

without change and will be made 

available online at https://

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be confidential or other 

information whose disclosure is 

restricted by statute. If you submit a 

comment, EBSA recommends that you 

include your name and other contact 

information, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as Social Security number or an 

unlisted phone number), or confidential 

business information that you do not 

want publicly disclosed. However, if 

EBSA cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EBSA might not be 

able to consider your comment. 

Additionally, the https://

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it. If you send an email 

directly to EBSA without going through 

https://www.regulations.gov, your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public record and 

made available on the internet. 

Background 

As described elsewhere in this edition 

of the Federal Register, the Department 

is proposing to amend the regulation 

defining when a person renders 

‘‘investment advice for a fee or other 

compensation, direct or indirect’’ with 

respect to any moneys or other property 

of an employee benefit plan, for 

purposes of the definition of a 

‘‘fiduciary’’ in section 3(21)(A)(ii) of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and in 

section 4975(e)(3)(B) of the Internal 

Revenue Code (Code). The Department 

is also proposing, elsewhere in this 

edition of the Federal Register, to 

amend prohibited transaction 

exemption (PTE) 2020–02 to provide 

additional clarity for advice fiduciaries 

and additional protections for plans and 

investors and PTE 84–24 to address 

specific issues that financial institutions 

face complying with the conditions of 

PTE 2020–02 when distributing 

annuities through independent agents. 

The Department is hereby proposing 

amendments to existing PTEs 75–1, 77– 

4, 80–83, 83–1, and 86–128 that 

currently provide relief for investment 

advice fiduciaries to receive 

compensation when plans and IRAs 

enter into certain transactions 

recommended by the fiduciaries as well 

as certain related transactions. The 

ERISA and Code provisions at issue 

generally prohibit fiduciaries with 

respect to employee benefit plans and 

individual retirement accounts (IRAs) 

from engaging in self-dealing in 

connection with transactions involving 

these plans and IRAs. The proposed 

amendments would remove fiduciary 

investment advice, as defined under 

ERISA and in a proposed regulation 

issued by the Department that is found 

elsewhere in this issue of the Federal 

Register, from the covered transactions 

in each exemption and make certain 

other administrative changes. The 

Department is proposing these 

amendments on its own motion, 

pursuant to its authority under ERISA 

section 408(a) and Code section 

4975(c)(2) and in accordance with 

procedures set forth in 29 CFR part 

2570, subpart B (76 FR 66637 (October 

27, 2011)).1


lotter on DSK11XQN23PROD with PROPOSALS3