Press release is here:
Statutory Exemption for Cross-Trading of Securities
Selection of Annuity Providers–Safe Harbor for Individual Account Plans
Amendment to Interpretive Bulletin 95-1
Amendments to Safe Harbor for Distributions From Terminated Individual Account Plans and Termination of Abandoned Individual Account Plans To Require Inherited Individual Retirement Plans for Missing Nonspouse Beneficiaries
Adoption of Amendment to Prohibited Transaction Exemption 2006- 06; (PTE 2006-06) For Services Provided in Connection With the Termination of Abandoned Individual Account Plans
Regarding the final regulation pertaining to the selection of annuity providers for individual account plans (a hot topic right now due to AIG’s demise and bailout):
(1) The DOL has eliminated paragraph (c)(2) of the proposed regulation which provided additional guidance concerning what information a fiduciary should consider in meeting the requirements for the safe harbor. One of those factors was “[t]he annuity provider’s ratings by insurance ratings services.” However, the DOL states in the preamble to the final regulations:
Further, although an annuity provider’s ratings by insurance ratings services are not part of the final safe harbor, in many instances, fiduciaries may want to consider them, particularly if the ratings raise questions regarding the provider’s ability to make future payments under the annuity contract. The Department also believes that some information regarding additional protections that might be available through a state guaranty association for an annuity provider also would be useful information to a plan fiduciary, even if limited to that information which is generally available to the public and easily accessible through such associations, state insurance departments, or elsewhere.
(2) In addition, the DOL makes it clear that a fiduciary is not home free by meeting the safe harbor at the time the annuity provider is selected as a provider for the plan generally. The fiduciary has ongoing responsibilities of monitoring the provider to ensure the ability of the annuity provider to make all future payments under the annuity contract and that the costs (including fees and commissions) of the annuity contract are still appropriate. The fiduciary is required to consult an expert, if necessary.