What is FINRA Rule 2821?

05 Rule 2821 requires that the member or person associated with a member consider whether the customer has had another deferred variable annuity exchange within the preceding 36 months. Members shall document in writing both the nature of the inquiry and the response from the customer.

What finra rule covers suitability of sales of variable annuities?

FINRA Rule 2320 (Variable Contracts of an Insurance Company) contains important requirements regarding cash and non-cash compensation arrangements associated with variable annuity sales.

How long does a principal have to review a recommended variable annuity transaction and make a suitability determination?

Prior to transmitting a customer’s application for a deferred variable annuity to the issuing insurance company for processing, but no later than seven business days after an office of supervisory jurisdiction of the member receives a complete and correct application package, a registered principal shall review and …

How does a variable annuity work?

A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Compare that to a fixed annuity, which provides a guaranteed payout.

What is the finra suitability rule?

FINRA Rule 2111 requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer.

What is required of insurance producers if the customer has had another deferred variable annuity exchange within 36 months?

Rule 2330 requires that the member or person associated with a member consider whether the customer has had another deferred variable annuity exchange within the preceding 36 months. Members shall document in writing both the nature of the inquiry and the response from the customer.

What is the FINRA suitability rule?

What 2 entities regulate the sale of variable annuities?

Variable annuities are securities registered with the Securities and Exchange Commission (SEC), and sales of variable insurance products are regulated by the SEC and FINRA.

What types of annuities have a step up in cost basis for federal income tax purposes?

For variable annuity contracts issued prior to 10/21/79, there is a “step-up” in basis for income tax purposes and no income tax is payable on the earnings. Qualified annuities refers to an annuity that is purchased inside of a qualified retirement plan, like an Individual Retirement Account (IRA).

Can you lose all your money in a variable annuity?

You can lose money in a Variable Annuity. Variable annuities are investment-based retirement plans. If the investment performance is negative, you will lose money.

Should I cash out my variable annuity?

One option to get out of a bad variable annuity is simply to terminate the contract. Yes, you can cash out. But beware: cashing out of an annuity can have tax consequences and surrender charges, and you may miss out on potential benefits, depending on the annuity contract and your personal situation.

Why didn’t FINRA eliminate its suitability rule?

FINRA has not eliminated its suitability rule because there will be recommendations that will not be subject to Reg BI but that would still warrant suitability protections.

What does Rule 2821 do for a member?

.01 Under Rule 2821, a member that is permitted to maintain customer funds under SEA Rules 15c3-1 and 15c3-3 may, prior to the member’s principal approval of the deferred variable annuity, deposit and maintain customer funds for a deferred variable annuity in an account that meets the requirements of SEA Rule 15c3-3.

Is the NASD Rule 2821 still in effect?

This rule is no longer applicable. NASD Rule 2821 has been superseded by FINRA Rule 2330. Please consult the appropriate FINRA Rule. This Rule applies to recommended purchase s and exchange s of deferred variable annuit ies and recommended initial subaccount allocations.

What are the rules and guidance for FINRA?

FINRA’s rules and guidance strive to protect investors and ensure the integrity of today’s rapidly evolving market. FINRA is here to help keep investors and their investments safe. To ensure this protection, we enact rules and publish guidance for securities firms and brokers.

What is Rule 2821 for variable annuity exchange?

.05 Rule 2821 requires that the member or person associated with a member consider whether the customer has had another deferred variable annuity exchange within the preceding 36 months.