Group annuity contracts

[R. Butler]

I'm aware that commissions earned on a Group Annuity Contract are reportable on the Sch. A or the form 5500-SF, however the case may be. I am being questioned on this point. The insurance agent is adamant that those requirements apply only to life insurance & not to other contracts with insurance companies. I spent three hours today arguing the issue without success. Is anyone aware of any guidance that mentions group annuities specifically. Although it seems clear to me, references referring to contracts with insurance companies is not sufficient. I need something that specifically references group annuities.

Thanks in advance for any guidance.

[david rigby]

You could refer to the first paragraph of the Schedule A instructions on page 19: http://www.dol.gov/ebsa/pdf/2009-5500inst.pdf

on page

[R. Butler]

Tried that. The agent focused on "the such as GIC's" and took that mean to only GIC's. I really need something referencing group annuity contracts. My impression is that at a minimum the agent knows the position taken is reckless; I'm just trying to avoid the fight altogether. (Kind of like the OJ Simpson trial. Everyone knows he did it, but since they didn't produce a video he was somone able to maintain innocence.)

[Belgarath]

I think it was Ron White who said, "Stupid is forever." According to the agent's line of reasoning, you don't have to include commissions on life insurance policies, because they aren't specifically listed in that first paragraph. Adding a specific reference to GIC's doesn't eliminate everything NOT specifically listed. What an idiot.

I'm puzzled by the agent's recalcitrance (not the stupidity, which doesn't surprise me, but the recalcitrance.) In order to sell insurance products in a qualified plan, there has to be some sort of disclosure to the fiduciary that discloses the commissions. If this wasn't properly done, then there are Prohibited Transaction issues to be considered. Of course, that may be the reason for the recalcitrance.

So if the disclosure was properly done under PTE 77-9 (and amended by 84-24) then client should already be aware and the disclosure on the A shouldn't be an issue. And even if not done properly, the agent is just plain wrong, and I don't see how you can avoid a fight. But having a battle of wits with an unarmed person should be enjoyable. To loosely quote Douglas Adams, "Flay him in the gobberwarts with your Bluggercruncheon!"

[david rigby]

I need something that specifically references group annuities.

You do not need such a specific reference (although the agent may "need" it).

Back up to the first sentence of that first paragraph. "... if any benefits under the plan are provided by an insurance company, insurance service, or other similar organization (such as Blue Cross, Blue Shield, or a health maintenance organization)..."

IMHO, you are done proving your point. Ask the agent to prove otherwise.