What can I do to ensure that my clients receive breakpoint discounts? Sign in from an account with admin permissions. The unit value increases with positive investment performance in the subaccount and decreases with negative investment performance and with asset management and insurance charges. B-Share Variable Annuities Variable annuity contracts characterized by deferred sales charges, which typically range from 5% to 7% in the first year, and subsequently decline to zero after five to seven years. However, if the investor does not actually make the required purchases at the end of the specified period, he or she will be required to forfeit the discounts received pursuant to the letter of intent. This variable annuity can help you plan for retirement by offering a solid approach for today with time to build for tomorrow. The outline serves as a model of the critical breakpoint topics firms should address in training. Qualified Annuities Qualified annuities are annuities purchased for funding an IRA, 403(b) tax-deferred annuity, or other type of tax-benefited retirement arrangements. This includes information about your client's own holdings as well as the holdings of certain parties related to your client, such as your client's spouse or children. Variable Annuities | Investor.gov Generally, distributions are required to begin at age 70 . To ensure that your clients receive all the discounts to which they are entitled under a mutual fund's ROA rules, you must understand the funds' ROA rules and gather information concerning your client's own holdings and the holdings of the appropriate related parties. 5. All immediate annuities and some deferred non-qualified annuities are in this category. The purchase may either be made in a lump sum or by staggering payments within a specified period of time. The contract owner determines the point at which accumulated principal and earnings are converted into a stream of income. Discuss the availability of breakpoint discounts with your clients prior to purchasing the mutual fund shares. 1. Contingent Deferred Sales Charge Costs imposed on the withdrawal of proceeds or liquidation of a variable annuity, which typically range from 5% to 7% in the first year, and subsequently decline to zero. Thus, signing an LOI allows the investor to take advantage of discount that would not otherwise be available. The unit value increases with positive investment performance in the subaccount, and decreases with negative investment performance and with asset management and insurance charges. I-Share Variable Annuity Also known as fee-based variable annuities in which an investor pays one fee to have the portfolio managed by an investment advisor. If you decide to proceed with the purchase of the policy, additional paperwork may be required to Fixed Annuitization A series of guaranteed income payments of a specified amount payable for the life of the annuitant(s) or a specified number of years. Firm compliance professionals can access filings and requests, run reports and submit support tickets. Contract Date The date an annuity contract becomes effective. Living Benefits The term applied to a series of annuity options that protect against investment risk by guaranteeing either withdrawal payments, account values, or annuity payments. Annuity Contract A legal agreement between the contract owner and the insurance company. Annuities can provide a reliable income stream in retirement, but if you die too soon, you may not get your money's worth. Variable Annuity Payment Floor A guaranteed minimum amount for each annuity payment. Separate Account The insurance companys investment portfolio that supports variable life and annuity contracts. The fee is often waived for contracts with high account values. FINRA provides this statement as an example of what it believes is appropriate. variable annuity is a contract issued by an insurance company, by which the insurance company invests your premium in separate accounts composed of stocks, bonds or other investments. Lump-Sum Option A withdrawal option in which the annuity is surrendered and all assets are withdrawn in a single payment. A percentage of employee contributions may be matched by the employer but the employee bears the investment risk. The extent of the discount depends on the amount invested in a particular family of funds. Unbundled Contracts Annuity contracts that permit purchasers to choose and pay for certain optional features they want in their contracts. In determining whether to invest in class A shares, you should consider the following: Breakpoints may also be obtained through "Rights of Accumulation" or "Letters of Intent.". Cash Surrender Value The amount that can be withdrawn from the contract after the deduction of any surrender charge. Bonus Rate Extra interest accumulated in the first year of a deferred annuity that is added to the sum upon which interest is calculated in later years, also called a first-year bonus rate. The principal investment is protected from losses in the equity market, while gains add to the annuitys returns. This tool allows you to look up breakpoint schedules and linkage rules for mutual funds with sales charges to ensure discounts are given where applicable. PDF Variable Annuities: What You Should Know - SEC.gov 3. Go to the sharing page of the new SharePoint Admin Center. We are one of 300 health centers nationally to . Investment Management Fee The fee paid in connection with the professional management of the assets of the investment funds underlying variable annuities. Annuitization The conversion of the annuity accumulation value to a fixed or variable income stream for the life of the annuitant(s) or for a specified period. Continue your industry education and access the latest in retirement industry resources by becoming an IRI member. An ROA allows an investor to aggregate his own fund shares with the holdings of certain related parties, such as spouses and children, toward achieving the investment thresholds at which breakpoint discounts become available. Holders of ordinary shares are typically entitled to one vote per share, and do not have any . Fixed Period Annuity Payout option for a specified number of years instead of for a lifetime. Non-qualified annuities are not covered by ERISA. File a complaint about fraud or unfair practices. Referred to as A- share pricing. An IRA or qualified retirement plan provides tax deferral. Fiduciary A person who has undertaken to act for and on behalf of another in a relationship of trust and confidence. Guarantee Period The period during which the level of interest credited under a fixed annuity is guaranteed. In some cases, ROA may also extend beyond just the targeted share class for investment. PDF Currently Sold Annuity Contracts - Edward Jones To access and download mutual funds prospectuses, go to the Securities and Exchange Commission's (SEC) EDGAR Database on the SEC website. Investors also may be able to aggregate holdings they have in different accounts at the same broker-dealer, at different broker-dealers, or in different types of accounts, such as 401(k)s and 529 plans, as well as the holdings in the accounts of related parties toward achieving an investment threshold at which a breakpoint discount is available. Some fund families also permit aggregation of other holdings, such as Class M or T shares, Section 529 plan holdings, or variable annuity sub-accounts to achieve breakpoints. This is due to both the availability of breakpoints and the lower 12b-1 Fees associated with A shares. If the investor commits to making ten $5,000 payments over the next 13 months through a LOI, then the investor will pay a 3.75% sales charge on each investment. Commutation A process provided under some annuities that allows annuity payments to be terminated and the remaining value to be withdrawn from the contract. Breakpoints offer investors a discount for making larger investments. In a letter to NASD Chairman and Chief Executive Officer Robert R. Glauber, dated January 15, 2003, former Securities and Exchange Commission (SEC) Chairman Harvey L. Pitt requested that NASD, joined by the Securities Industry Association (SIA) and the Investment Company Institute (ICI), convene a task force to recommend industry-wide changes to address errors and missed opportunities to provide discounts in the calculation of sales loads charged on the purchase of mutual fund shares that carry a front-end sales load. rider fee and withdrawal percentages that we are currently offering for the Transamerica Income Edge rider as described in the Transamerica Income Edge Rider Fees, Transamerica Income Edge Summary, Transamerica Income Edge A shares offer breakpoint pricing. Enhanced Earnings Benefit A feature of some variable annuity contracts that provides beneficiaries with an additional death benefit amount, usually equal to a percentage of earnings. Income Floor Guarantee Annuity feature that guarantees payments will never be less than a given percentage of the original payment, such as 80%, regardless of the performance of the underlying investments. Share Our Selves - Personalized Care for the Orange County Community O-share Variable Annuities O-shares are intended to merge the advantageous M&E and surrender charges of A-share and B-share variable annuities, respectively. Class A shares of front-end load mutual funds, member firms may review the following Breakpoints Checklist, which may help member firms eva luate their breakpoint compliance . Contributions are not dependent on company profits. L Share Annuity Class: A common share class offered by a variable annuity that has a short surrender period but with higher administrative costs. Nationwide O Series is a variable annuity that's designed for investors looking for tax-deferred growth potential, varied investment choices and retirement income. Annuity Unit Annuity units (variable) are the units in the separate account after the maturity date that is used to determine the amount of the annuity payment. Death Benefits The payment the investors estate or beneficiaries receive if the contract holder dies prior to the annuity starting date. For example, assume a new investor would like to make a $50,000 investment in a fund that follows the sample fee schedule outlined above and has a standard sales charge of 5.0%. Mortality Table A table showing the incidence of death at specified ages that is used to determine average life expectancy. To learn more about FINRA breakpoints initiatives, please see our Mutual Fund Breakpoints Web page. A-Share Variable Annuities Annuity contracts in which sales charges are incurred at time of investment or premium payment.