STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
The Office of General Counsel issued the following opinion on June 15, 2007, representing the position of the New York State Insurance Department.
RE: Regulation 60
Does 11 NYCRR Part 51 (Regulation 60) apply when the assets of a fixed-annuity Individual Retirement Account (“IRA”) are rolled over into a non-insurance IRA?
No. 11 NYCRR Part 51 (Regulation 60) does not apply when the assets of a fixed-annuity IRA are rolled over into a non-insurance IRA.
A financial adviser’s client wishes to roll over the assets of a fixed-annuity IRA into a non-insurance IRA. The financial adviser questions the validity of the annuity IRA insurer’s assertion that compliance with the procedures set forth in 11 NYCRR Part 51 (Regulation 60) is required before it may release the client’s funds.
11 NYCRR Part 51 (Regulation 60) establishes minimum standards for the replacement or proposed replacement of life insurance policies and annuity contracts. It requires, among other things, an insurance agent or broker to “[s]ubmit to the insurer whose policy or contract is being replaced a list of all life insurance policies or annuity contracts proposed to be replaced, as well as the policy or contract number for such policies or contracts, together with the proper authorization from the applicant[.]” 11 NYCRR § 51.5.
However, 11 NYCRR Part 51 (Regulation 60) only applies to insurance-to-insurance replacement transactions. As stated in 11 NYCRR § 51.2(a), “the term ‘replacement of a life insurance policy or an annuity contract’ … means … that a new life insurance or new annuity contract is to be purchased and delivered or issued for delivery in New York and it is known to the Department licensee that, as part of the transaction, existing life insurance policies or annuity contracts have been or are likely to be … lapsed, surrendered, partially surrendered, forfeited, assigned to the insurer replacing the life insurance policy or annuity contract, or otherwise terminated[.]”
Because the financial adviser’s client requests that his fixed-annuity IRA funds be rolled over to a non-insurance IRA, 11 NYCRR Part 51 (Regulation 60) is not implicated, and no insurance and annuity replacement forms need be filed.
For further information you may contact Associate Attorney Sally Geisel at the New York City Office.