5 IRS Asset-Based Fee Ruling Possibilities
August 14, 2019 by Allison Bell
Annuity issuers are celebrating the arrival of new private letter rulings from the Internal Revenue Service.
The new IRS rulings give life insurers the ability, under certain circumstances, to pay fee-based financial advisors asset-based fees directly from ordinary, individual annuity contracts, without generating any of those dreaded “taxable events” for the customers.
Sales of fee-based annuities accounted for only a small slice of U.S. issuers’ $232 billion in 2018 individual annuity sales, according to data from the LIMRA Secure Retirement Institute.
But many insurers and distributors have been hoping that growth of fee-based annuity sales could be a way to give consumers an alternative to the traditional annuity sales process and reduce the pressure from state and federal regulators to adopt new annuity sales standards.
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