DOL explains "safest available annuity provider" rule.(Department of Labor)(Column)

Plan sponsors selecting a 401(k) investment program from an insurance company will want to document that they requested information on six key financial factors about the insurance company. That's the word from the DOL in Advisory Opinion 2002-14A. These factors were confirmed by the DOL in a request from an insurance company on how to comply with fiduciary requirements when annuities are purchased by defined contribution plans.

In Interpretive Bulletin (IB) 95-1, the DOL addresses the fiduciary requirements for the purchase of annuities by a defined benefit pension plan for the purpose of making distributions, such as when the plan is terminated. A purchase of annuities by the defined benefit plan results from transferring the plan's liability for the payment of benefits to an insurance company. IB 95-1 directs plan fiduciaries to make that purchase …