Defined terms for the annuity market and lifetime income landscape.
ERISA Section 404 is the provision of the Employee Retirement Income Security Act that sets out the core fiduciary duties — loyalty, prudence, diversification, and adherence to plan documents — that every ERISA plan fiduciary must satisfy in administering a covered plan.
Excess of loss reinsurance is a non-proportional structure in which the reinsurer pays only when losses on a defined block exceed a specified retention amount, and pays up to a specified limit above that retention.
Exclusion ratio is a tax computation applied to income payments from a non-qualified annuity that determines the portion of each payment treated as a nontaxable return of the contract owner's after-tax investment, with the remaining portion taxed as ordinary income.
The exclusive benefit rule is the ERISA fiduciary duty of loyalty requiring a plan fiduciary to discharge duties solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits to them and defraying reasonable expenses of administering the plan.
