rule text

§ 270.27a–2

17 CFR Ch. II (4–1–07 Edition)

variable annuity contract participating
in such account, be deemed to satisfy
the requirements of section 27(a)(1) and
section 27(h)(1) of the Act if such contract provides for a sales load which
will not exceed 9 per centum of the
total payments to be made thereon as
of a date not later than the end of the
12th year of such payments: Provided,
That if a contract be issued for any
stipulated shorter payment period the
sales load under such contract shall
not exceed 9 per centum of the total
payments thereunder for such period.
[36 FR 11645, June 17, 1971]

§ 270.27a–2 Exemption from section
27(a)(3) and section 27(h)(3) of the
Act for certain registered separate
accounts.
(a) A registered separate account,
and any depositor of or underwriter for
such account, shall be exempt from
paragraph (3) of section 27(a) and paragraph (3) of section 27(h) of the Act:
Provided, That with respect to any
variable annuity contract participating
in such account the proportionate
amount of sales load deducted from
any payment during the contract period shall not exceed the proportionate
amount deducted from any prior payment during the contract period.
[36 FR 11645, June 17, 1971]

§ 270.27a–3 Exemption from section
27(a)(4) and section 27(h)(5) of the
Act for certain registered separate
accounts.
(a) A registered separate account,
and any depositor of or underwriter for
such account, shall be exempt from
paragraph (4) of section 27(a) of the Act
and paragraph (5) of section 27(h) of the
Act as to payments under any variable
annuity contract participating in such
account which (1) is purchased in connection with a plan which meets the
requirements for qualification under
section 401 of the Internal Revenue
Code of 1954, as amended (Code), or the
requirements for deduction of the employer’s contributions under section
404(a)(2) of the Code, or (2) meets the
requirements of section 403(b) of the
Code, but such exemptions shall apply
only to contributions or payments
within the exclusion allowance for any
employee under section 403(b) except as

clause (3) hereof applies, or (3) permits
no sales load deduction from any payment in excess of 9 per centum of such
payment.
[36 FR 11645, June 17, 1971, as amended at 36
FR 23624, Dec. 11, 1971]

§ 270.27c–1 Exemption from section
27(c)(1) and section 27(d) of the Act
during annuity payment period of
variable annuity contracts participating in certain registered separate accounts.
(a) A registered separate account,
and any depositor of or underwriter for
such account, shall, during the annuity
payment period of variable annuity
contracts participating in such account, be exempt from the requirement
of paragraph (1) of section 27(c) of the
Act that a periodic payment plan certificate be a redeemable security and
from section 27(d) of the Act with respect to such contracts under which
payments are being made based upon
life contingencies.
(Sec. 6(c), 54 Stat. 800, 841; sec. 16, 84 Stat.
1424, 15 U.S.C. 80a–27(h))
[36 FR 11645, June 17, 1971]

§ 270.27d–1 Reserve requirements for
principal underwriters and depositors to carry out the obligations to
refund charges required by section
27(d) and section 27(f) of the Act.
(a)(1) Every depositor of or principal
underwriter for the issuer of a periodic
payment plan certificate sold subject
to section 27(d) or section 27(f) of the
Act or both, shall deposit and maintain
funds in a segregated trust account as
a reserve and as security for the purpose of assuring the refund of charges
required by sections 27(d) and 27(f) of
the Act.
(2) The assets of such trust account
may be held as cash or invested only in
one or more of (i) government securities as defined in section 2(a)(16) of the
Act (except equity securities) or (ii) negotiable certificates of deposit issued
by a bank, as defined in section 2(a)(5)
of the Act and having capital and surplus of at least $10 million: Provided,
That no such investment may have a
maturity of more than 5 years, no more

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Securities and Exchange Commission

§ 270.27d–1

than 50 percent of the assets may be invested in obligations having a maturity of more than 1 year, and certificates of deposit of a single issuer may
not constitute more than 10 percent of
the value of the assets in the account.
(3) Any income, gains, or losses from
assets allocated to such account,
whether or not realized, shall be credited to or charged against such account
without regard to other income, gains,
or losses of the depositor or principal
underwriter.
(4) The assets of such trust account
may be withdrawn only as permitted
by paragraph (f) of this section and
shall in no event be chargeable with liabilities arising out of any aspect of
the business of the depositor or principal underwriter other than assuring
the ability of the depositor or principal
underwriter to refund the amounts required by such sections.
(b) For purposes of this section:
(1) ‘‘Excess sales load’’ on any payment is that portion of the sales load
in excess of 15 percent of that payment.
(2) ‘‘Monthly payment’’ shall be the
amount of the smallest monthly installment scheduled to be paid during
the life of the plan. If payments are required or permitted to be made on a
basis less frequently than monthly, an
equivalent monthly payment shall be
the amount determined by dividing the
smallest minimum payment required
or permitted in a payment period by
the number of months included in such
period.
(3) The assets in the segregated trust
account shall be valued as follows: (i)
With respect to securities for which
market quotations are readily available, the market value of such securities; and (ii) with respect to other securities, fair value as determined in good
faith by the depositor or principal underwriter.
(c) For every periodic payment plan
certificate governed by section 27(d),
the depositor or principal underwriter
shall deposit into the segregated trust
account not less than 45 percent of the
excess sales load on each of the first six
monthly payments or their equivalent.
(d) For all periodic payment plan certificates governed by section 27(d)
which have not been surrendered in accordance with their terms, and for

which the depositor or principal underwriter may be liable for the refund of
any sales load, the depositor or principal underwriter shall maintain in the
segregated trust account an amount
equal to not less than 15% of the total
refundable sales load on the payments
made on those certificates. The depositor or principal underwriter shall also
maintain in the segregated trust account such additional amounts as the
Commission by order may require for
the depositor or principal underwriter
to carry out refund obligations pursuant to sections 27(d) and 27(f) of the
Act.
(e) For every periodic payment plan
certificate governed by section 27(f) of
the Act, and for which the depositor or
principal underwriter has no obligation
to refund any excess sales load pursuant to section 27(d) of the Act, the depositor or principal underwriter shall
deposit and maintain during the refund
period, at least the following amounts
in the segregated trust account:
(1) For certificates that require
monthly payments of $100 or less, 20
percent of the difference between the
gross payments made and the net
amount invested;
(2) For certificates that require
monthly payments in excess of $100 and
for single payment plan certificates, 30
percent of the difference between the
gross payments made and the net
amount invested;
(3) For certificates with respect to
which the holder is entitled to receive
the greater of the refund provided by
section 27(f) (of the Act) or a refund of
total payments and upon which a total
of at least $1,000 has been paid, 100 percent of the difference between the gross
payments made and net amount invested; and
(4) Such additional amounts as the
Commission by order may require to
carry out the obligation to refund
charges pursuant to section 27(f) of the
Act.
(f) Assets may be withdrawn from the
segregated trust account by each depositor or principal underwriter:
(1) To refund excess sales load to a
certificate holder exercising the right
of surrender specified in section 27(d) of
the Act; or

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§ 270.27d–2

17 CFR Ch. II (4–1–07 Edition)

(2) To refund to a certificate holder
exercising the right of withdrawal
specified in section 27(f) of the Act the
difference between the amount of his
gross payments and the net amount invested; or
(3) For any other purpose: Provided,
however, That such withdrawal shall
not reduce the segregated trust account to an amount less than the sum
of (i) 130 percent of the amount required to be maintained by paragraph
(d) of this section, if any, and (ii) 100
percent of that amount required to be
maintained by paragraph (e) of this
section, if any.
(g) The minimum amounts required
to be maintained by paragraphs (d) and
(e) of this section shall be computed at
least monthly. Any additional deposits
required by paragraph (d) or (e) of this
section shall be made immediately
after such computation, and any withdrawals permitted by paragraph (f)(3)
of this section may be made only at
such time.
(h) Nothing in this section shall be
construed to prohibit a depositor or
principal underwriter, acting as such
for two or more registered investment
companies issuing periodic payment
plan certificates, from combining in a
single segregated trust account the reserves for such companies required by
this section.
(i) The refunds required to be made
to certificate holders pursuant to sections 27(d) and 27(f) (of the Act) shall be
paid in cash not more than 7 days from
the date the certificate is received in
proper form by the custodian bank or
such other paying agent as may be designated under the periodic payment
plan.
(j) Each depositor or principal underwriter shall file with the Commission,
within the appropriate period of time
specified, an Accounting of Segregated
Trust
Account.
Form
N–27D–1
(§ 274.127d–1 of this chapter) is hereby
prescribed as such accounting form.
[36 FR 13136, July 15, 1971, as amended at 40
FR 50712, Oct. 31, 1975]

§ 270.27d–2 Insurance company undertaking in lieu of segregated trust
account.
(a) Any depositor of or principal underwriter for the issuer of a periodic

payment plan certificate sold subject
to section 27(d) or 27(f) of the Act, or
both, shall be exempt from the requirements of § 270.27d–1 if an insurance
company (as defined in section 2(a)(17)
of the Act) undertakes in writing to
guarantee the performance of all obligations of such depositor or principal
underwriter to refund charges under
sections 27(d) and 27(f) of the Act and
paragraph (b) of this section: Provided,
however, That:
(1) Such insurance company at all
times shall have (i) combined capital
paid-up, gross paid in and contributed
surplus and unassigned surplus, if a
stock company, or (ii) unassigned surplus, if a mutual company, at least
equal to the larger of (a) $1 million or
(b) 200 percent of the amount of the
total refund obligation of the depositor
or underwriter pursuant to sections
27(d) and 27(f) (of the Act) less any liability reserve established by such insurance company to meet such obligations; and
(2) Such depositor or underwriter
shall file or cause to be filed with the
Commission as an exhibit to the registration statement or any amendment
thereto pursuant to the Securities Act
of 1933 of the registered investment
company issuing periodic payment plan
certificates (i) a copy of such written
undertaking, and any amendment
thereto, (ii) an annual statement certified by a responsible officer of the insurance company indicating that at
least on a monthly basis throughout its
fiscal year the insurance company has
met the requirements of the proviso in
paragraph (a)(1) of this section, and
(iii) a Statement of Financial Condition (Balance Sheet) of the insurance
company certified by an independent
public accountant. Such balance sheet
shall be filed at least annually, within
90 days after the close of the insurance
company’s fiscal year.
(b) The refunds required to be made
to certificate holders pursuant to sections 27(d) and 27(f) (of the Act) shall be
paid in cash not more than 7 days from
the date the certificate is received in
proper form by the custodian bank or
such other paying agent as may be designated under the periodic payment
plan.
[36 FR 13137, July 15, 1971]

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