Which organization is responsible for mandating a 24-month period for exchange privileges?

Which organization is responsible for mandating a 24-month period for exchange privileges?

• A. SEC
• B. FINRA
• C. NAIC
• D. IRS

Answer: (A)

The rule about a 24-month period for exchange privileges comes from the federal securities regulation that governs variable annuities, which are securities with an insurance component. Because these products are securities, the Securities and Exchange Commission sets rules related to their features and how investors can move money around within the contract. The 24-month window is a standard safeguard designed to prevent rapid churn and to ensure investors understand their options. The NAIC deals with state insurance regulation, FINRA covers broker-dealer conduct, and the IRS handles taxes—none of these impose this specific federal requirement. So the responsible organization is the SEC.

The rule about a 24-month period for exchange privileges comes from the federal securities regulation that governs variable annuities, which are securities with an insurance component. Because these products are securities, the Securities and Exchange Commission sets rules related to their features and how investors can move money around within the contract. The 24-month window is a standard safeguard designed to prevent rapid churn and to ensure investors understand their options. The NAIC deals with state insurance regulation, FINRA covers broker-dealer conduct, and the IRS handles taxes—none of these impose this specific federal requirement. So the responsible organization is the SEC.