New Jersey today became the 50th and final state to approve the NAIC’s best interest annuity rule, a pro-consumer measure that also aligns with the SEC’s Regulation Best Interest to provide retirement savers with what supporters say are “robust safeguards” at the state and federal level.
“With New Jersey’s action today, all 50 states have now adopted a best interest standard for annuity sales—an important milestone for consumers.”
ACLI/NAIFA joint statement
The best interest annuity rule approved Monday by the New Jersey Department of Banking & Insurance requires insurance agents and companies to act in the best interest of consumers when recommending annuity products.
“With New Jersey’s action today, all 50 states have now adopted a best interest standard for annuity sales—an important milestone for consumers. This ensures people will get professional financial guidance they can trust on products that provides a reliable lifetime stream of income in retirement. At a time when millions of workers are nearing retirement without a pension, this kind of certainty matters more than ever,” said a joint statement from American Council of Life Insurers (ACLI) President and CEO David Chavern and National Association of Insurance and Financial Advisors (NAIFA) Trustee Dennis Cuccinelli.
New Jersey Department of Banking & Insurance Commissioner Justin Zimmerman approved the rule, which incorporates the best interest protections from the NAIC Suitability in Annuity Transactions Model Regulation. Together with the SEC’s Regulation Best Interest, supporters say these models offer better protections for retirement savers than the U.S. Department of Labor’s fiduciary-only regulation that they say limited consumers’ access to retirement guidance and information. Before it was vacated by a federal court in 2018, the department’s 2016 regulation left more than 10 million American workers’ accounts, with $900 billion in savings, without access to professional financial guidance.
Each year through 2027, more than 4.1 million Americans will turn 65. Most will not have a defined benefit pension that provides a regular monthly income in retirement. Congress reaffirmed the importance of lifetime income when it passed SECURE Act legislation in 2019 and SECURE 2.0 in 2022 that made it easier for employers to include annuities in workplace retirement plans.
“With these enhanced state and federal consumer protections in place, millions of savers across the country can be confident that financial professionals are offering guidance on annuities that are in the consumer’s best interest,” today’s press release from ACLI and NAIFA said.
Road to full adoption
Back in February 2020, the NAIC adopted a best-interest standard requiring four obligations: care, disclosure, conflict of interest and documentation. The best-interest model was expressly designed to harmonize with the SEC’s Regulation Best Interest, and applies to insurance agents and brokers selling individual annuity products; insurance companies issuing annuities; and activities governed by state insurance laws (e.g., non-ERISA individual retirement accounts or post-rollover sales).
It does not apply to Registered Investment Advisers (RIAs) acting under federal securities laws; advisors working within ERISA-covered 401(k) plans when they’re giving fiduciary advice; or any activity governed by the DOL’s fiduciary rule.
The best-interest standard requires extra work and documentation to establish the consumer’s profile. Agents document things like a consumer’s financial situation, insurance needs and financial objectives. The rule specifically does not establish a fiduciary duty, nor does it ban agents and advisors from recommending products with a higher compensation structure. But the agent or advisor must be able to show that such a recommendation is in the consumer’s best interest.
DOL rule vs. NAIC
Even with 50-state NAIC adoption, advisors and insurers who operate in both ERISA and non-ERISA spaces must still comply with federal rules. As of April 2025, the Department of Labor’s (DOL) fiduciary rule, known as the Retirement Security Rule, remains in a state of uncertainty.
That rule is aimed at setting a fiduciary standard, under ERISA.
Originally finalized in April 2024 during the Biden administration, the rule aimed to expand the definition of “fiduciary” under ERISA for all investment advice related to retirement plans and IRAs (including annuities), ensuring retirement advisors act in the best interests of their clients. The DOL’s rule imposes stricter obligations, including acting with undivided loyalty to the client and avoiding conflicts unless exempted.
However, its implementation has been halted due to legal challenges and a change in administration.
Following the transition to the Trump administration in January 2025, the DOL requested a 60-day pause in the litigation to reassess its position on the rule, which was granted by the Fifth Circuit Court of Appeals. Then earlier this month, the DOL sought an additional 60-day extension, indicating ongoing deliberations within the department.
The Trump administration’s nomination of Daniel Aronowitz to be Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) is one indication of a potential shift in policy. Aronowitz has previously criticized the fiduciary rule as regulatory overreach, suggesting that the current administration may be inclined to abandon or significantly revise the rule.
Given these developments, it is possible the Trump administration could move to vacate the Biden-era fiduciary rule, which would align with the administration’s broader deregulatory agenda and past actions to limit the scope of fiduciary responsibilities imposed on financial advisors.
So while full adoption of the NAIC model rule is a major industry milestone, it’s not a substitute for federal fiduciary standards. Advisors serving retirement plans and rollovers still need to monitor the DOL rule’s status, prepare for compliance, and understand how the two standards may overlap or conflict.
SEE ALSO:
• Walberg Calls for DOL to ‘Rescind or Withdraw’ Fiduciary Rule
• California’s Adoption of NAIC Annuity Protection Model Means 90% of U.S. Consumers Now Covered
• Most Americans Seek Best Interest in Retirement Advice
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.