State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California's annuity suitability requirements (Insurance Code Section 10509.912), which of the following transactions is generally EXEMPT from the suitability information requirements?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 10509.912 exempts from California's annuity suitability article contracts used to fund plans described in IRC Section 401(a), 401(k), 403(b), 408(k), or 408(p) when established and maintained by an employer, as well as ERISA-covered employee benefit plans and Section 457 plans. Because these qualified plan annuities are governed by federal plan rules and employer fiduciary duties, the California suitability information requirements do not apply to them.
Why the other options are wrong
- B) Individually solicited annuities are exactly what the suitability article regulates; individual fixed annuities are not exempt.
- C) Whether the consumer has a reverse mortgage is a factor the producer must collect and evaluate under Section 10509.913(i)(13); the sale is not exempt.
- D) Replacement transactions are subject to suitability analysis and disclosure requirements, not exempt from them.
Memory hook
401(k), 403(b), ERISA, 457: federal plan rules already protect those employees, so California suitability backs off.