(a) Amendments to Fee Table Disclosure Requirements (Item 4)
    We propose amending Item 4 to require specific disclosures
regarding contract adjustments and other costs specific to RILAs. Item
4 currently requires variable annuity registrants to provide
comprehensive information on the fees and expenses investors will pay
when buying, owning, and surrendering or making withdrawals from a
contract, as well as expenses paid each year during the time the
investor owns the contract. While RILAs typically do not charge the
explicit ongoing fees and expenses common to variable annuities,
investors do experience an implicit ongoing fee to the extent the
insurer limits, through the use of a cap, participation rate, or some
other rate or measure, index gains. Moreover, RILA issuers typically
utilize contract adjustments, which can result in a significant charge
to investors who make withdrawals from an index-linked option or from
the contract before the end of a specified period. Further, investor
testing suggested that most participants struggled to fully comprehend
the costs to investors of these products.\183\ These costs include
contract adjustments because they can negatively affect an investor's
contract value or the amounts an investor could withdraw from the
contract.\184\ Accordingly, we are proposing to include a detailed
description of contract adjustments in the prospectus, and that this
disclosure be proximate and similar to other disclosures regarding fees
and expenses. Thus, we are proposing several amendments to incorporate
the concept of contract adjustments as well as implicit ongoing fees
and expenses into the current Item 4 disclosure requirements. We
propose generally expanding the tabular disclosures that Item 4
requires to address contract adjustment costs that investors will pay
when buying, owning, and surrendering or making withdrawals from an
investment option, and as noted below, requiring disclosures about the
maximum potential loss that an investor could experience in connection
with a contract adjustment. We are also proposing to expand the tabular
disclosures with respect to annual contract expenses, to alert
investors to the implicit ongoing costs associated with limiting
positive index returns. In addition, we are proposing certain non-
substantive changes to the fee table disclosures and instructions that
would be applicable to all issuers.\185\

Particularized changes we propose to the fee table disclosures are
discussed below.
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    \183\ See OIAD Report at Section 6, Quantitative Testing,
Testing Impacts, Table 9 (noting that 16.2 percent of participants
understood that a participation rate reduces potential gains from
the market and 52.1 percent of participants understood that a cap
reduces potential gains from the market).
    \184\ See, e.g., OIAD Report at Section 5, Qualitative Testing,
Results From Round 2.
    \185\ In order to eliminate unnecessary information in the
prospectus, we propose amending the general instructions to clarify
that registrants may omit a narrative explanation that is not
applicable under the contract. See proposed instruction 1 to Item 4
of Form N-4. We also are proposing an amendment to general
instruction 5 regarding the preparation of the Transaction Expenses
and Annual Contract Expenses tables, clarifying that the instruction
to disclose the maximum guaranteed charge as a single number where a
fee is calculated based on a benchmark does not apply to a contract
adjustment. See proposed instruction 5 to Item 4 of Form N-4.
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Transaction Expenses Table
    Form N-4 issuers currently must include a transaction expenses
table in their prospectuses, describing fees and expenses investors
must pay when buying, owning, and surrendering or making withdrawals in
connection with a contract. This requires a description of the sales
load imposed on purchases (as a percentage of purchase payments), the
deferred sales load (as a percentage of purchase payments or amount
surrendered, as applicable), and transfer fees. To provide proximate
and similar disclosure for RILA-specific costs, we propose to require
that insurance companies additionally include the maximum negative
contract adjustment that may be imposed, to be expressed as a
percentage of contract value at the start of the crediting period or
the amount withdrawn, as applicable. To provide investors notice of the
circumstances where they might be subject to this cost, we also propose
that insurance companies include a footnote describing all transactions
potentially subject to a contract adjustment.\186\
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    \186\ See proposed instruction 11 to Item 4 of Form N-4.
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    Currently this table also requires registrants to describe the
maximum exchange fee that investors could incur for any exchange or
transfer of contract value from the registrant to another investment
company, or between sub-accounts or to the insurance company's general
account. In a change relevant to all Form N-4 issuers, we are proposing
a terminology change, replacing the term ``exchange fee'' with
``transfer fee,'' as this term better reflects our experience, namely
that the vast majority of such fees are those imposed on transfers of
account value among investment options under the contract.\187\
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    \187\ See proposed Instruction 10 to Item 4 of Form N-4. Under
the proposed definition, ``transfer fee'' would encompass both the
maximum fee charged for any exchange or transfer of contract value
between investment options as well as the maximum fee charged for
any exchange or transfer of contract value from the registered
separate account to another investment company or from the
registered separate account to the insurance company's general
account. Thus, the proposed amendments regarding the definition and
terminology surrounding transfer fees would not result in any
substantive change for existing Form N-4 issuers.
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Annual Contract Expenses
    Form N-4 issuers currently must include an annual contract expenses
table in their prospectuses, detailing the fees and expenses that
investors pay each year in administrative expenses, base contract
expenses, and optional benefit expenses. Currently, base contract
expenses must be expressed as a percentage of average account value. In
a change relevant to all Form N-4 issuers, we propose an amendment that
would also allow base contract expenses to be expressed as a percentage
of average account value or contract value. We do not expect that this
change will substantively affect variable annuities' existing
disclosure. We are proposing this expansion to describe expenses
deducted where index-linked options or fixed options are implicated, as
those options do not generally use the concept of average account
value.\188\ Additionally, to place investors on notice of the unique
and ongoing trade-off costs associated with RILAs that may not be
captured by this table, we are proposing to require registrants to
include the following statement in the table:
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    \188\ We are also proposing two related, non-substantive
amendments to the instructions relating to annual contract expenses
relevant to all issuers. These changes are to broaden terminology
given the expanded scope of issuers that under the proposal could
file on Form N-4. Currently the instruction for describing
administrative expenses references ``any Contract, account, or
similar fee on all Investor Accounts;'' however, as noted below, we
propose deleting the term ``Investor Account,'' and accordingly also
propose amending this instruction to conform to that change.
Relatedly we are proposing to amend the instruction regarding base
contract expenses to remove a reference to fees and expenses
deducted ``from separate account assets or charged to all Investor
Accounts,'' replacing it with an instruction to consider fees and
expenses ``charged to any Investment Option.''

    In addition to the fees described above, we limit the amount you
can earn on an Index-Linked Option. Imposing this limit helps us
make a profit on the Index-Linked Option. In return for accepting
this limit on Index gains, you will receive some protection from
Index losses.
Annual Portfolio Company Expenses
    Form N-4 currently requires issuers to include in the prospectus an
annual portfolio company expenses table, disclosing the minimum and
maximum total operating expenses charged by the portfolio companies
offered by variable annuity contracts that may be periodically charged
to investors during the time they own the contract. This includes costs
incurred by portfolio companies directly and, if the portfolio company
invests in other mutual funds, the fees and expenses the portfolio
company indirectly incurs from these investments. In a change that also
would apply to variable annuities prospectuses, we are proposing that
registrants disclose that expenses shown in this table may change over
time and may be higher or lower in future. We propose this change for
two reasons. First, this modification would help to ensure that
investors understand that these charges may increase over time,
notwithstanding that these charges are described as maximum expenses.
Second, given that we are proposing similar disclosures with regard to
features of RILA offerings that are subject to change, we propose to
require a similar level of disclosure with regard to variable annuity
offerings where appropriate.
Example
    Form N-4 issuers currently must provide an example in their
prospectuses that is designed to allow variable annuity investors to
compare the cost of investing in the contract with the cost of
investing in other variable annuity contracts. We propose amending the
example requirements to clarify, for variable annuity and RILA issuers,
that the example is designed to permit investors to compare costs of
investing solely in variable options under the contract with costs
associated with variable options offered under other annuity contracts.
Under the proposal, the example would be preceded with a legend
specifically stating that: the example assumes that all contract value
is allocated to variable options; the example does not reflect contract
adjustments; and costs would likely differ if an investor selects
index-linked options or fixed options.
(b) Charges (Item 7)
    Currently, Item 7 requires registrants to provide a brief
description in their prospectuses of all current charges deducted from
purchase payments, investor accounts, or assets of the registrant.
Consistent with the proposed changes to Item 4, we also are proposing a
change in terminology that would affect all Form N-4 issuers, replacing
references in Item 7 to ``investor accounts'' and the assets of
``registrants'' with the terms ``contract value'' and ``investment
option'' assets, respectively. Therefore, in responding to Item 7,
variable annuity and RILA issuers would describe charges deducted from
purchase payments, contract value, or investment option assets.\189\
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    \189\ Additionally, we are proposing two non-substantive
terminology changes in Instruction 3 to Item 7(a) regarding how
registrants must describe the sources that will be used to cover
shortfalls where proceeds from sales load will not cover expected
costs. First, we propose replacing the term ``depositor'' with the
term ``insurance company.'' Second, where shortfalls are to be made
from an insurance company's general account, this instruction
requires a disclosure that amounts paid by the insurance company may
consist of proceeds derived from base contract expenses deducted
from the registered separate account. We propose striking this
italicized language referring to assets of the registered separate
account because it is superfluous given the definition of ``base
contract expenses'' in proposed Instruction 14 to Item 5, discussed
above.

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    For the reasons described above and given the potentially
significant economic consequences contract adjustments can have on RILA
investors, we are also proposing additional specific requirements to
incorporate contract adjustments into the prospectus's disclosure of
charges, which would entail detailed descriptions of any contract
adjustments under the contract. These disclosures are designed to be
comparable in scope and proximate to existing disclosures about
contract charges applicable to variable annuities.\190\
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    \190\ See instructions (a) through (d) to Item 7 of Form N-4.
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    Specifically, we are proposing that insurance companies would have
to: (1) disclose (as a percentage) the maximum potential loss that
could result from a negative contract adjustment; (2) define the period
during which any contract adjustment would apply; and (3) describe all
transactions subject to a contract adjustment.\191\ Insurance companies
also would have to include a description of how the contract adjustment
will affect the contract value, surrender value, death benefit, and any
living benefits, and disclose that a negative adjustment could reduce
the value under the contract in an amount greater than the value
withdrawn.\192\ They would also need to describe, in simple terms, how
the contract adjustment is determined under the contract, and the
relationship between the contract adjustment and any other charges or
fees applied under the contract, including, for example, the sequence
in which charges and adjustments are applied.\193\ The required
disclosure would also require the issuer to briefly describe the
purpose of the contract adjustment, including, for example, that the
contract adjustment transfers risk from the insurance company to the
investor to protect the insurance company from losses on its own
investments supporting contract guarantees if amounts are withdrawn
prematurely.\194\ Finally, issuers would be required to disclose how an
investor can obtain information about the current value of the contract
adjustment, while stating that this value can fluctuate daily, and that
the quoted value may differ from the actual value at the time of
adjustment.\195\
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    \191\ See proposed instructions (e)(1) through (e)(3) to Item 7
of Form N-4. In describing the transactions subject to a contract
adjustment, the insurance company would need to describe, for
example, whether adjustments apply if amounts are transferred or
withdrawn from an index-linked option or from the contract due to a
partial withdrawal, surrender, election of an annuity option, or
payment of death benefit proceeds, or where a particular optional
benefit (e.g., a withdrawal under a guaranteed living benefit) is
utilized, and to describe any circumstances under which the
adjustment will be waived.
    \192\ See proposed instruction (e)(5) to Item 7 of Form N-4. If
applicable, the insurance company would also be required to state
the impact of the contract adjustment on interest to be credited to
an index-linked option at the end of its crediting period.
    \193\ See proposed instructions (e)(4) and (e)(6) to Item 7 of
Form N-4. The description of how the contract adjustment is
determined would have to provide a meaningful explanation of all the
material features of the contract adjustment's application,
including: (1) information about any formula applied (e.g., a change
in value of hypothetical derivative instruments); (2) the factors
that may cause an adjustment (e.g., timing of withdrawal, index
volatility, increase in external interest rates); (3) a description
of any proportionate withdrawal calculations; and (4) how
adjustments are applied (e.g., allocated among the investment
options, applied to a withdrawal amount).
    \194\ See proposed instruction (e)(7) to Item 7 of Form N-4.
    \195\ See proposed instruction (e)(8) to Item 7 of Form N-4.
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    These proposed disclosures are intended to provide investors with
the necessary scope and level of detail of the contract adjustments
that could negatively affect an investor's contract value or the
amounts an investor could withdraw from the contract. These disclosures
are further justified given the RILA Act's requirement that the
Commission use the results of investor testing in designing a
registration form for RILAs. That mandated investor testing showed that
participants were confused about contract adjustments, their purpose,
the situations in which they could arise, their potential magnitude,
and their relationship to other fees and charges (e.g., surrender
fees).\196\ These disclosures are designed to address these areas of
identified confusion.
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    \196\ See, e.g., OIAD Report at Section 5, Qualitative Testing,
Results From Round 2 and Section 7, Conclusions.
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    To simplify this disclosure, we propose specifying that detailed
disclosure on the method of calculating the contract adjustment appear
in the SAI, as opposed to the prospectus.\197\ We also propose
requiring that Item 7(e) include a cross-reference to Item 22 of Form
N-4, which would require more-detailed disclosure on the contract
adjustment's calculation (including illustrative examples as to
adjustment's operation) to appear in the SAI. The more detailed SAI
discussion is not, however, a substitute for the Item 7 requirements.
Thus, for example, an insurance company could not include the formula
underlying the contract adjustment calculation in the SAI in lieu of
the required discussion of the formula in the prospectus. Rather, in
addition to stating the formula in the SAI, the insurance company would
need to include in the prospectus a brief description, in simple terms,
of the manner in which contract adjustment is determined.
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    \197\ See proposed instruction (e)(4) to Item 7 of Form N-4.
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    Further, while the proposed disclosures are tailored to the
mechanics of contract adjustments, they are also designed to be, where
possible, consistent with existing requirements regarding disclosure of
current charges deducted from purchase payments, investor accounts, or
assets of the registrant. For example, Form N-4 currently requires
disclosure of current fees and charges, which are typically expressed
as a percentage. Because the value of a given contract adjustment can
change daily, we are proposing that insurance companies disclose the
maximum potential loss, as a percentage, that could result from a
negative contract adjustment (rather than mandate a disclosure of a
current contract adjustment value that could quickly become
outdated).\198\
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    \198\ See proposed instruction (e)(1) to Item 7 of Form N-4.
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(c) Purchase of Securities Being Offered (Item 22)
    We are proposing to amend Item 22, which addresses the purchase of
securities being offered, to require specific, detailed contract
adjustment disclosures to appear in RILA issuers' SAIs. As discussed
above, issuers would be required to provide a simple explanation of the
underlying mechanics of contract adjustments in their prospectuses,
while noting that further detail is available in the SAI and providing
a cross reference to that information. Under the proposal, in addition
to the discussion required in the prospectus by Item 7, Item 22 would
require issuers to explain fully the operation of any contract
adjustment that can be applied under the contract. This more detailed
explanation would not take the place of the prospectus discussion and
would need to address all the material features of the adjustment and
include an explanation

of any formulas used to calculate the adjustment, and at least one
numeric example to illustrate the application of the contract
adjustment. This numeric example would have to include a negative
adjustment, reflect surrender charges (if applicable), and disclose the
percentage change in contract value as a result of the adjustment.
    The mechanics of contract adjustments under a RILA contract are
typically complex, often implicating the application of factors or
formulas that can be difficult for many investors to understand.
Because the application of a negative contract adjustment can
substantially affect an investor's contract value, however, we propose
to require the inclusion of information on negative contract adjustment
in the SAI, so that investors who wish to learn more about the
calculation may do so. In addition to promoting transparency generally,
this proposed disclosure would ensure that liability attaches under
section 11 of the Securities Act for any material misrepresentations
regarding the application of a contract adjustment.
    We are also proposing to make applicable to RILA issuers certain
existing SAI disclosure requirements about the purchase of securities
being offered. Specifically, we are proposing revisions to the
instructions to the existing requirement to describe the manner in
which the securities are offered to the public, which would instruct
RILA issuers to respond by addressing any exchange privileges between
investment options.\199\ Additionally, we propose to make the existing
requirement to describe the method used to determine the sales load
applicable to RILA issuers.\200\ We do not propose applying the
existing disclosure requirement dealing with frequent transfer
arrangements to RILA issuers, as its provisions are relevant only to
variable annuity contracts.\201\
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    \199\ See proposed Item 22(a) of Form N-4.
    \200\ See proposed Item 22(b) of Form N-4.
    \201\ See proposed Item 22(c) of Form N-4.
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(d) Request for Comment
    We request comment on these proposed amendments.
    63. Do commenters agree that it is appropriate to include a
discussion of contract adjustments in Items 4, 7, and 22 as proposed?
If not, how would commenters suggest issuers disclose contract
adjustments to ensure that investors have sufficient information to
make an informed investment decision regarding RILAs?
    64. Is it appropriate to require the disclosure of the contract
adjustment maximum potential loss in the transaction expense table? Do
commenters agree that is appropriate to require that issuers express
the contract adjustment maximum potential loss as a percentage? If not,
what alternative measure would commenters suggest?
    65. Do commenters agree that the proposal strikes the proper
balance in the location of the proposed contract adjustment
disclosures? Are there any contract adjustment disclosures we propose
including in the SAI that commenters believe would be more
appropriately located in the prospectus? Are there any contract
adjustment disclosures we propose including in the prospectus that
commenters believe would be better situated in the SAI?
    66. Do commenters agree with our proposal that issuers be required
to include, in the annual contract expenses table, a statement
disclosing that, in addition to the expenses described in the table,
investors will be subject to limits on the amounts they can earn in
connection with index-linked options? Do commenters agree that it is
appropriate to include a statement addressing current limits on gains
in conjunction with the annual contract expenses table? Do commenters
agree the proposed statement captures the most salient concerns to
investors of these kinds of limits on gains? Do commenters have any
suggestions for alternate wording or placement of the statement?
    67. Do commenters have any suggestions about additional or
alternative disclosures that would address the areas of confusion
regarding contract adjustments that this release describes as being
identified in investor testing?
    68. Are there any concerns with our proposal to use the term
``contract adjustment'' when referring to MVAs (market value
adjustments) and IVAs (interim value adjustments)? Is there an
alternative term that we should use to describe these kinds of
adjustments?
    69. Does our proposal to replace the term ``exchange fee'' with
``transfer fee'' in Item 4 raise any concerns?
    70. With regard to the numeric examples we propose requiring in the
SAI, should there be any additional requirements for what those
examples would need to include? For example, should we require that the
example utilize the average negative contract adjustment in operation
for the preceding year, or the negative contract adjustment expected
over the next year? Should we also (or instead) require an example of a
contract adjustment in the prospectus? If so, why, and what particular
assumptions should we require in the example?
    71. Do commenters agree with our recommendation to place the more
detailed disclosures associated with the mechanics of contract
adjustments (such as applicable formulas) in the SAI as opposed to the
prospectus? Why or why not?
    72. In addition to the contract adjustment disclosures we have
proposed, should we also require issuers to provide a graphic
illustrating the operation of a contract adjustment? If so, where
should we require that graphic illustration be presented, and what
particular circumstances should it illustrate? For example, would it be
helpful to require issuers to include a graphic illustration
demonstrating how a contract adjustment works when investors withdraw
amounts from their contract prior to the end of a crediting period?
Should we require illustrations that demonstrate the operation of a
contract adjustment for investors in circumstances where they change to
a different index-linked option before the end of a crediting period,
and demonstrating how they can change investment options to minimize
the financial impact to their contract value?
6. Information About Contracts With Index-Linked Options (Item 31A)
    We are proposing new Item 31A of Form N-4 to require census-type
information regarding RILAs offered in connection with the applicable
registration statement. Specifically, under proposed Item 31A, an
insurance company would be required to provide the following
information regarding any RILA offered through the registration
statement, as of the most recent calendar year-end: (1) the name of
each contract; (2) the number of contracts outstanding; (3) the total
value of investor allocations attributable to index-linked options; (4)
the number of contracts sold during the prior calendar year; (5) the
gross premiums received during the prior calendar year; (6) the amount
of contract value redeemed during the prior calendar year; and (7)
whether the contract is a ``combination contract,'' that is, a contract
that offers variable options in addition to index-linked options. This
information would be required as of the most recent calendar year-end
and, accordingly, would generally be updated through a post-effective
amendment to a registration statement on Form N-4.\202\
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    \202\ See proposed Item 31A of Form N-4. An issuer transitioning
from an existing registration statement on Form S-1 or S-3 to Form
N-4 through a post-effective amendment would be required to report
this information as of the most recently completed calendar year in
its first post-effective amendment transitioning onto Form N-4.

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    This information is census-type data that would provide contract-
level disclosures designed to assist the Commission and staff in
identifying trends in insurance companies' offerings of RILAs. This
information would also provide improved transparency to investors by
supplementing the information available about the marketplace for the
contracts offered in connection with a registration statement. These
items are relatively limited in scope and primarily consist of
information that should generally be readily available to issuers. The
particular data required is similar to that provided by registered
separate accounts that likewise assist the Commission and staff in
identifying trends in variable annuities.\203\
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    \203\ See Item F.14 of Form N-CEN; see also Investment Company
Reporting Modernization, Investment Company Act Release No. 32314
(Oct. 13, 2016) [81 FR 81870 (Nov. 18, 2016)] at the sentences
following n.1142.
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    We are proposing to require information to be presented as of the
most recent calendar year-end to provide the Commission and its staff
with information that will be updated with an annual frequency for
offerings of RILAs. We anticipate that this information would typically
be updated as part of an issuer's annual update to its registration
statements for such contracts.\204\ This approach would result in
information provided as of a uniform date for all offerings of RILAs,
regardless of the issuer's filing date, and, in turn, would provide for
increased comparability across issuers and contracts.\205\ Requiring
this information to be updated annually is intended to achieve an
appropriate balance between providing the Commission and its staff with
current information while avoiding overburdening issuers. An annual
snapshot should be sufficient for the census-type nature of the
information and would provide Commission staff with appropriate
intervals of data points over time in which to identify trends in
insurance companies' offerings of RILAs. Requiring these issuers to
report such census information semi-annually or more frequently would
place an increased burden on issuers that may not be justified by a
commensurate increase in the value of the information received by the
Commission.
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    \204\ See 15 U.S.C. 77j(a)(3).
    \205\ We understand that insurance companies offering RILAs have
a December 31 fiscal year end which, in practice, means a
distinction between calendar year and fiscal year would result in
limited effect on the reporting.
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    This reporting would provide the Commission with additional
transparency into the RILA market segment, which would in turn improve
the effectiveness of the Commission's oversight of offerings on Form N-
4. Requiring this high-level reporting would permit the Commission to
identify trends occurring in this market segment over time and assist
with allocating the Commission's resources in administering the form.
This reported information on index-linked options would complement
parallel census-type information that is currently required to be
reported annually on Form N-CEN by registered unit investment trusts
offering variable annuities.\206\ The new census-type information
therefore would help provide the Commission with a more complete
picture of the marketplace for insurance products offered through
registration statements on Form N-4. In addition, this information may
benefit the public in supplementing the information available about
RILAs.
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    \206\ Issuers registering combination contracts on Form N-4
would be required to exclude amounts allocated to a variable option
when providing information in response to Item 31A as these
allocations would be separately reported by registered separate
accounts on Form N-CEN.
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    We request comment on these proposed amendments.
    73. Are the required reporting elements in Item 31A of proposed
Form N-4 appropriate and clear? If not, what elements require
additional instruction?
    74. Do commenters agree that it is appropriate to require reporting
under Item 31A to be provided as of calendar year-end? Do commenters
agree that there is limited practical difference between requiring a
fiscal year-end and calendar year-end requirement in light of
investment company practices?
    75. Should we require additional or different reporting of census-
type reporting regarding RILAs? If so, should we also amend the
requirements of Form N-CEN to ensure parallel reporting by registered
unit investment trusts offering variable annuities registered on Form
N-4?
    76. Would RILA issuers face any significant challenges in providing
the required reporting elements? If so, why?
    77. Do commenters agree that it would be appropriate for issuers
with existing contracts to report information required by proposed Item
31A for the calendar year prior to the calendar year the issuer first
transitions its registration statement onto Form N-4?
7. Other Amendments and Provisions
    Our proposed amendments also include certain other amendments to
Form N-4 and related rules designed to accommodate the inclusion of
RILA issuers on that form. These include amendments to Form N-4's
facing sheet, definitions, exhibit list, and required representations,
as well as amendments to certain Securities Act rules that help to
implement the proposal. These proposed amendments are discussed below.
(a) Facing Sheet
    We are proposing amendments to include a new checkbox section on
the facing sheet. Specifically, an issuer would be required to identify
in this new section: (1) if it is a new registrant, defined as, as
applicable, a registered separate account or insurance company that has
not filed a Securities Act registration statement or amendment thereto
within 3 years preceding this filing; \207\ (2) if it is an emerging
growth company (``EGC''), as defined by Rule 12b-2 under the Exchange
Act; (3) if it is an EGC, whether it has elected not to use the
extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 7(a)(2)(B)
of the Securities Act; and (4) if it is relying on an exemption from
Exchange Act reporting requirements in reliance on rule 12h-7.\208\
These changes would help the Commission better understand the types of
registration statements being filed on Form N-4 and, in the case of the
EGC information, mirrors similar facing sheet requirements found in
Form S-1. In addition, we are proposing amendments to the description
of the types of entities that use Form N-4 to include insurance
companies that offer index-linked options, either as stand-alone or
combination products.\209\
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    \207\ For example, a variable annuity separate account that has
not previously filed a Securities Act registration statement would
identify itself as a new registrant, regardless of whether the
sponsoring insurance company has filed a recent Securities Act
registration statement or amendment thereto as the proposed
requirements request information on the registrant. In the same
manner, an insurance company filing on Form N-4 would determine
whether it is a new registrant solely with respect to its own
Securities Act registration statement filings.
    \208\ In addition to this checkbox, we are proposing an
instruction that implements the requirements of rule 12h-7 to
indicate that the insurance company is relying upon the exemption
provided by that rule in the relevant prospectus. See supra section
II.B.3.b.
    \209\ See supra section II.A.
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(b) Definitions (General Instruction A)
    We are proposing amendments to General Instruction A to update the

existing definitions in Form N-4, add new definitions to accommodate
the inclusion of RILAs on Form N-4, and implement these proposed
definitions throughout the form. However, unless otherwise stated, the
proposed amendments to the definitions in General Instruction A would
not alter the existing obligations under Form N-4 for current issuers
on Form N-4. These changes should provide a standard set of definitions
to convey form provisions in a consistent and efficient manner without
the need for lengthy descriptions in each instance and clarify which
form provisions apply to which categories of issuers and investment
products.\210\
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    \210\ We are also proposing to amend Form N-4 throughout to use
the gender-neutral reference of ``investor'' where appropriate. See,
e.g., proposed Instruction 6 to Item 2 of Form N-4.
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    Specifically, we propose to add a new definition for ``index-linked
option.'' The proposed definition covers RILAs and index-linked options
offered in combination contracts, as an investment option offered under
any contract, pursuant to which the value of the contract, either
during an accumulation period or after annuitization, or both, will
earn positive or negative interest based, in part, on the performance
of a specified index.\211\ This is a functional definition focused on
the key features of a RILA and would cover RILAs as defined in the RILA
Act. We also propose to define ``fixed option'' as an investment option
under the contract pursuant to which the value of the contract, either
during an accumulation period or after annuitization, or both, will
earn interest at a rate specified by the insurance company, subject to
a minimum guaranteed rate under the contract. Further, we would change
the existing definition of ``variable annuity contract'' to ``variable
option'' and move the parts of that definition that refer to annuity
contracts generally to a new definition for ``contract.'' In connection
with the addition of other types of investment options on Form N-4, we
are proposing to amend ``portfolio company'' to clarify that this term
relates to the investment companies offered as investment options in
contracts containing variable options. We also propose to add a new
defined term ``investment option'' to refer collectively to any index-
linked, variable, or fixed option. We propose to add these items to
help clarify which provisions of amended Form N-4 apply to which types
of annuities or investment options.
---------------------------------------------------------------------------

    \211\ Because RILA returns may not be one for one with the
index, we propose to indicate that positive or negative interest is
only based ``in part'' on the index's performance.
---------------------------------------------------------------------------

    Because an insurance company issuing a RILA is not acting as a
depositor, we propose to change the definition of ``depositor'' to
``insurance company.'' The proposed definition refers to the insurance
company that issues the contract, which company is subject to state
supervision, and that the insurance company may also be the depositor
or sponsor for a variable annuity separate account. We would also add a
new definition of ``registered separate account'' defined as the
separate account in which the contract participates with regard to any
variable option offered under the contract, and refine the definition
of ``registrant'' to mean either the registered separate account or
insurance company, as applicable. These changes further help to clarify
which provisions of the form apply to variable annuities and RILAs.
    We also propose to add definitions of ``index,'' \212\ ``contract
adjustment,'' \213\ and ``crediting period'' \214\ to refer to these
RILA-centric concepts in the form and, in the case of ``contract
adjustment'' and ``crediting period,'' help clarify when the relevant
disclosures would be required. Lastly, we propose to eliminate the
currently defined term ``investor account.'' Insurance companies
typically do not use this term in their disclosure, and the more
generalized concept of contract value, which also is designed to
address the value of an investor's investment, is intended to convey
the characteristics of the broader scope of annuities that insurance
companies could register on Form N-4 under the proposal.
---------------------------------------------------------------------------

    \212\ As proposed, ``index'' means any index, rate, or benchmark
(such as a registered exchange-traded fund that tracks an index)
used in the calculation of positive or negative interest credited to
an index-linked option. See proposed General Instruction A to Form
N-4.
    \213\ As proposed, ``contract adjustment'' means a positive or
negative adjustment made to the value of the contract by the
insurance company if amounts are withdrawn from an index-linked
option or from the contract before the end of a specified period.
This adjustment may be based on calculations using a predetermined
formula, or a change in interest rates, or some other factor or
benchmark. See id.
    \214\ As proposed, ``crediting period'' means the period of time
over which an index's performance is measured, subject to applicable
limits on index gains and losses, to determine the amount of
positive or negative interest that will be credited to an index-
linked option at the end of the period.
---------------------------------------------------------------------------

    We also are proposing related amendments throughout Form N-4 to
help implement the proposed new definitions. For example, we are
proposing to clarify the applicability of certain variable annuity or
Investment Company Act-specific disclosure to limit those requirements
to ``registered separate accounts'' or ``variable options'' when
appropriate.\215\ As another example, the form requires disclosure of
the procedures to purchase an annuity contract including certain
particularized information.\216\ We would apply this provision
generally to all annuities including RILAs, but are only requiring
certain disclosures relating to the operation of accumulation units and
sub-accounts to contracts with variable options as those elements are
not utilized by RILAs.
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    \215\ See, e.g., proposed Items 3, 7, 8, 24, 32, and 34(a) of
Form N-4; see also proposed definitions for ``class'' (clarifying
applies to all contracts) and ``platform charge'' (clarifying only
applies if there is a variable option).
    \216\ See Item 11 of Form N-4.
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(c) Rules 405, 480, 481, 483, and 484
    We are proposing amendments to rule 405 under the Securities Act to
add the new defined terms ``Form available solely to investment
companies registered under the Investment Company Act of 1940'' and
``registered index-linked annuity'' for purposes of Securities Act
rules.
    Certain Securities Act rules apply only to registration statements
that are prepared on a form available solely to a registered investment
company or a business development company. These rules are 17 CFR
230.480 (``rule 480''), 17 CFR 230.481 (``rule 481''), 17 CFR 230.483
(``rule 483''), and 17 CFR 230.484 (``rule 484'') under the Securities
Act, and include forms such as Forms N-1A, N-2, N-3, N-4, N-5, and N-6.
These rules prescribe requirements relating to: information given with
the title of securities; information contained in registration
statements; exhibits filed as part of the registration statement; and
undertakings required with respect to requests for acceleration.
    By virtue of moving RILAs, which are not issued by a registered
investment company, onto Form N-4, Form N-4 would be outside the scope
of this description absent the proposed amendments. As such, the
proposed new defined term ``form available solely to investment
companies registered under the Investment Company Act of 1940'' would
specify that these rules would continue to apply to registration
statements filed on Form N-4. Specifically, we are proposing to amend
rule 405 to state that ``a form available solely to investment
companies registered under the Investment Company Act of 1940''
includes the form used to register the offering of securities of a
registered index-linked annuity for purposes of the Securities Act of
1933. By operation of this new

term, RILA registration statements on Form N-4 would be subject to
rules 480, 481, 483, and 484.\217\ We propose to subject RILA
registration statements to these rules to help facilitate a consistent
application of Form N-4 requirements.
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    \217\ These rules currently apply to registration statements on
Form N-4. Rule 480 prescribes requirements relating to information
given with the title of securities. Rule 481 prescribes certain
information to be required in the registration statement (e.g.,
certain legends to appear on the front and back cover pages of
prospectuses). Rule 483 prescribes certain requirements relating to
exhibits filed as part of the registration statement. Rule 484
prescribes certain required undertakings with respect to requests
for acceleration under 17 CFR 230.461 when certain arrangements
exist with respect to indemnification of specified persons against
liability under the Securities Act.
---------------------------------------------------------------------------

    We are also proposing to add a definition of ``registered index-
linked annuity'' to rule 405, which provides consistent definitions for
select terms used throughout the Securities Act rules, to simplify
references to RILAs in the proposed Securities Act rule amendments.
Specifically, we would define ``registered index-linked annuity'' as an
annuity or an option available under an annuity (1) that is deemed a
security; (2) that is offered or sold in a registered offering; (3)
that is issued by an insurance company that is the subject to the
supervision of either the insurance commissioner or bank commissioner
of any state or any agency or officer performing like functions as such
commissioner; (4) that is not issued by an investment company; and (5)
whose value, either during the accumulation period or after
annuitization or both, will earn positive or negative interest based,
in part, on the performance of any index, rate, or benchmark.
    Under the RILA Act, the term ``registered index-linked annuity''
means an annuity (A) that is deemed to be a security, (B) that is
registered with the Commission in accordance with section 5 of the
Securities Act, (C) that is issued by an insurance company that is
subject to the supervision of the insurance commissioner or bank
commissioner of any State or any agency or officer performing like
functions as such commission, (D) that is not issued by an investment
company, and (E) the returns of which are based on the performance of a
specified benchmark index or rate (or a registered exchange traded fund
that seeks to track the performance of a specified benchmark index or
rate) and may be subject to a market value adjustment if amounts are
withdrawn before the end of the period during which that market value
adjustment applies.\218\ The proposed definition in rule 405 differs in
certain respects from this definition, but covers all offerings that
would be included in the RILA Act's definition. These differences are
intended to simplify the definition and use terminology that is
consistent with other rules under the Securities Act. For example, the
proposed definition clarifies that the insurance company is registering
the offering of a RILA, rather than the RILA itself, with the
Commission.\219\ As another example, the proposed definition in rule
405 does not include a reference to a ``market value adjustment,'' as
the RILA Act's definition does, because the RILA Act did not require
that feature as a predicate for being a ``RILA.'' \220\ Since the
presence of a market value adjustment does not factor into the
assessment of whether a security is a RILA under the RILA Act's
definition, it is unnecessary to refer to this feature in the proposed
definition in rule 405. The proposed definition, however, continues to
encompass the full scope of the RILA Act's definition.
---------------------------------------------------------------------------

    \218\ See Public Law 117-328; 136 Stat. 4459 (Dec. 29, 2022).
    \219\ This is functionally the same as the requirement of the
RILA Act that the RILA ``be registered with the Commission in
accordance with section 5 of the Securities Act of 1933.'' See
section 101(a)(5) of Division AA, Title I of the Consolidated
Appropriations Act, 2023.
    \220\ See Public Law 117-328; 136 Stat. 4459 (Dec. 29, 2022)
(defining RILA as an annuity, among other things, the returns of
which may be subject to a market value adjustment if amounts are
withdrawn before the end of a period in which that market value
adjustment is applied) (emphasis added).
---------------------------------------------------------------------------

(d) Exhibits and Undertakings (Items 27 and 34)
    As a function of moving RILAs onto Form N-4 and subjecting them to
the requirements of rule 483, RILA issuers would be required to file
various exhibits as part of a registration statement, similar to the
requirements these issuers are subject to when registering RILA
offerings on Forms S-1 and S-3 currently.\221\ Further, in addition to
the requirements of rule 484, we are proposing to amend Item 34 of Form
N-4 to include certain undertakings currently required of RILAs as part
of their Form S-1 and S-3 registration statements.\222\
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    \221\ See Item 16 of Form S-1; Item 16 of Form S-3; Item 601 of
Regulation S-K.
    \222\ The disclosure currently required in Item 34, the fee
representation mandated of registered separate accounts under the
Investment Company Act, would be retained as paragraph (a) of this
item, limited in application to variable options, and the new
undertakings added as new paragraph (b) and limited to index-linked
options. See also 15 U.S.C. 80a-26(f)(2)(A). We would also rename
this item ``Fee Representation and Undertakings.''
---------------------------------------------------------------------------

Item 27--Exhibits
    RILA issuers are currently subject to the integrated disclosure
requirements of Regulation S-K when registering their offerings, which
provide requirements for exhibits that must be filed as part of the
registration statement.\223\ Conversely, issuers on Form N-4 are
required to file the exhibits required by rule 483 and Item 27 of Form
N-4. To provide consistent requirements for Form N-4 issuers, we are
proposing amendments to require RILA issuers to adhere to the same
requirements as current issuers on Form N-4. RILA issuers and current
Form N-4 issuers are subject to somewhat different provisions for
filing exhibits to a registration statement. However, there are
significant similarities between the types of the exhibits that each
type of issuer is required to file, and thus we generally are not
proposing to change those requirements. RILA registration statements
will therefore continue to include the types of exhibits currently
included in their registration statements on Forms S-1 and S-3. For
example, RILA issuers filing on Form N-4 would continue to be required
to file such exhibits as the insurance company's certificate of
incorporation and by-laws, forms of contracts offered in connection
with the registration statement, underwriting agreements, legal
opinions, and other material contracts, as applicable.\224\
---------------------------------------------------------------------------

    \223\ See 17 CFR 229.601.
    \224\ See 17 CFR 229.601; proposed Item 27 of Form N-4.
---------------------------------------------------------------------------

    We are not, however, proposing to amend Item 27 of Form N-4 to
include required exhibits under Regulation S-K that are generally not
applicable to RILAs or would no longer be relevant in light of the
proposed amendments.\225\ For example, RILA registration statements are
currently required to include a filing fee exhibit. Under the proposed
amendments, RILA issuers would no longer include registration fee
payments as part a registration statement or post-effective amendment
filing. Therefore, the proposed amendments to Item 27 of Form N-4 omit
this existing exhibit requirement for RILAs.\226\
---------------------------------------------------------------------------

    \225\ See 17 CFR 229.601; proposed Item 27 of Form N-4. For
example, some items, like Item 601(b)(96) of Regulation S-K which
requires a technical report summary to be filed as an exhibit to a
registration statement on Form S-1 when a registrant discloses
information concerning its mineral resources, are wholly
inapplicable to RILAs.
    \226\ See 17 CFR 229.601(b)(107).
---------------------------------------------------------------------------

    We are, however, proposing to amend Form N-4's required exhibits
list to add new Item 27(p) for all issuers, which would require the
filing of any power of

attorney included pursuant to rule 483(b).\227\ While this exhibit is
already required to be filed with a Form N-4 registration statement
under rule 483(b), practices differ in regards to the placement of a
required power of attorney exhibit within the exhibit list. This
amendment is designed to assist the public in comparing these exhibits
by standardizing their location in the registration statement. In
addition, we are proposing conforming changes in Item 27 to reflect the
proposed amendments to the definitions in Form N-4.
---------------------------------------------------------------------------

    \227\ RILA registration statements on Forms S-1 and S-3
similarly include a power of attorney, when applicable, to be filed
as part of the registrations statement. See 17 CFR 229.601(b)(24).
See also supra section II.D (discussing the addition of a new
exhibit relating to changes in accountants).
---------------------------------------------------------------------------

Item 34--Fee Representation and Undertakings
    We are also proposing amendments to Item 34 of Form N-4 to require
RILA issuers to include specific undertakings in their registration
statements on Form N-4. Under the proposed amendments, a RILA issuer
would be required to furnish two undertakings as part of the
registration statement on Form N-4. These undertakings are (1) to file,
during any period in which offers or sales are being made, through a
post-effective amendment to its registration statement, any prospectus
required by section 10(a)(3) of the Securities Act and (2) that, for
the purposes of determining liability under the Securities Act, each
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof. These proposed undertakings are the same as two
undertakings RILA issuers currently provide in registration
statements,\228\ and mirror the effect of similar provisions of section
24(e) of the Investment Company Act, which applies to amendments to
Form N-4 registration statements by registered separate accounts.\229\
We are proposing that RILA issuers continue to furnish these
representations concerning post-effective amendments to a registration
statement as, under the proposed amendments, RILAs may be continuously
offered on a registration statement for an indefinite amount of time.
In that time, a RILA registration statement may be subject to a number
of various post-effective amendments. Conversely, the proposed
amendments do not include other undertakings which may be currently
required in RILA registration statements. These undertakings relate to
the process for conducting continuous offerings under rule 415, which
RILAs will no longer be subject to under the proposed amendments. In
addition, we are not including other undertakings that are unnecessary
in light of the proposed amendments as a whole.\230\ For example, RILA
issuers currently are required to include an undertaking to remove from
registration any of the securities being registered that remain unsold
at the termination of an offering through a post-effective
amendment.\231\ However, under the proposed amendments, RILA issuers
will be registering an indeterminate amount of securities and paying
registration fee payments in arrears on amended Form 24F-2 for the life
of an offering. Under this approach, a RILA issuer would only pay
registration fees on the exact amount of net issuance of securities
relating to an offering and therefore, it is unnecessary to
additionally require an undertaking that relates to a surplus
registration of securities during an offering.
---------------------------------------------------------------------------

    \228\ See rule 415(a)(3) and 17 CFR 229.512(a). Under the
proposed amendments, RILAs would be exempt from the conditions of
rule 415, including furnishing the required undertakings pursuant to
Item 512(a) of Regulation S-K. See infra footnote 331. For example,
RILA registration statements would no longer be required to include
a statement that the issuer undertakes to file a post-effective
amendment to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. We preliminarily believe this
requirement is not necessary for RILA registration statements on
Form N-4 in light of the other amendments we are making to the
prospectus and registration statement filing process for RILAs. See
infra section II.E (discussing proposed amendments to rules 485 and
497 under the Securities Act).
    \229\ See Section 24(e) of the Investment Company Act [15 U.S.C.
80a-24(e)]. Section 24(e) generally requires a registered separate
account to amend its registration statement annually to update its
prospectus for the purposes of section 10(a)(3). Section 24(e) also
provides that, for the purposes of liability under Securities Act,
the effective date of the latest amendment is deemed to be the
effective date of the registration statement with respect to
securities sold after the effectiveness of amendment.
    \230\ See 17 CFR 229.512(a).
    \231\ See 17 CFR 229.512(a)(3).
---------------------------------------------------------------------------

(e) Request for Comment
    We request comment on these proposed amendments.
    78. Are the instructions for the proposed new section on the facing
sheet appropriate? Should there be additional or different options for
the proposed new section on the facing sheet?
    79. Are the definitions in Part A of the General Instructions of
Form N-4 appropriate? If not, which definitions require additional
clarity or modifications? For example, do commenters believe it is
appropriate to use the collective term ``registrant'' to include
insurance companies that may not be registered entities under the
Securities Act? Do the definitions effectively convey which provisions
apply to which type of annuity contract?
    80. Do commenters agree with the statement that ``investor
account'' is not generally used in insurance company disclosures to
investors relating to annuity contracts?
    81. Did we appropriately scope those provisions that practically
only apply to variable options to those types of investment options?
Are there any other disclosures we should limit to variable options?
Conversely, are there provisions we limited to variable options that we
should also apply to index-linked options?
    82. Should we add any additional definitions to Part A of the
General Instructions to Form N-4? Should we retain the term ``investor
account''?
    83. Is the definition of ``Index-Linked Option'' appropriate?
Should we revise the definition in any way? Does this definition
encompass all potential RILAs and index-linked options offered in
combination contracts as proposed as required by the RILA Act?
    84. Do commenters agree that the proposed definition of
``registered index-linked annuity'' in rule 405 is appropriate? Do
commenters agree that the proposed definition is inclusive of the types
of RILAs encompassed in the definition of ``registered index-linked
annuity'' in the RILA Act?
    85. Do commenters agree that with the proposed definition of ``Form
available solely to investment companies registered under the
Investment Company Act of 1940?'' Do commenters think this may cause
confusion as RILA issuers are not investment companies registered under
the Investment Company Act?
    86. Should we require RILA issuers to adhere to rules 480, 481,
483, and 484 when registering RILAs on Form N-4?
    87. Do commenters agree that the Exhibit List for proposed Form N-4
encompasses the types of exhibits that RILA issuers currently include
in registration statements and is appropriate for RILAs? If not, what
exhibit requirements should govern RILAs registered on Form N-4? Are
there additional exhibits that RILA issuers should be required to file
as part of their registration statements on Form N-4? Are there any
exhibits that the integrated disclosure requirements of Regulation S-K
currently include that we should require on Form N-4?

    88. Is it appropriate to require RILA issuers to furnish the
undertakings in Item 34 of proposed Form N-4? Are there different or
additional undertakings that should be required for these issuers?
8. Remaining Form N-4 Items
    We propose to make applicable to RILAs the remaining requirements
and disclosure items on the existing Form N-4 discussed below, which we
do not propose to substantively change.\232\ The general instructions
to the proposed form include both organizational requirements along
with substantive requirements for the preparation of the registration
statement, including instructions relating to the organization,
presentation, and prospectuses permitted to be included in a
registration statement. The remaining disclosure items principally
provide investors with information about the annuity contract and how
it operates. In addition, these items provide basic information about
the insurance company or the securities offering itself, consistent
with some of the disclosures provided currently in Forms S-1 or S-3.
---------------------------------------------------------------------------

    \232\ As noted above, some of these items would be amended to
account for changes in defined terms and to use gender-neutral
terminology. See supra section II.B.7.
---------------------------------------------------------------------------

(a) General Instructions
    RILAs offerings registered on Form N-4 will need to comply with the
general instructions of that form. These general instructions are
structured to include four parts: (A) Definitions; \233\ (B) Filing and
Use of Form; (C) Preparation of the Registration Statement; and (D)
Incorporation by Reference.\234\ This would result in a number of
substantive outcomes for those issuers.\235\ Specifically:
---------------------------------------------------------------------------

    \233\ See supra section II.B.7(b) (discussing proposed
amendments to the definitions used in the form).
    \234\ The items described in this section can generally be found
in proposed General Instruction C of Form N-4. See also supra
section II.B. [Other Amendments] (discussing definitional updates).
EDGAR permits registrants to file required financial statements
separately under a specific submission type. Thus, registrants may
incorporate by reference into their post-effective amendment and
other filings the financial statements filed under this EDGAR
submission type. See VASP Adopting Release at n.592.
    \235\ We are also proposing to correct a typographical error in
General Instruction B.2(b) regarding items that can be omitted for
registration statements or amendments filed only under the
Investment Company Act. Currently, the instructions state that
issuers can omit from Part C Items 26(c), (k), (l), and (m), but
those items do not exist in the form and Item 26 (Financial
Statements) is in the SAI, not Part C. This is supposed to refer to
Item 27 (Exhibits), which do exist, are in Part C, and are more
Securities Act in nature. This instruction would be updated to refer
instead to Item 27 as a result.
---------------------------------------------------------------------------

     Plain English. The instructions provide a number of points
to issuers on how best to promote effective communication between
issuers and prospective investors. For example, issuers are directed to
use document design techniques that promote effective communication and
to respond to the items in the form as simply and directly as
reasonably possible and avoid the use of formulas as the primary means
of communicating certain terms or features of a contract.\236\ Issuers
are also encouraged to use, as appropriate, Q&A formats beyond the KIT,
tables, and other presentation methods in the form generally.\237\
---------------------------------------------------------------------------

    \236\ See proposed General Instructions C.1.(a) and (c) to Form
N-4. This specific text is not intended to discourage use of a
formula, but rather, to clarify that if a formula is used in
connection with a term or feature, investors are first provided
appropriate plain English disclosure regarding the operation of the
term or feature. See VASP Adopting Release at n.591.
    \237\ See proposed General Instruction C.3.(c) to Form N-4. As
discussed above, we are proposing to require Q&A formatted responses
to the Key Information Table. See supra section II.B.2.
---------------------------------------------------------------------------

     Organization. Issuers are directed to organize information
in the prospectus and SAI to make it easy for investors to understand,
with some limitations on the order of presentation.\238\
---------------------------------------------------------------------------

    \238\ See proposed General Instruction C.3.(b) to Form N-4.
---------------------------------------------------------------------------

     Other Information. Issuers are permitted to include (other
than in Items 2 or 3) information in the prospectus or SAI not
otherwise required as long as the additional information is not
incomplete, inaccurate, or misleading and does not, because of its
nature, quantity, or manner of presentation, obscure, or impede
understanding of the information that is required.\239\ In similar
circumstances, issuers may include sales literature in the
prospectus.\240\
---------------------------------------------------------------------------

    \239\ See proposed General Instruction C.3.(b) to Form N-4.
    \240\ See proposed General Instruction C.3.(g) to Form N-4.
---------------------------------------------------------------------------

     Terminology. Issuers are required to define special terms
used in the prospectus in any presentation that clearly conveys meaning
to investors.\241\ Only these special terms must be defined or listed
in any glossary or list of definitions elected to be used.\242\
Registrants are not required to use the same terminology as that used
in the form as long as the registrant clearly conveys the meaning of,
or provides comparable information as, the form's terminology.
---------------------------------------------------------------------------

    \241\ See proposed General Instruction C.3.(d) to Form N-4.
    \242\ Registrants are also permitted to define terminology only
used in one section in such section.
---------------------------------------------------------------------------

     Multiple Contracts. Issuers are permitted to describe
multiple contracts that are essentially identical in a single
prospectus, and the instructions discuss the presentation of
information regarding multiple contracts in these circumstances.\243\
Further, issuers are permitted to combine multiple prospectuses into a
single registration statement where the contracts are substantially
similar.
---------------------------------------------------------------------------

    \243\ See proposed General Instruction C.3.(e) to Form N-4. The
instructions state that ``essentially identical'' is a facts and
circumstances-based determination but that contracts that differ in
providing optional benefits or being group or individual contracts
are not essentially identical whereas variances due only to State
regulatory requirements would be.
---------------------------------------------------------------------------

     Timing. The instructions state that, consistent with
Securities Act rules, in most circumstances prospectuses and SAIs used
after the effective date of the registration statement shall be dated
approximately as of such effective date, but that a revised or amended
prospectus or SAI used thereafter need only bear the approximate date
of its issuance. Each supplement to the prospectus or SAI shall be
dated separately the approximate date of its first use.\244\
---------------------------------------------------------------------------

    \244\ See proposed General Instruction C.3.(f) to Form N-4; 17
CFR 230.423.
---------------------------------------------------------------------------

     Provision of Websites. Any websites included in an
electronic version of the prospectus must include active hyperlinks or
other means of facilitating access that leads directly to the relevant
website address, though this requirement does not apply to a prospectus
filed on EDGAR.\245\
---------------------------------------------------------------------------

    \245\ See proposed General Instruction C.3.(i) to Form N-4.
---------------------------------------------------------------------------

     Incorporation by Reference. In addition to the general
requirements of the Commission rules on incorporation by reference,
issuers are not permitted to incorporate by reference information
required to be in the prospectus unless otherwise permitted by the
form, but may incorporate by reference the SAI into the prospectus
without delivering the SAI and incorporate by reference information
required to be included in the SAI or Part C.\246\
---------------------------------------------------------------------------

    \246\ Proposed General Instruction D of Form N-4.
---------------------------------------------------------------------------

    Collectively, these general instructions are designed to require
clear disclosure to investors about the variable annuity contracts
currently registered on the form and to make clear how issuers must
prepare and file their registration statements. Requiring RILA issuers
to prepare their registration statements in accordance with these
instructions would likewise facilitate the provision of clear
disclosure to

investors and provide clear direction to these issuers on how to
prepare and file their registration statements. Further, applying these
requirements to RILAs as proposed would help ensure the comparability
of different annuity offerings, for example, by ensuring that the
filings are held to the same plain English, multiple contract
disclosure, timing, website, and incorporation by reference standards.
(b) Contract Disclosures
    The table below summarizes disclosures in the existing Form N-4
about the annuity contract, how it operates, and how it is serviced by
the insurance company, that we propose making applicable to RILA
issuers without substantive change.

                      Table 4--Contract Disclosures
------------------------------------------------------------------------
             Item                             Description
------------------------------------------------------------------------
                           Prospectus (Part A)
------------------------------------------------------------------------
General Description of the     A general description of the contract,
 Contracts (Item 8).            including disclosure of the parties'
                                material rights under the contract;
                                relevant contract provisions and
                                limitations; contract obligations funded
                                by the insurance company's general
                                account; class of purchasers, and
                                material changes that can be made to the
                                contract by the insurance company.
Annuity Period (Item 9)......  A description of the annuity options
                                available, including a discussion of
                                material factors that determine the
                                benefits; annuity commencement date;
                                frequency and duration of annuity
                                payments; the effect of assumed
                                investment return; any minimum amount
                                necessary for an annuity option and the
                                consequences of an insufficient amount;
                                rights to change annuity options; and,
                                if applicable, a disclosure that the
                                investor will be unable to withdraw any
                                contract value amounts after the annuity
                                commencement date.
Benefits Available Under the   A tabular summary overview of the
 Contract (Item 10).            benefits available under the contract
                                (e.g., standard or optional death
                                benefits, standard or optional living
                                benefits, etc.), briefly discussing,
                                among other things: whether the benefit
                                is optional; current and maximum fees
                                associated with the benefit; how the
                                benefit amount is calculated; and any
                                associated restrictions or limitations.
Purchases and Contract Value   A description of the procedures for
 (Item 11).                     purchasing a contract, including concise
                                explanations of minimum initial and
                                subsequent purchase payment required,
                                when these payments are credited, and
                                how they are allocated to investment
                                options. Also an identification of the
                                principal underwriters (other than the
                                insurance company) of the contracts and
                                other information about that underwriter
                                such as any affiliations.
Surrenders and Withdrawals     A description of how surrenders and
 (Item 12).                     withdrawals can be made from a contract,
                                including limits on the ability to
                                surrender, how proceeds are calculated,
                                and when surrenders and withdrawals are
                                payable. Issuers must also describe
                                potential effect of surrenders and
                                withdrawals, including how they could
                                affect a contract's value or benefits,
                                and whether any charges or contract
                                adjustments will apply. Issuers should
                                also describe any involuntary redemption
                                provisions and any revocation rights,
                                disclosing the calculation methodology
                                and any associated limitations to
                                investment options.
Loans (Item 13)..............  A description of the loan provisions of
                                the contract, including, for example,
                                loan availability and related
                                restrictions, interest mechanics, the
                                effect of a loan on the contract's value
                                and death benefit, other effects that a
                                loan could have on a contract; and loan
                                procedures.
Taxes (Item 14)..............  A description of the material tax
                                consequences to the investor and
                                beneficiary of buying, holding,
                                exchanging, or exercising rights under
                                the contract. The description should
                                include a discussion of the taxation of
                                annuity payments, death benefit
                                proceeds, periodic and non-periodic
                                withdrawals, loans, and any other
                                distribution that may be received under
                                the contact, as well as the tax benefits
                                accorded the contract and other material
                                tax consequences. Issuers must identify
                                the types of qualified plans for which
                                the contracts are intended to be used
                                and describe any effect of taxation on
                                the determination of contract values.
------------------------------------------------------------------------
              Statement of Additional Information (Part B)
------------------------------------------------------------------------
Cover Page and Table of        A statement of the name of the insurance
 Contents (Item 18).            company, the contract, and related class
                                or classes. This item also requires a
                                table of contents, a statement that the
                                SAI is not a prospectus, information
                                about how to obtain the prospectus, and
                                a discussion of information the SAI
                                incorporates by reference.
Non-principal Risks of         A summary of the non-principal risks of
 Investing in the Contract      purchasing a contract not otherwise
 (Item 20).                     disclosed in the prospectus.
Services (Item 21)...........  Information on services provided to the
                                registrant in connection with the
                                contract. If not disclosed elsewhere,
                                this requires a summary of the
                                substantive provisions of certain
                                management-related service contracts.
                                The registrant must also provide the
                                name and address of its independent
                                public accountant. Where affiliates of
                                the insurance company act as agents for
                                the registrant in connection with the
                                contract, issuers are required to
                                provide specific information about the
                                services performed and remuneration paid
                                for the services. Issuers must also
                                disclose if the insurance company is the
                                principal underwriter of the contract.
Annuity Payments (Item 25)...  A description of the method for
                                determining the amount of annuity
                                payments if not described in the
                                prospectus and how any change in the
                                amount of a payment after the first
                                payment is determined.
------------------------------------------------------------------------
                       Other Information (Part C)
------------------------------------------------------------------------
Management Services (Item 33)  A summary of the substantive provisions
                                of any management-related service
                                contracts not discussed in Parts A or B,
                                including the last three years' payment
                                history.
------------------------------------------------------------------------

    These requirements apply to existing Form N-4 issuers because these
disclosures provide investors in these products with a concise
presentation of material information about the annuity contract they
would be purchasing, as well as other information that provides
necessary context about the contracts such as management service
disclosures.\247\ Because disclosure of this information is equally
fundamental to the ability of investors to make informed investment
decisions about RILA contracts, we are proposing to apply these
requirements to RILAs. For example, existing Form N-4 issuers are
required to summarize standard and optional benefits available to the
investor under the contract because these benefits are primary features
of variable contracts and are also often key differentiators between
competing products.\248\ Insurance companies also offer these benefits
in connection with RILAs.
---------------------------------------------------------------------------

    \247\ See Registration Forms for Insurance Company Separate
Accounts That Offer Variable Annuity Contracts, Investment Company
Act Release No. 14575 (June 24, 1985) [50 FR 26145 (June 25, 1985)]
(``Forms N-3 and N-4 Adopting Release'').
    \248\ See VASP Adopting Release at n.26 and accompanying text.
---------------------------------------------------------------------------

(c) Issuer and Offering Disclosures
    In addition to disclosures about the contract, the proposed
amendments to Form N-4 would require that RILA issuers make certain
disclosures relating to the issuer and offering consistent with the
form's current requirements. The table below summarizes these items,
omitting items in Form N-4 that, by their terms, would not apply to
RILAs.

                Table 5--Issuer and Offering Disclosures
------------------------------------------------------------------------
                                                        Similar form S-1
             Item                     Description          disclosure
------------------------------------------------------------------------
                           Prospectus (Part A)
------------------------------------------------------------------------
Legal Proceedings (Item 15)...  A description of        Item 11(c)
                                 material pending        (legal
                                 legal proceedings to    proceedings).
                                 which the registered
                                 separate account, the
                                 principal
                                 underwriter, or the
                                 insurance company is
                                 a party, including
                                 similar information
                                 regarding any
                                 proceedings
                                 instituted or known
                                 to be contemplated by
                                 a governmental
                                 authority.
------------------------------------------------------------------------
              Statement of Additional Information (Part B)
------------------------------------------------------------------------
General Information and         Basic information       Item 11(a)
 History (Item 19).              regarding the           (description of
                                 background and          business).
                                 organization of the
                                 insurance company,
                                 including the
                                 jurisdiction in which
                                 it is organized and a
                                 description of its
                                 business.
Underwriters (Item 23)........  Identification of the   Item 8 (plan of
                                 principal               distribution).
                                 underwriters (other
                                 than the insurance
                                 company), and for
                                 affiliated
                                 underwriters, a
                                 description of the
                                 nature of the
                                 affiliation. For each
                                 principal underwriter
                                 distributing the
                                 registrants'
                                 contracts, the
                                 insurance company
                                 must provide
                                 information about the
                                 offering and related
                                 commissions. If the
                                 registrant made
                                 payments to an
                                 underwriter of or
                                 dealer in the
                                 contracts during its
                                 last fiscal year over
                                 a threshold amount,
                                 the registrant must
                                 disclose certain
                                 information about
                                 those payments.
------------------------------------------------------------------------
                       Other Information (Part C)
------------------------------------------------------------------------
Directors and Officers of the   A statement of the      Item 11(k)
 Insurance Company (Item 28).    name, principal         (directors and
                                 business address,       executive
                                 position, and office    officers).
                                 held for each
                                 director or officer
                                 of the insurance
                                 company.
Persons Controlled by or Under  Disclosure of persons   Item 11(k)
 Common Control with the         directly or             (directors and
 Insurance Company or the        indirectly controlled   executive
 Registrant (Item 29).           by or under common      officers).
                                 control with the
                                 registrant or the
                                 sponsoring insurance
                                 company.
Indemnification (Item 30).....  Information about the   Item 14
                                 effect of relevant      (indemnificatio
                                 indemnification         n of directors
                                 agreements,             and officers).
                                 arrangements, or
                                 statutory provisions
                                 through which
                                 underwriters or
                                 affiliates are
                                 insured or
                                 indemnified against
                                 any liability
                                 incurred in their
                                 official capacity.
Principal Underwriters (Item    A statement of          Item 8 (plan of
 31).                            investment companies,   distribution).
                                 other than any
                                 registered separate
                                 account related to
                                 the filing, each
                                 principal underwriter
                                 is also acting as a
                                 principal
                                 underwriter. More
                                 detailed information
                                 about principal
                                 underwriters
                                 identified in Item
                                 23, such as recent
                                 information about
                                 commissions and other
                                 compensation received
                                 from the registrant
                                 by each principal
                                 underwriter.
------------------------------------------------------------------------

    Information about the issuer and the offering process are relevant
when purchasing an annuity contract, including in the context of a
RILA.\249\ These items, which largely correspond to items currently
required to be disclosed by RILAs on Forms S-1 and S-3 as detailed in
the table above, provide the appropriate amount of information about
the issuing insurance company and the offering of securities in a way
tailored to annuity contract investors. For example, because an
investor's rights under RILAs are dependent on the insurance company's
claim-paying ability, RILA purchasers also share an interest in
disclosures of material pending legal proceedings involving the
insurance company or related parties. On the other hand, where Form S-1
disclosures have less relevance to RILAs, we have not included those
disclosures in proposed Form N-4.
---------------------------------------------------------------------------

    \249\ See Forms N-3 and N-4 Adopting Release.

---------------------------------------------------------------------------

(d) Request for Comment
    We request comment on our proposed application of these
requirements and disclosures to RILAs.
    89. Is it appropriate to require RILA issuers to meet these general
instructions of the form? Should we tailor any particular provision to
account for the differences between RILAs and the variable annuities
that currently use the form? For example, is there any reason to treat
RILAs different for purposes of the ``essentially identical'' test?
    90. The investor testing results suggested that investors had
significant difficulty in understanding certain terminology used in
connection with RILAs, in particular the words ``term'' and
``investment term.'' \250\ Should we, as a result, change any
instruction to aid in investor understanding? For example, the form
currently provides that the prospectus disclosure requirements in Form
N-4 are intended to elicit information for an average or typical
investor who may not be sophisticated in legal or financial
matters.\251\ In light of this feedback in investor testing, should we
amend this instruction or otherwise provide that insurance companies
should not use ``term,'' ``investment term,'' or other terminology that
investors found confusing? Regardless of whether insurance companies
use ``investment term'' or different terminology, in the glossary
definition of the ``investment term'' (or another term to describe that
concept) should insurance companies be required to specifically
disclose to investors that the ``investment term'' is not the same as
the life of the contract? As another example, should we require, rather
than permit, the use of a glossary or list of definitions for the
entirety of the form so that investors have one place to look to
understand a particular term? Should we clarify what terms are
``special terms''? What terminology in particular should be considered
a special term in the RILA context?
---------------------------------------------------------------------------

    \250\ See OIAD Report at Section 7, Conclusions, Summary of
Findings.
    \251\ See Instruction C.1.b of Form N-4.
---------------------------------------------------------------------------

    91. Should we define certain key terms that insurance companies
must use in their registration statement to help to mitigate investor
confusion and help investors compare one RILA to another? Which key
terms should we address and how should they be defined?
    92. Is it appropriate, as proposed, to apply these exiting Form N-4
disclosure requirements to RILA issuers? Are any of these disclosure
items inappropriate for including in a RILA registration?
    93. Are there other details about the RILA contract, not otherwise
addressed above, that we should require be disclosed on amended Form N-
4? Are there details regarding the issuer or offering that we should
require?
    94. Certain of these disclosures are repeated throughout the
registration statement. For example, similar disclosures regarding
principal underwriters are contained in the prospectus (Item 11) and
SAI (Item 23). Should we limit these items to a particular location in
the registration statement?
    95. Under the proposal, certain information that RILA issuers
currently provide on Forms S-1 and S-3 would still be required by Form
N-4, but would be placed in the SAI rather than the prospectus. Should
any of the information we propose to require in the SAI instead be
provided in the prospectus?
    96. Are these items properly ordered? Should we move any of these
items to greater prominence or move items from the prospectus, SAI, or
Part C to another part of the registration statement?
9. Inline XBRL
    We are proposing to require RILA issuers to tag certain of the
information they would disclose in their prospectuses and SAIs in a
structured, machine-readable data language. Specifically, we are
proposing to require RILA issuers to tag the required information in
Inline XBRL in accordance with Rule 405 of Regulation S-T (17 CFR
232.405) and the EDGAR Filer Manual.\252\ The proposed requirements for
RILA issuers would include tagging of the overview and more in-depth
descriptions of index-linked options and contract adjustments that RILA
issuers would have to include in their prospectuses under the proposal,
the proposed disclosure of census-type information regarding contracts
with index-linked options, and information disclosed about changes in
and disagreements with accountants.\253\ RILA issuers, in addition to
variable contracts issuers whose contracts offer fixed options, would
have to tag the proposed descriptions of fixed options available under
the contract.\254\ Form N-4 filers also would have to tag the proposed
new disclosures indicating that the insurance company is relying on the
exemption provided by rule 12h-7, and variable contract issuers would
have to tag the proposed new statement relating to the risks of
variable options.\255\
---------------------------------------------------------------------------

    \252\ This proposed tagging requirements would be implemented by
amending General Instruction C.3(h) of Form N-4, and by revising
rule 405(b) of Regulation S-T to include the proposed RILA-specific
disclosures. Pursuant to rule 301 of Regulation S-T, the EDGAR Filer
Manual is incorporated by reference into the Commission's rules. In
conjunction with the EDGAR Filer Manual, Regulation S-T governs the
electronic submission of documents filed with the Commission. Rule
405 of Regulation S-T specifically governs the scope and manner of
disclosure tagging requirements for operating companies and
investment companies, including the requirement in rule 405(a)(3) to
use Inline XBRL as the specific structured data language to use for
tagging the disclosures.
    \253\ See proposed General Instruction C.3(h) of Form N-4; see
also proposed Items 2(b)(2), 2(d), 6(d), 7(e), 26(c), and 31A.
    \254\ See proposed General Instruction C.3(h) of Form N-4; see
also proposed Item 6(e).
    \255\ See proposed General Instruction C.3(h) of Form N-4; see
also proposed Items 6(a) (instruction) and 6(c)(1).
---------------------------------------------------------------------------

    In addition, RILA issuers would have to tag those prospectus
disclosures that Form N-4 currently requires to be tagged.\256\ These
include the following disclosure items: the Key Information Table, Fee
Table, Principal Risks of Investing in the Contract, Other Benefits
Available Under the Contract, and Investment Options Available Under
the Contract in the statutory prospectus. The proposed Inline XBRL
requirements, like the current Inline XBRL requirements for Form N-4
issuers, would only apply to contracts being sold to new investors. The
result of this proposed approach would be that prospectus disclosure
for contracts that are no longer being sold to new investors would not
need to be tagged, as we believe tagging this disclosure would have
less utility for current investors and other market participants.\257\
Issuers of variable annuities registered on Form N-4 are currently
required to tag certain registration statement disclosure items using
Inline XBRL.\258\ These items are those that would be most suited to
being tagged in a structured format and be of greatest utility for
investors and other data users that seek structured data to analyze and
compare RILA contracts. This rationale is the same as that which the
Commission articulated in originally adopting these tagging
requirements in

the context of variable annuity disclosure.\259\
---------------------------------------------------------------------------

    \256\ See rule 405(b) of Regulation S-T; proposed General
Instruction C.3(h) of Form N-4; see also proposed Items 3, 4, 5, 10,
and 17.
    \257\ See VASP Adopting Release at paragraph accompanying n.904.
    \258\ See General Instruction C.3(h) of current Form N-4; see
also Interactive Data to Improve Financial Reporting, Release No.
33-9002 (Jan. 30, 2009) [74 FR 6776], as corrected by Release No.
33-9002A (Apr. 1, 2009) [74 FR 15666] (requiring operating companies
to submit financial statements accompanying their registration
statements and periodic and current reports in XBRL).
    \259\ See VASP Adopting Release at section II.E.
---------------------------------------------------------------------------

    In addition to these existing items, requiring Inline XBRL tagging
of the new disclosure requirements we are proposing to include in Form
N-4 would benefit investors, other market participants, and the
Commission by making the disclosures more readily available and easily
accessible for aggregation, comparison, filtering, and other
analysis.\260\ We chose these particular items in the form to
structure--including those that issuers of variable annuities would
newly have to structure--because we believe that they are the most
salient to investors and benefit most from being structured. We believe
that tagging this disclosure, along with the requirement for RILA
issuers to tag the same other disclosure items that are currently
tagged, would result in information being tagged that would best permit
investors and other data users to analyze and compare RILAs. For
example, this would enable automated extraction and analysis of
descriptions of index-linked options available under the contract,
information regarding the features of each currently offered index-
linked option, and information regarding contract adjustments. This
would allow investors and other market participants more efficiently to
perform large-scale analysis and comparison across RILAs (including the
index-linked options that different RILAs offer) and time periods.
Similarly, the requirement to tag information about fixed options will
permit the same type of analysis with respect to these investment
options--including comparing fixed options across contracts, as well as
index-linked options, variable options, and fixed options offered under
the same contract.
---------------------------------------------------------------------------

    \260\ See supra footnotes 253-255. These primarily include the
proposed new disclosure items that are specific to RILAs, as opposed
to extant Form N-4 disclosure items to which we are proposing
incremental amendments to address RILAs along with variable
annuities.
---------------------------------------------------------------------------

    As another example, census-type information about variable annuity
contracts, which is parallel to the SAI disclosure we propose to
require for contracts with index-linked options, is currently reported
in structured data format.\261\ Requiring census-type information about
contracts with index-linked options to be tagged in Inline XBRL would
help the Commission and staff identify trends in insurance companies'
offerings of the contracts, similar to the tools the Commission and
staff currently have to identify trends in the offering of variable
annuity contracts. An Inline XBRL requirement also would facilitate
other analytical benefits, such as more easily extracting and searching
disclosures about annuities, and automatically comparing these
disclosures against prior periods.
---------------------------------------------------------------------------

    \261\ See supra section II.B.I.A.6; see also Item F.14 of Form
N-CEN.
---------------------------------------------------------------------------

    We are proposing to require RILA issuers to submit Interactive Data
Files as follows, consistent with the approach for issuers of variable
annuities registered on Form N-4:
     For most post-effective amendments, Interactive Data Files
would have to be filed either concurrently with the filing, or in a
subsequent amendment that is filed on or before the date that the post-
effective amendment that contains the related information becomes
effective; \262\
---------------------------------------------------------------------------

    \262\ See proposed General Instruction C.3(h)(i)(B) of Form N-4.
This instruction relates to post-effective amendments filed pursuant
to paragraph (b)(1)(i), (ii), (v), (vi), or (vii) of rule 485.
---------------------------------------------------------------------------

     For initial registration statements (and post-effective
amendments other than as described in the bullet immediately above),
Interactive Data Files would have to be filed in a subsequent amendment
on or before the date the registration statement or post-effective
amendment that contains the related information becomes effective;
\263\ and
---------------------------------------------------------------------------

    \263\ See proposed General Instruction C.3(h)(i)(A) of Form N-4.
This instruction relates to initial registration statements and
post-effective amendments other than those filed pursuant to
paragraph (b)(1)(i), (ii), (v), (vi), or (vii) of rule 485.
---------------------------------------------------------------------------

     For any form of prospectus filed pursuant to rule 497(c)
or (e), Interactive Data Files would have to be submitted concurrently
with the filing.\264\
---------------------------------------------------------------------------

    \264\ See proposed General Instruction C.3(h)(ii) of Form N-4.
---------------------------------------------------------------------------

    We anticipate that this approach would facilitate the timely
availability of important information in a structured format for
investors, investment professionals, and other data users yielding
substantial benefits. For data aggregators responding to investor
demand for the data, the availability of the required disclosures in
the Inline XBRL format concurrent with filing or before the date of
effectiveness would allow them to quickly process and share the data
and related analysis with investors.
    Like other issuers, RILA issuers could request temporary and
continuing hardship exemptions for the inability to timely file
electronically the Interactive Data File.\265\
---------------------------------------------------------------------------

    \265\ See rule 201 Regulation S-T (temporary hardship exemption)
and rule 202 of Regulation S-T (continuing hardship exemption).
---------------------------------------------------------------------------

Request for Comments
    We request comment generally on the proposed amendments to require
the use of Inline XBRL, and specifically on the following issues:
    97. Should we adopt rules that make the submission of structured
data in the Inline XBRL format mandatory for RILA issuers?
    98. Is it appropriate that RILA issuers would have to tag the same
disclosure items that variable annuity issuers tag? Why or why not? If
RILA issuers were to be required to tag other disclosure items that are
also applicable to variable annuities, should variable annuity issuers
also be required to tag these same items?
    99. Is it appropriate that all Form N-4 filers would have to tag
certain of the new disclosure items that we are proposing to add to
Form N-4, in particular, proposed Items 2(b)(2), 2(d), 6(a)
(instruction), 6(c)(1), 6(d), 6(e), 7(e), 26(c), and 31A of Form N-4?
Should insurance companies not be required to tag any of these items,
and if so, why not? Are there other proposed disclosure items that we
should also require insurance companies to tag? If so, why?
    100. Is it appropriate that the approach for RILA issuers to submit
Interactive Data Files be consistent with the current approach for
issuers of variable annuities registered on Form N-4, as proposed? If
not, what alternative approach would be more appropriate and why? Is it
appropriate that, like variable annuities registered on Form N-4, the
proposed Inline XBRL requirements for RILA issuers would apply only to
contracts being sold to new investors? Do commenters agree that tagging
the prospectus disclosure would have less utility for current investors
and other market participants?
    101. Are any other amendments necessary or appropriate to require
the submission of the proposed required information in Inline XBRL? If
so, what are they?

C. Option To Use a Summary Prospectus

    We are proposing to amend rule 498A to permit RILA issuers, as well
as issuers of ``combination contracts'' offering a combination of
index-linked options and variable options, to use a summary prospectus
to satisfy statutory prospectus delivery obligations.\266\

Investors would continue to have access to the RILA statutory
prospectus and other information about the RILA contract online, with
paper or electronic copies of this information upon request.\267\ This
proposed approach would provide parity between RILA issuers and issuers
of variable annuities registered on Form N-4, which are permitted to
use summary prospectuses to satisfy their prospectus delivery
obligations.
---------------------------------------------------------------------------

    \266\ Section 5(b)(2) of the Securities Act makes it unlawful to
carry or cause to be carried a security for purposes of sale or for
delivery after sale ``unless accompanied or preceded'' by a
prospectus that meets the requirements of section 10(a) of the Act.
See section 10(a) of the Securities Act (generally requiring a
prospectus relating to a security to contain the information
contained in the registration statement). For purposes of this
release, a prospectus meeting the requirements of a section 10(a)
prospectus is referred to as a ``statutory prospectus.'' For
purposes of this section, we refer to RILA contracts and combination
contracts together as ``RILA contracts.''
    \267\ To further effectuate the changes being proposed, we
propose to exclude RILA offerings from the provisions of rule 172,
which provides that a final prospectus will be deemed to precede or
accompany a security for sale for purposes of Securities Act section
5(b)(2) as long as the final prospectus meeting the requirements of
Securities Act section 10(a) is filed or the issuer will make a good
faith and reasonable effort to file it with the Commission as part
of the registration statement within the required rule 424
prospectus filing timeframe. Consistent with registered investment
companies and business development companies, RILA offerings would
be subject to a separate framework governing communications with
investors under the proposal. See supra section II.E; see also
Offering Reform Release at section VI.B.1.b.
---------------------------------------------------------------------------

RILA Summary Prospectus Overview
    The current summary prospectus rule for variable contracts uses a
layered disclosure approach designed to provide investors directly with
key information relating to the contract's terms, benefits, and risks
in a concise and reader-friendly presentation, with more detailed
information available elsewhere. We anticipate that the summary
prospectus framework would improve investor understanding of RILA
contracts, as the Commission similarly expressed when it adopted the
summary prospectus rule for variable contracts.\268\ This proposed
approach for RILA contracts builds on the Commission's decades of
experience with layered disclosure and rules permitting the use of
summary prospectuses.\269\ The proposal also recognizes investors'
expressed preferences for concise and engaging disclosure of key
information. Accordingly, we believe the proposed approach is
consistent with the RILA Act's mandate of designing disclosure
requirements ``with the goal of ensuring that key information is
conveyed in terms that a purchaser is able to understand.'' \270\
---------------------------------------------------------------------------

    \268\ See VASP Adopting Release at n.21 and accompanying text.
    \269\ See id.; see also Enhanced Disclosure and New Prospectus
Delivery Option for Registered Open-End Management Investment
Companies, Investment Company Act Release No. 28584 (Jan. 13, 2009)
[74 FR 4545 (Jan. 26, 2009)] (``2009 Summary Prospectus Adopting
Release''); Tailored Shareholder Reports for Mutual Funds and
Exchange-Traded Funds; Fee Information in Investment Company
Advertisements, Investment Company Act Release No. 34731 (Oct. 26,
2022) [87 FR 72758 (Nov. 25, 2022)] (``Tailored Shareholder Reports
Adopting Release'') (adopting rules incorporating a layered
disclosure approach to open-end funds' annual and semi-annual
reports to shareholders).
    \270\ See VASP Adopting Release at n.20 and accompanying text;
Tailored Shareholder Reports Adopting Release at nn.10, 11, and 29
and accompanying text; see also supra discussion following footnote
7.
---------------------------------------------------------------------------

    The proposed amendments to rule 498A would broaden the scope of the
rule to address RILA contracts.\271\ Under the proposed amendments, the
rule's conditions for relying on the rule to satisfy prospectus
delivery obligations would be the same for RILA contracts as for
variable contracts.\272\ These conditions include the requirements to
send or give a summary prospectus to an investor no later than the time
of the ``carrying or delivery'' of the contract security, as well as:
(1) requirements for the contents that must be included in a summary
prospectus, (2) limitations on binding a summary prospectus with other
materials, and (3) requirements that the summary prospectus, statutory
prospectus, and contract statement of additional information must be
publicly accessible, free of charge, on a website in the manner that
the rule specifies.
---------------------------------------------------------------------------

    \271\ To facilitate this change, and to make the terminology
used in rule 498A more consistent with certain terms used in the
proposed amendments to Form N-4, we are also proposing a number of
amendments to the rule's definitions. Specifically, we would (1)
amend the definitions to ``Class,'' ``Contract,'' Investment
Option,'' ``Registrant,'' ``Variable Annuity Contract,'' and
``Variable Life Insurance Contract'' to address RILA contracts, and/
or to make changes to these definitions that correspond with
amendments to certain definitions in Form N-4 (either definitions of
these same terms in Form N-4, or definitions of other terms in Form
N-4 that would otherwise affect the way these terms are defined in
rule 498A); (2) add definitions for ``Fixed Option,'' ``Index-Linked
Option,'' ``Insurance Company,'' ``Registered Separate Account,''
``RILA Contract,'' and ``Variable Option'' consistent with their
counterparts in the proposed Form N-4 amendments; and (3) deleting
the definition of ``Depositor.'' These changes are necessary to
communicate the provisions of the rule that would be applicable to
RILA and combination contracts.
    \272\ See proposed rule 498A(f). Rule 498A also provides that a
communication relating to an offering registered on Form N-4 that a
person sends or gives after the effective date of the registration
statement (other than a prospectus that Section 10 of the Securities
Act permits or requires) will not be deemed a prospectus under
section 2(a)(10) of the Securities Act, under certain conditions.
The proposed amendments to rule 498A would extend this provision to
RILA contracts. See rule 498A(g). Under the proposed amendments, the
rule 498A provision addressing information that may be incorporated
by reference into a summary prospectus also would apply the same to
RILAs as it does to other contracts currently within the scope of
the rule. See rule 498A(d).
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    The proposed amendments to rule 498A would involve the use of two
distinct types of summary prospectuses for RILA contracts, employing
the same approach the rule currently uses for variable contracts. An
``initial summary prospectus,'' covering contracts offered to new
investors, would include certain key information about the contract's
most salient features, benefits, and risks, presented in plain English
in a standardized order. The rule amendments would also require
``updating summary prospectuses'' to be provided to existing investors
in RILA contracts as a condition to relying on the rule. The updating
summary prospectus would include a brief description of certain changes
to the contract that occurred during the previous year, as well as a
subset of the information required to appear in the initial summary
prospectus. Certain key information about the index-linked options that
the contract offers would be provided in both the initial summary
prospectus and updating summary prospectus.\273\
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    \273\ This proposed approach is consistent with the approach for
information about variable options in variable contracts' summary
prospectuses, in which certain key information about the portfolio
companies offered as variable options appears in both the initial
summary prospectus and updating summary prospectus. See proposed
rule 498A(b)(5)(ix); proposed rule 498A(c)(6)(iv).
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    As under current rule 498A for variable contracts, the proposed use
of summary prospectuses for RILA contracts would be voluntary. This
would be appropriate to provide RILA issuers sufficient time to
transition to a summary prospectus regime, as well as in recognition of
the fact that there could be different relative benefits of using a
summary prospectus for certain RILA issuers and investors in these
contracts.\274\ Similar considerations informed the Commission's
decision to adopt a voluntary summary prospectus regime for variable
contracts.\275\
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    \274\ The Commission similarly discussed the relative benefits
to variable contract issuers of using a summary prospectus, based on
the types of products that these issuers offer and the length of
their current prospectuses, as well as the benefit of more concise
disclosure to investors, in adopting rule 498A. See, e.g., VASP
Adopting Release at section IV.E.1 (discussion in the Economic
Analysis section of the release, addressing the Commission's
consideration of mandating summary prospectuses for variable
contracts).
    \275\ See VASP Adopting Release at discussion accompanying
nn.41-45; see also infra section III.C.1.c (discussing that
different issuers and investors could expect to benefit differently
from this optional prospectus delivery regime, although we expect a
majority of RILA issuers to choose to use summary prospectuses and
that therefore the majority of RILA investors will have the option
to use both summary prospectuses and statutory prospectuses in their
decision-making, in whatever proportion investors think is best for
their preferences).
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Initial Summary Prospectus
    As under the current rule 498A, an initial summary prospectus for a
RILA

contract may only describe a single contract that the RILA issuer
currently offers for sale.\276\ An initial summary prospectus may
describe more than one class of a currently offered contract.\277\
Aggregating disclosures for multiple contracts, or currently offered
and no-longer-offered features and options of a single contract, can
hinder investors from distinguishing between contract features and
options that apply to them and those that do not. As a result, an
initial summary prospectus could simplify and consolidate lengthy and
complex disclosures. The content and ordering of items is designed to
highlight aspects of a RILA contract that may not be emphasized in
marketing materials and other disclosures.
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    \276\ See proposed rule 498A(b)(1).
    \277\ The definition of the term ``class'' in the proposed
amendments is the same as the definition in the current rule (that
is, as a class of a contract that varies principally with respect to
distribution-related fees and expenses). Proposed rule 498A(a).
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    Like other summary prospectuses that rule 498A addresses, we are
proposing a standardized presentation for RILA initial summary
prospectuses to require certain disclosure items that we believe would
be most relevant to investors to appear at the beginning of the initial
summary prospectus, followed by supplemental information.\278\ The
required presentation could also facilitate comparisons of different
RILA contracts, as well as comparisons between RILA contracts and
variable annuities. An initial summary prospectus must contain the
information required by the rule, and only that information, in the
order specified by the rule.\279\ The information would be required to
appear in the same order, and under relevant corresponding headings, as
the rule specifies.
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    \278\ See VASP Adopting Release at paragraph accompanying nn.58-
59.
    \279\ Proposed rule 498A(b)(5).
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    The chart in Table 6 below outlines the information that we propose
to require to appear in an initial summary prospectus for a RILA
contract. We would not change these content requirements, with the
exception of the ordering of the Overview of the Contract and KIT
disclosures, from the current variable annuity requirements. The
Commission has historically viewed these items as providing annuity
investors with key information relating to a contract's terms,
benefits, and risks in a concise and reader-friendly presentation, and
highlighting aspects of the contract that may not be emphasized in
marketing materials and other disclosures.\280\ We preliminarily
believe that this rationale is equally true in the context of RILA
disclosure. Further, as discussed above, we propose that the Overview
of the Contract disclosures (currently Item 3 of Form N-4, but proposed
to be re-numbered as Item 2) should precede the KIT (currently Item 2
of Form N-4, but proposed to be re-numbered as Item 3), due to the
context that the Overview section provides and based upon our
experience with the form [and taking into account the results of
investor testing].\281\ This change would be reflected in the
requirements of rule 498A.\282\ Otherwise, the same order of
disclosures would be provided as under the current rule.
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    \280\ See VASP Adopting Release at nn. 47-48 and accompanying
text. To the extent that these content requirements are unchanged
from the content requirements for variable annuity summary
prospectuses, our rationale for these requirements has not changed
from the rationale that is discussed throughout the sections of the
VASP Adopting Release that address each of the content items
discussed in Table 6 below. See VASP Adopting Release at section
II.A.1.c. Further, we provide our reasoning as to why these
particular disclosures are important to investors in the RILA
context as a general matter in section II.B, supra.
    \281\ See supra section II.B.I.A.2.
    \282\ Currently, rule 498A requires issuers to place ``Important
Information You Should Consider About the [Contract]'' disclosures
before ``Overview of the [Contract] disclosures.''

                               Table 6--Outline of the Initial Summary Prospectus
----------------------------------------------------------------------------------------------------------------
                                    Relevant paragraph  Item of Form N-                         Applicable to
    Heading in initial summary         in proposed      4 (as proposed   Applicable to RILA   variable annuities
            prospectus              amendments to rule  to be amended)       contracts?       registered on Form
                                           498A                                                      N-4?
----------------------------------------------------------------------------------------------------------------
Cover Page:
    Identifying Information        Rule 498A(b)(2)(i)   ..............  [check]............  [check]
     (front cover page) \1\.        through (iv).
    Legends (front cover page)     Rule 498A(b)(2)(v).  ..............  [check]............  [check]
     \2\.
    EDGAR Contract Identifier      Rule 498A(b)(3)....  ..............  [check]............  [check]
     (back cover page).
    Table of Contents (optional).  Rule 498A(b)(4)....  ..............  [check]............  [check]
Content:
    Overview of the [Contract]...  Rule 498A(b)(5)(ii)               2  [check]............  [check]
                                                                        (each paragraph of   (each paragraph of
                                                                         Item 2, as           Item 2 except
                                                                         applicable).         (b)(2) and (d),
                                                                                which are
                                                                                generally only
                                                                                applicable to RILA
                                                                                contracts).
    Important Information You      Rule 498A(b)(5)(i).               3  [check]............  [check]
     Should Consider About the                                          (with line items     (with line items
     [Contract].                                                         applicable to RILA   applicable to
                                                                         contracts, as        variable
                                                                         specified in         annuities, as
                                                                         instructions to      specified in