New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter A - Life, Accident and Health Insurance › Part 40 - Group Annuity Contracts And Funding Agreements: Disclosure And Withdrawal Rules › Section 40.4 - Certain contract withdrawals to pay plan benefits

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Subject to subdivisions (b) through (f)
				  of this section, to the extent that a defined contribution plan provides for
				  the payment of a participant's individual account balance under the plan in a
				  lump sum to a plan participant or beneficiary of a plan participant upon bona
				  fide termination of employment of such participant, any contract to which this
				  Part applies which is issued in connection with such a plan and which provides
				  the contractholder with the right to withdraw from the contract the amounts
				  required to pay such lump sum benefits as they arise in accordance with the
				  provisions of the plan, must provide for such withdrawals to be made on a basis
				  pursuant to which neither the amount withdrawn from the contract nor the amount
				  of the remaining principal balance of the accumulation fund following such
				  withdrawal is adjusted to reflect changes in interest rates or asset values
				  since receipt of contract funds.
(b) Subject to subdivisions (c) through (f)
				  of this section, for any group annuity contract funding a defined contribution
				  plan, the contract shall provide that any annuity benefit purchased with
				  respect to an amount equal to the plan participant's account value as
				  determined at the time of its commencement shall not be less than that which
				  would be provided by the application of such amount to purchase a single
				  consideration immediate annuity offered by the company at that time for the
				  same class of contracts.
(c) In the
				  event that contributions under a defined contribution plan are allocated to
				  more than one funding vehicle or to the extent there is cash available under
				  the plan, this Part shall not require any insurance company issuing a contract
				  in connection with such plan to provide for withdrawals in accordance with
				  subdivision (a) of this section in any amount in excess of the contract's
				  allocated share of benefit payments as determined pursuant to the agreement of
				  the insurance company and contractholder.
(d) In the case of a contract which funds a
				  participant directed investment option under which each contribution allocated
				  to such option is credited with a specified rate of interest to a stated
				  maturity date which rate and maturity date are disclosed to the participant
				  prior to the allocation, such contract may require that any withdrawals
				  referred to in subdivision (a) of this section (other than withdrawals on
				  account of bona fide termination of employment due to death or disability of
				  the plan participant on whose behalf the withdrawal is made) be postponed until
				  the stated maturity date for the contribution. Notwithstanding the above, the
				  insurance company may permit withdrawals under such a contract prior to the
				  maturity date for the contribution subject to a negative market value
				  adjustment and/or surrender charge. Such withdrawals shall be considered
				  partial surrenders of the contract for purposes of the definition of market
				  value adjustment in section
				  40.2(o) 
				  of this Part. Contracts subject to this subdivision must have at least one
				  option for participants age 55 and over on the date contributions are received
				  where the maturity date will not exceed five years.
(e) This section shall not apply to any
				  withdrawal from a contract to pay plan benefits under circumstances or
				  conditions if the terms of the relevant plans are materially different from the
				  terms or the manner in which the plans are administered as made known to the
				  insurance company as of the date upon which the contract is issued. This
				  section shall, however, continue to apply to any withdrawal pursuant to a plan
				  amendment entered into, or pursuant to a change in the manner of administration
				  made, subsequent to the issuance of the contract, provided that the insurance
				  company, in its sole discretion, determines that the amendment or change will
				  not adversely affect the insurance company's rights and liabilities under the
				  contract.
(f) The insurance company
				  may provide for such procedures or conditions as the insurance company
				  reasonably requires in order to establish that a requested contractual
				  withdrawal is being made in connection with a bona fide termination of
				  employment and in accordance with the provisions of the relevant
				  plan.