The News Journal reports that New York Life was told last year it had been disqualified as a vendor because it was unable to comply with new data sharing requirements of the Internal Revenue Service 403(b) regulations. The insurer will now be allowed to service its existing 403(b) contracts, but cannot accept new accounts.
New York Life will resume collecting pre-tax premium payments beginning in May. Had a resolution not been reached between the state treasurer and insurance commissioner and New York Life, the policyholders likely would have had to cash out their policies for far less than what they paid in, and likely would have had trouble finding new insurance at affordable rates, officials said, according to the news report.
The New York Life contracts were concentrated at Delaware State University, Delaware Technical & Community College, and public school districts, and even though participants haven’t been able to pay into the plans for more than a year, the policies remained in effect.The News Journal said that out of more than 110 vendors that had been servicing 403(b) accounts for Delaware state employees, only 13 were able to comply with the new requirements of the IRS regulations.