State RegulationsNC specificDifficulty 3/5
Two unallocated annuity obligations exist with an insolvent member insurer: one funds a governmental retirement plan participant's benefits, and one is held by a non-governmental unallocated annuity contract holder. Under G.S. 58-62-21(d)(3),(4), which pairing of guaranty limits is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-62-21(d)(3),(4), a governmental plan participant in a state, county, city, or other public retirement plan (including tax-deferred plans such as 401, 403(b), and 457 arrangements) is protected up to $300,000 in present value of annuity benefits, while any other unallocated annuity contract holder is protected up to $5,000,000 regardless of the number of contracts. The governmental/non-governmental distinction therefore changes the applicable cap by more than an order of magnitude.
Why the other options are wrong
- B) This reverses the two limits; the higher $5,000,000 cap belongs to non-governmental unallocated annuity contract holders.
- C) Only the governmental plan participant is capped at $300,000; other unallocated contract holders receive up to $5,000,000.
- D) $1,000,000 is the structured settlement limit under G.S. 58-62-21(d)(5) and applies to neither unallocated annuity category here.
Memory hook
Public plans get three hundred grand; private contract holders get five million.