By: Nixon S.B. No. 292
A BILL TO BE ENTITLED
AN ACT
1-1 relating to a self-directed investment option for participants in
1-2 the Teacher Retirement System of Texas.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle C, Title 8, Government Code, is amended
1-5 by adding Chapter 826 to read as follows:
1-6 CHAPTER 826. OPTIONAL DEFINED CONTRIBUTION PLAN
1-7 Sec. 826.001. DEFINITIONS. In this chapter:
1-8 (1) "Optional defined contribution plan" means the
1-9 plan established under this chapter.
1-10 (2) "Qualified plan" means an employee benefit plan
1-11 qualified under Section 401(a), Internal Revenue Code of 1986.
1-12 Sec. 826.002. ESTABLISHMENT OF PLAN. (a) The retirement
1-13 system shall establish and administer an optional defined
1-14 contribution plan that is a qualified plan and under which members
1-15 of the system may elect to pay a portion of the member
1-16 contributions required by Section 825.402 to the optional defined
1-17 contribution plan for the purchase of securities selected by the
1-18 member from among products that are authorized to be provided under
1-19 a qualified plan and that are offered by companies authorized to
1-20 provide the products in this state.
1-21 (b) A provider of securities is exempt from the payment of
1-22 franchise or premium taxes on products issued under the optional
1-23 defined contribution plan.
1-24 Sec. 826.003. ELECTION TO PARTICIPATE IN PLAN. (a) A
2-1 contributing member who is not participating in the deferred
2-2 retirement option plan under Subchapter I, Chapter 824, may file an
2-3 election with the retirement system, on a form prescribed by the
2-4 system, to participate in the optional defined contribution plan.
2-5 (b) The election must include the percentage of the member's
2-6 contributions required under Section 825.402 to be used under the
2-7 optional defined contribution plan. The percentage of required
2-8 contributions to be used under the plan may not exceed 50 percent.
2-9 (c) An election made under this section is irrevocable,
2-10 except:
2-11 (1) when a member changes employers, the member may
2-12 increase the percentage of contributions to be used under the
2-13 optional defined contribution plan within the limit prescribed by
2-14 Subsection (b); and
2-15 (2) when a member ceases to be employed by any
2-16 employer, the member may make a withdrawal as provided by Section
2-17 826.005.
2-18 (d) For purposes of Subsection (c), a change of employers is
2-19 a transfer from one school district or state agency participating
2-20 in the retirement system to another school district or state agency
2-21 participating in the system.
2-22 (e) A member participating in the optional defined
2-23 contribution plan continues to participate in the retirement system
2-24 and becomes eligible to receive an annuity and other benefits
2-25 payable by the retirement system in the same manner as other
2-26 members, except the benefits will be reduced under tables adopted
3-1 under Section 826.006.
3-2 Sec. 826.004. RULES. (a) The retirement system may adopt
3-3 rules for administration of the optional defined contribution plan,
3-4 including rules requiring notice of a member's choice to transfer
3-5 contributions among investment products and rules for the temporary
3-6 deposit of contributions under the plan pending transmittal to the
3-7 appropriate vendors.
3-8 (b) The retirement system shall adopt rules requiring
3-9 vendors to:
3-10 (1) administer the selection of investment products,
3-11 the transfer of account information and balances among investment
3-12 products, and the coordination of services under the optional
3-13 defined contribution plan;
3-14 (2) account for contributions invested, including any
3-15 dividends or capital gains earned; and
3-16 (3) provide participants any notices of changes
3-17 related to the offering of investment products.
3-18 Sec. 826.005. WITHDRAWAL OF CONTRIBUTIONS. A member
3-19 participating in the optional defined contribution plan may
3-20 withdraw amounts earned under the plan, under the terms of the
3-21 instrument governing the investment product, when the member ceases
3-22 to be employed by any employer, whether or not the member
3-23 concurrently retires under the retirement system.
3-24 Sec. 826.006. REDUCTION OF BENEFITS UNDER RETIREMENT SYSTEM.
3-25 The board of trustees shall adopt tables, after recommendation by
3-26 the retirement system's actuary, providing for reduction of
4-1 annuities and other benefits payable by the retirement system under
4-2 this subtitle in proportion to the percentage of member
4-3 contributions diverted to the optional defined contribution plan.
4-4 Sec. 826.007. INFORMATION TO MEMBERS. The retirement system
4-5 shall provide, as frequently as the system considers appropriate,
4-6 information about the optional defined contribution plan to the
4-7 contributing members of the retirement system. The information
4-8 must include information about the possible federal tax
4-9 consequences of participation in the plan, notice that amounts
4-10 contributed in the plan are not guaranteed by the state, and
4-11 information about the ability to transfer assets from the plan to
4-12 other retirement plans, including the retirement system.
4-13 Sec. 826.008. ENROLLMENT FEE. (a) The retirement system
4-14 may establish an enrollment fee for participation in the optional
4-15 defined contribution plan in an amount that does not exceed $15 and
4-16 is sufficient to recover the retirement system's costs of
4-17 administering the plan.
4-18 (b) Any fees collected under this section shall be deposited
4-19 in the expense account.
4-20 SECTION 2. Subsection (a), Section 825.312, Government Code,
4-21 is amended to read as follows:
4-22 (a) The retirement system shall deposit in the expense
4-23 account:
4-24 (1) money transferred from the interest account under
4-25 Section 825.313(c); [and]
4-26 (2) money received from the Texas Public School
5-1 Employees Group Insurance Program for service performed for the
5-2 program by the retirement system; and
5-3 (3) fees collected under Section 826.008.
5-4 SECTION 3. The Teacher Retirement System of Texas may
5-5 establish a reduced preenrollment fee in an amount that does not
5-6 exceed $15 and offer it instead of the enrollment fee provided by
5-7 Section 826.008, Government Code, as added by this Act, to persons
5-8 who remit the fee at least 90 days before the date Chapter 826,
5-9 Government Code, as added by this Act, is implemented.
5-10 SECTION 4. The Teacher Retirement System of Texas shall
5-11 implement Chapter 826, Government Code, as added by this Act,
5-12 beginning with the 2000-2001 school year.
5-13 SECTION 5. The importance of this legislation and the
5-14 crowded condition of the calendars in both houses create an
5-15 emergency and an imperative public necessity that the
5-16 constitutional rule requiring bills to be read on three several
5-17 days in each house be suspended, and this rule is hereby suspended.