By Nixon S.B. No. 292
76R4516 GCH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a self-directed investment option for participants in
1-3 the Teacher Retirement System of Texas.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle C, Title 8, Government Code, is amended
1-6 by adding Chapter 826 to read as follows:
1-7 CHAPTER 826. OPTIONAL DEFINED CONTRIBUTION PLAN
1-8 Sec. 826.001. DEFINITIONS. In this chapter:
1-9 (1) "Optional defined contribution plan" means the
1-10 plan established under this chapter.
1-11 (2) "Qualified plan" means an employee benefit plan
1-12 qualified under Section 401(a), Internal Revenue Code of 1986.
1-13 Sec. 826.002. ESTABLISHMENT OF PLAN. (a) The retirement
1-14 system shall establish and administer an optional defined
1-15 contribution plan that is a qualified plan and under which members
1-16 of the system may elect to pay a portion of the member
1-17 contributions required by Section 825.402 to the optional defined
1-18 contribution plan for the purchase of securities selected by the
1-19 member from among products that are authorized to be provided under
1-20 a qualified plan and that are offered by companies authorized to
1-21 provide the products in this state.
1-22 (b) A provider of securities is exempt from the payment of
1-23 franchise or premium taxes on products issued under the optional
1-24 defined contribution plan.
2-1 Sec. 826.003. ELECTION TO PARTICIPATE IN PLAN. (a) A
2-2 contributing member who is not participating in the deferred
2-3 retirement option plan under Subchapter I, Chapter 824, may file an
2-4 election with the retirement system, on a form prescribed by the
2-5 system, to participate in the optional defined contribution plan.
2-6 (b) The election must include the percentage of the member's
2-7 contributions required under Section 825.402 to be used under the
2-8 optional defined contribution plan. The percentage of required
2-9 contributions to be used under the plan may not exceed 50 percent.
2-10 (c) An election made under this section is irrevocable,
2-11 except:
2-12 (1) when a member changes employers, the member may
2-13 change the percentage of contributions to be used under the
2-14 optional defined contribution plan; 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) A member participating in the optional defined
2-19 contribution plan continues to participate in the retirement system
2-20 and becomes eligible to receive an annuity and other benefits
2-21 payable by the retirement system in the same manner as other
2-22 members, except the benefits will be reduced under tables adopted
2-23 under Section 826.006.
2-24 Sec. 826.004. RULES. The retirement system may adopt rules
2-25 for administration of the optional defined contribution plan,
2-26 including rules requiring notice of a member's choice to transfer
2-27 contributions among investment products and rules for the temporary
3-1 deposit of contributions under the plan pending transmittal to the
3-2 appropriate vendors.
3-3 Sec. 826.005. WITHDRAWAL OF CONTRIBUTIONS. A member
3-4 participating in the optional defined contribution plan may
3-5 withdraw amounts earned under the plan, under the terms of the
3-6 instrument governing the investment product, when the member ceases
3-7 to be employed by any employer, whether the member concurrently
3-8 retires under the retirement system.
3-9 Sec. 826.006. REDUCTION OF BENEFITS UNDER RETIREMENT SYSTEM.
3-10 The board of trustees shall adopt tables, after recommendation by
3-11 the retirement system's actuary, providing for reduction of
3-12 annuities and other benefits payable by the retirement system under
3-13 this subtitle in proportion to the percentage of member
3-14 contributions diverted to the optional defined contribution plan.
3-15 Sec. 826.007. INFORMATION TO MEMBERS. The retirement system
3-16 shall provide, as frequently as the system considers appropriate,
3-17 information about the optional defined contribution plan to the
3-18 contributing members of the retirement system. The information
3-19 must include information about the possible federal tax
3-20 consequences of participation in the plan, notice that amounts
3-21 contributed in the plan are not guaranteed by the state, and
3-22 information about the ability to transfer assets from the plan to
3-23 other retirement plans, including the retirement system.
3-24 SECTION 2. The Teacher Retirement System of Texas shall
3-25 implement Chapter 826, Government Code, as added by this Act,
3-26 beginning with the 2000-2001 school year.
3-27 SECTION 3. The importance of this legislation and the
4-1 crowded condition of the calendars in both houses create an
4-2 emergency and an imperative public necessity that the
4-3 constitutional rule requiring bills to be read on three several
4-4 days in each house be suspended, and this rule is hereby suspended.