1-1 By: Nixon S.B. No. 292
1-2 (In the Senate - Filed January 27, 1999; February 1, 1999,
1-3 read first time and referred to Committee on State Affairs;
1-4 April 27, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 6, Nays 0; April 27, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 292 By: Nixon
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to a self-directed investment option for participants in
1-11 the Teacher Retirement System of Texas.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subtitle C, Title 8, Government Code, is amended
1-14 by adding Chapter 826 to read as follows:
1-15 CHAPTER 826. OPTIONAL DEFINED CONTRIBUTION PLAN
1-16 Sec. 826.001. DEFINITIONS. In this chapter:
1-17 (1) "Optional defined contribution plan" means the
1-18 plan established under this chapter.
1-19 (2) "Qualified plan" means an employee benefit plan
1-20 qualified under Section 401(a), Internal Revenue Code of 1986.
1-21 Sec. 826.002. ESTABLISHMENT OF PLAN. (a) The retirement
1-22 system shall establish and administer an optional defined
1-23 contribution plan that is a qualified plan and under which members
1-24 of the system may elect to pay a portion of the member
1-25 contributions required by Section 825.402 to the optional defined
1-26 contribution plan for the purchase of securities selected by the
1-27 member from among products that are authorized to be provided under
1-28 a qualified plan and that are offered by companies authorized to
1-29 provide the products in this state.
1-30 (b) A provider of securities is exempt from the payment of
1-31 franchise or premium taxes on products issued under the optional
1-32 defined contribution plan.
1-33 Sec. 826.003. ELECTION TO PARTICIPATE IN PLAN. (a) A
1-34 contributing member who is not participating in the deferred
1-35 retirement option plan under Subchapter I, Chapter 824, may file an
1-36 election with the retirement system, on a form prescribed by the
1-37 system, to participate in the optional defined contribution plan.
1-38 (b) The election must include the percentage of the member's
1-39 contributions required under Section 825.402 to be used under the
1-40 optional defined contribution plan. The percentage of required
1-41 contributions to be used under the plan may not exceed 50 percent.
1-42 (c) An election made under this section is irrevocable,
1-43 except:
1-44 (1) when a member changes employers, the member may
1-45 increase the percentage of contributions to be used under the
1-46 optional defined contribution plan within the limit prescribed by
1-47 Subsection (b); and
1-48 (2) when a member ceases to be employed by any
1-49 employer, the member may make a withdrawal as provided by Section
1-50 826.005.
1-51 (d) For purposes of Subsection (c), a change of employers is
1-52 a transfer from one school district or state agency participating
1-53 in the retirement system to another school district or state agency
1-54 participating in the system.
1-55 (e) A member participating in the optional defined
1-56 contribution plan continues to participate in the retirement system
1-57 and becomes eligible to receive an annuity and other benefits
1-58 payable by the retirement system in the same manner as other
1-59 members, except the benefits will be reduced under tables adopted
1-60 under Section 826.006.
1-61 Sec. 826.004. RULES. (a) The retirement system may adopt
1-62 rules for administration of the optional defined contribution plan,
1-63 including rules requiring notice of a member's choice to transfer
1-64 contributions among investment products and rules for the temporary
2-1 deposit of contributions under the plan pending transmittal to the
2-2 appropriate vendors.
2-3 (b) The retirement system shall adopt rules requiring
2-4 vendors to:
2-5 (1) administer the selection of investment products,
2-6 the transfer of account information and balances among investment
2-7 products, and the coordination of services under the optional
2-8 defined contribution plan;
2-9 (2) account for contributions invested, including any
2-10 dividends or capital gains earned; and
2-11 (3) provide participants any notices of changes
2-12 related to the offering of investment products.
2-13 Sec. 826.005. WITHDRAWAL OF CONTRIBUTIONS. A member
2-14 participating in the optional defined contribution plan may
2-15 withdraw amounts earned under the plan, under the terms of the
2-16 instrument governing the investment product, when the member ceases
2-17 to be employed by any employer, whether or not the member
2-18 concurrently retires under the retirement system.
2-19 Sec. 826.006. REDUCTION OF BENEFITS UNDER RETIREMENT SYSTEM.
2-20 The board of trustees shall adopt tables, after recommendation by
2-21 the retirement system's actuary, providing for reduction of
2-22 annuities and other benefits payable by the retirement system under
2-23 this subtitle in proportion to the percentage of member
2-24 contributions diverted to the optional defined contribution plan.
2-25 Sec. 826.007. INFORMATION TO MEMBERS. The retirement system
2-26 shall provide, as frequently as the system considers appropriate,
2-27 information about the optional defined contribution plan to the
2-28 contributing members of the retirement system. The information
2-29 must include information about the possible federal tax
2-30 consequences of participation in the plan, notice that amounts
2-31 contributed in the plan are not guaranteed by the state, and
2-32 information about the ability to transfer assets from the plan to
2-33 other retirement plans, including the retirement system.
2-34 Sec. 826.008. ENROLLMENT FEE. (a) The retirement system
2-35 may establish an enrollment fee for participation in the optional
2-36 defined contribution plan in an amount that does not exceed $15 and
2-37 is sufficient to recover the retirement system's costs of
2-38 administering the plan.
2-39 (b) Any fees collected under this section shall be deposited
2-40 in the expense account.
2-41 SECTION 2. Subsection (a), Section 825.312, Government Code,
2-42 is amended to read as follows:
2-43 (a) The retirement system shall deposit in the expense
2-44 account:
2-45 (1) money transferred from the interest account under
2-46 Section 825.313(c); [and]
2-47 (2) money received from the Texas Public School
2-48 Employees Group Insurance Program for service performed for the
2-49 program by the retirement system; and
2-50 (3) fees collected under Section 826.008.
2-51 SECTION 3. The Teacher Retirement System of Texas may
2-52 establish a reduced preenrollment fee in an amount that does not
2-53 exceed $15 and offer it instead of the enrollment fee provided by
2-54 Section 826.008, Government Code, as added by this Act, to persons
2-55 who remit the fee at least 90 days before the date Chapter 826,
2-56 Government Code, as added by this Act, is implemented.
2-57 SECTION 4. The Teacher Retirement System of Texas shall
2-58 implement Chapter 826, Government Code, as added by this Act,
2-59 beginning with the 2000-2001 school year.
2-60 SECTION 5. The importance of this legislation and the
2-61 crowded condition of the calendars in both houses create an
2-62 emergency and an imperative public necessity that the
2-63 constitutional rule requiring bills to be read on three several
2-64 days in each house be suspended, and this rule is hereby suspended.
2-65 * * * * *