By Nixon S.B. No. 585 76R5067 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 Employees Retirement System of Texas. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle B, Title 8, Government Code, is amended 1-6 by adding Chapter 816 to read as follows: 1-7 CHAPTER 816. OPTIONAL DEFINED CONTRIBUTION PLAN 1-8 Sec. 816.001. 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. 816.002. 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 815.402 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. 816.003. ELECTION TO PARTICIPATE IN PLAN. (a) A 2-2 contributing member may file an election with the retirement 2-3 system, on a form prescribed by the system, to participate in the 2-4 optional defined contribution plan. 2-5 (b) The election must include the percentage of the member's 2-6 contributions required under Section 815.402 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 change the percentage of contributions to be used under the 2-13 optional defined contribution plan; and 2-14 (2) when a member ceases to be employed by any 2-15 employer, the member may make a withdrawal as provided by Section 2-16 816.005. 2-17 (d) A member participating in the optional defined 2-18 contribution plan continues to participate in the retirement system 2-19 and becomes eligible to receive an annuity and other benefits 2-20 payable by the retirement system in the same manner as other 2-21 members, except the benefits will be reduced under tables adopted 2-22 under Section 816.006. 2-23 Sec. 816.004. RULES. The retirement system may adopt rules 2-24 for administration of the optional defined contribution plan, 2-25 including rules requiring notice of a member's choice to transfer 2-26 contributions among investment products and rules for the temporary 2-27 deposit of contributions under the plan pending transmittal to the 3-1 appropriate vendors. 3-2 Sec. 816.005. WITHDRAWAL OF CONTRIBUTIONS. A member 3-3 participating in the optional defined contribution plan may 3-4 withdraw amounts earned under the plan, under the terms of the 3-5 instrument governing the investment product, when the member ceases 3-6 to be employed by any employer, whether the member concurrently 3-7 retires under the retirement system. 3-8 Sec. 816.006. REDUCTION OF BENEFITS UNDER RETIREMENT SYSTEM. 3-9 The board of trustees shall adopt tables, after recommendation by 3-10 the retirement system's actuary, providing for reduction of 3-11 annuities and other benefits payable by the retirement system under 3-12 this subtitle in proportion to the percentage of member 3-13 contributions diverted to the optional defined contribution plan. 3-14 Sec. 816.007. INFORMATION TO MEMBERS. The retirement system 3-15 shall provide, as frequently as the system considers appropriate, 3-16 information about the optional defined contribution plan to the 3-17 contributing members of the retirement system. The information 3-18 must include information about the possible federal tax 3-19 consequences of participation in the plan, notice that amounts 3-20 contributed in the plan are not guaranteed by the state, and 3-21 information about the ability to transfer assets from the plan to 3-22 other retirement plans, including the retirement system. 3-23 SECTION 2. The Employees Retirement System of Texas shall 3-24 implement Chapter 816, Government Code, as added by this Act, and 3-25 offer participation beginning September 1, 2000. 3-26 SECTION 3. The importance of this legislation and the 3-27 crowded condition of the calendars in both houses create an 4-1 emergency and an imperative public necessity that the 4-2 constitutional rule requiring bills to be read on three several 4-3 days in each house be suspended, and this rule is hereby suspended.