78R6395 SGA-F
By: Armbrister S.B. No. 1259
A BILL TO BE ENTITLED
AN ACT
relating to deferred compensation plans for employees of regional
education service centers and certain institutions of higher
education.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 609.001, Government Code, is amended by
amending Subdivisions (6) and (8) and adding Subdivisions (2-a) and
(7-a) to read as follows:
(2-a) "Institution of higher education" means an
institution of higher education as defined by Section 61.003,
Education Code, other than a public junior college.
(6) "Political subdivision" means a governmental
entity in the state that is not a state agency and includes a
county, municipality, school district, regional education service
center, river authority, other special purpose district or
authority, and junior college district.
(7-a) "Regional education service center" has the
meaning assigned by Section 5.001, Education Code.
(8) "State agency" means a board, commission, office,
department, or other agency in the executive, judicial, or
legislative branch of state government, including an institution of
higher education [as defined by Section 61.003, Education Code,
but does not include a public junior college].
SECTION 2. Section 609.002, Government Code, is amended to
read as follows:
Sec. 609.002. QUALIFICATIONS FOR QUALIFIED VENDOR. A
vendor may be a qualified vendor for a 457 plan or a 401(k) plan
created by a political subdivision, [or] group of political
subdivisions, an institution of higher education, or a group of
institutions of higher education only if the vendor satisfies the
requirements for participation in the deferred compensation plan
provided by:
(1) this chapter; and
(2) the plan administrator.
SECTION 3. Section 609.003(b), Government Code, is amended
to read as follows:
(b) The approval of an investment product for a 401(k) plan
of a political subdivision, [or] group of political subdivisions,
an institution of higher education, or a group of institutions of
higher education must be in accordance with a contract between the
plan administrator and a qualified vendor.
SECTION 4. Section 609.007, Government Code, is amended by
adding Subsection (e) to read as follows:
(e) An institution of higher education may contract with an
employee of the institution of higher education for the deferment
of any part of the employee's compensation.
SECTION 5. Chapter 609, Government Code, is amended by
adding Subchapter D to read as follows:
SUBCHAPTER D. DEFERRED COMPENSATION PLANS FOR EMPLOYEES OF
INSTITUTIONS OF HIGHER EDUCATION
Sec. 609.701. DEFINITIONS. In this subchapter:
(1) "Deferred compensation plan" means a plan
established under this subchapter.
(2) "Deferred compensation trust fund" means the fund
in which deferred amounts and investment income of participating
employees are temporarily held.
(3) "Investment product" includes a fixed or variable
rate annuity, mutual fund, certificate of deposit, money market
account, passbook savings account, stock, bond, obligation, and any
other investment product not prohibited under Section 457, Internal
Revenue Code of 1986, as amended.
Sec. 609.702. CREATION OF PLAN. (a) An institution of
higher education may create and administer for its employees a 457
plan under this subchapter.
(b) An institution of higher education may contract with
other institutions of higher education to create a single deferred
compensation plan for their employees under Subsection (a).
Sec. 609.703. DESIGNATION OF PLAN ADMINISTRATOR. (a) An
institution of higher education that creates a deferred
compensation plan shall designate a plan administrator for the
plan.
(b) Institutions of higher education that create a single
plan shall designate jointly a plan administrator for the plan.
(c) A plan administrator may be an employee, a nonprofit
corporation, an individual, a trustee, a private entity, another
institution of higher education, or an association of institutions
of higher education.
Sec. 609.704. REMOVAL OF PLAN ADMINISTRATOR. An
institution of higher education or group of institutions of higher
education that designates a plan administrator may remove the plan
administrator at any time unless specifically provided otherwise by
contract.
Sec. 609.705. OVERSIGHT COMMITTEE. (a) An institution of
higher education or group of institutions of higher education that
creates a deferred compensation plan may direct and supervise the
activities of the plan administrator through an oversight
committee.
(b) The institution of higher education or group shall
determine the authority, activities, and composition of an
oversight committee created under this section.
Sec. 609.706. AUTHORITY OF PLAN ADMINISTRATOR. (a) A plan
administrator shall execute necessary contracts for the
administration of the deferred compensation plan, subject to any
prior approval required by the institution of higher education or
group of institutions of higher education that created the plan.
(b) A plan administrator shall develop and implement
criteria and procedures for any matter not covered by this
subchapter that the plan administrator considers appropriate for
the operation of the deferred compensation plan.
Sec. 609.707. INVESTMENT AND TRANSFER OF DEFERRED AMOUNTS
AND INCOME. The plan administrator shall:
(1) invest the deferred amounts and investment income
of a participating employee in the qualified investment products
designated by the employee; and
(2) transfer the deferred amounts and investment
income of a participating employee from one qualified investment
product to another on the employee's request.
Sec. 609.708. PARTICIPATION OF INDEPENDENT CONTRACTORS.
(a) The plan administrator shall determine whether a person who
provides services as an independent contractor to an institution of
higher education that created the plan may participate in the
deferred compensation plan.
(b) For the purposes of Subchapter A and this subchapter, an
independent contractor that is authorized to participate in a
deferred compensation plan is treated as an employee of the
institution of higher education creating the plan.
Sec. 609.709. CHANGING AMOUNT DEFERRED. An employee may
change the amount to be deferred by notifying the plan
administrator of the change in accordance with the requirements of
the administrator.
Sec. 609.710. DISTRIBUTION. A plan administrator shall
develop and implement procedures for:
(1) the designation by a participating employee of a
beneficiary to receive the employee's deferred amounts and
investment income after the employee's death; and
(2) the distribution of a participating employee's
deferred amounts and investment income to the employee or the
employee's beneficiary, as appropriate, because of the employee's
death or termination of employment, a financial hardship, or
another reason permissible under federal law.
Sec. 609.711. FEE. (a) An institution of higher education
or group of institutions of higher education that creates a
deferred compensation plan may assess a fee for the administration
of the plan against each participating employee.
(b) The institution of higher education or group of
institutions of higher education shall determine the method for
computing and assessing the fee.
Sec. 609.712. EVALUATION AND APPROVAL OF QUALIFIED VENDOR.
(a) A plan administrator shall develop and implement criteria and
procedures for evaluating a vendor's application to become a
qualified vendor.
(b) A plan administrator may not approve a vendor's
application if the vendor is:
(1) a state or national bank or savings and loan
association, the deposits of which are not insured by the Federal
Deposit Insurance Corporation;
(2) a credit union, the deposits of which are not
insured by the National Credit Union Administration Board; or
(3) an insurance company that:
(A) is not a member of the Life, Accident,
Health, and Hospital Service Insurance Guaranty Association; or
(B) is an impaired or insolvent insurer under
Article 21.28-D, Insurance Code.
(c) On written request, the Texas Department of Insurance
shall certify in writing to a plan administrator whether an
insurance company is prohibited from being approved as a qualified
vendor under Subsection (b)(3). The plan administrator may rely on
the certification.
Sec. 609.713. NUMBER OF VENDORS UNDER 457 PLAN. The plan
administrator of a 457 plan shall determine the minimum and maximum
number of vendors that may be qualified vendors for the plan at any
given time.
Sec. 609.714. CONTRACT WITH QUALIFIED VENDOR. (a) After a
plan administrator approves an application of a vendor to become a
qualified vendor, the plan administrator shall execute a written
contract with the vendor to participate in the deferred
compensation plan.
(b) A plan administrator shall develop and implement
criteria and procedures for evaluating a qualified vendor's
investment products to determine whether those products are
acceptable as qualified investment products.
(c) A qualified vendor may offer to employees participating
in a 457 plan only qualified investment products.
Sec. 609.715. REGULATION OF QUALIFIED VENDORS. A plan
administrator shall develop and implement requirements for
qualified vendors and their employees concerning disclosure,
reporting, standards of conduct, solicitation, advertising,
relationships with participating employees, the nature and quality
of services provided to those employees, and other matters.
Sec. 609.716. TRANSFER ON VENDOR'S FAILURE. An institution
of higher education or group of institutions of higher education
that creates a deferred compensation plan may authorize or require
as a part of the plan that the plan administrator immediately
transfer to the deferred compensation trust fund all deferred
amounts and investment income from a vendor who fails to satisfy the
requirements of this subchapter or the plan administrator.
SECTION 6. This Act takes effect January 1, 2004.