81R3251 TJS-D

By: Truitt H.B. No. 2283

A BILL TO BE ENTITLED

AN ACT

relating to increasing state employee participation in the TexaSaver program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 609.006(a), Government Code, is amended to read as follows:

(a) A deferred compensation plan must conform to federal law to provide that deferred amounts and investment income are not includable, for federal income tax purposes, in the gross income of a participating employee until distributed to the employee, subject to the employee's option to designate all or a portion of deferred amounts as Roth contributions under Section 609.5021, the federal income tax treatment of which is governed by Section 402A, Internal Revenue Code of 1986.

SECTION 2. Subchapter C, Chapter 609, Government Code, is amended by adding Section 609.5021 to read as follows:

Sec. 609.5021. ROTH CONTRIBUTION PROGRAMS. The board of trustees shall:

(1) establish a qualified Roth contribution program in accordance with Section 402A, Internal Revenue Code of 1986, under which an employee may designate all or a portion of the employee's contribution under a 401(k) plan as a Roth contribution at the time the contribution is made; and

(2) if authorized by federal law, establish a program in accordance with the applicable federal law under which an employee may designate all or a portion of the employee's contribution under a 457 plan as a Roth contribution at the time the contribution is made.

SECTION 3. Sections 609.5025(c) and (d), Government Code, are amended to read as follows:

(c) An employee participating in a 401(k) plan under this section makes a contribution [of one percent of the compensation earned by the employee] to a default investment product selected by the board of trustees based on the criteria established under Section 609.505(d) and the rules adopted under Subsection (f). Subject to Subsection (d), the employee contributes one percent of the employee's compensation in the employee's first year of participation, and that contribution amount increases by an additional one percent in each succeeding year of participation until the employee's total annual contribution equals five percent of the employee's compensation. The contribution is made by automatic payroll deduction.

(d) At any time, an employee participating in a 401(k) plan under this section may, in accordance with rules adopted by the board of trustees, elect to end participation in the 401(k) plan, to contribute to a different investment product, [or] to contribute a different amount to the plan, or to designate all or a portion of the employee's contribution as a Roth contribution under Section 609.5021.

SECTION 4. Subchapter C, Chapter 609, Government Code, is amended by adding Section 609.5026 to read as follows:

Sec. 609.5026. STATE MATCHING CONTRIBUTIONS. (a) Except as provided by Subsection (b) and subject to legislative appropriation, the Employees Retirement System of Texas may make matching contributions to a 401(k) plan on behalf of employees participating in the plan in an amount specified in the appropriation.

(b) The Employees Retirement System of Texas may only make a contribution under this section if the retirement system:

(1) receives amounts sufficient to cover normal cost; and

(2) maintains a funded ratio equal to or greater than 90 percent.

SECTION 5. Section 4, Chapter 1409 (H.B. 957), Acts of the 80th Legislature, Regular Session, 2007, is repealed.

SECTION 6. The Employees Retirement System of Texas shall adopt rules to implement Section 609.5025(c), Government Code, as amended by this Act, as soon as practicable after the effective date of this Act, but not later than August 31, 2010.

SECTION 7. Section 609.5025(c), Government Code, as amended by this Act, applies to an employee of a state agency regardless of the date on which the employee begins employment. For an employee who began employment before the effective date of this Act, automatic participation in or increased contributions to a 401(k) plan under Section 609.5025(c), Government Code, begins as soon as practicable after the effective date of this Act, but not later than August 31, 2010, subject to the employee's option to elect not to participate or to contribute a different amount to the plan.

SECTION 8. This Act takes effect September 1, 2009.