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A BILL TO BE ENTITLED
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AN ACT
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relating to the authority of political subdivisions to offer |
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certain deferred compensation plans to employees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subsection (a), Section 609.006, Government |
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Code, is amended to read as follows: |
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(a) A deferred compensation plan must conform to federal law |
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to provide that deferred amounts and investment income are not |
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includable, for federal income tax purposes, in the gross income of |
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a participating employee until distributed to the employee, subject |
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to the employee's option to designate or convert all or a portion of |
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deferred amounts as or to Roth contributions under Section 609.1025 |
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or 609.5021, as applicable, the federal income tax treatment of |
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which is governed by Section 402A, Internal Revenue Code of 1986. |
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SECTION 2. Subchapter B, Chapter 609, Government Code, is |
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amended by adding Section 609.1025 to read as follows: |
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Sec. 609.1025. ROTH CONTRIBUTION PROGRAMS. A political |
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subdivision may: |
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(1) establish a qualified Roth contribution program in |
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accordance with Section 402A, Internal Revenue Code of 1986, under |
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which an employee may: |
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(A) designate all or a portion of the employee's |
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contribution under a 401(k) plan as a Roth contribution at the time |
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the contribution is made; or |
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(B) convert all or a portion of the employee's |
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previous contribution under the plan to a Roth contribution; and |
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(2) if authorized by federal law, establish a program |
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in accordance with the applicable federal law under which an |
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employee may: |
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(A) designate all or a portion of the employee's |
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contribution under a 457 plan as a Roth contribution at the time the |
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contribution is made; or |
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(B) convert all or a portion of the employee's |
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previous contribution under the plan to a Roth contribution. |
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SECTION 3. Subchapter B, Chapter 609, Government Code, is |
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amended by adding Section 609.1175 to read as follows: |
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Sec. 609.1175. LOANS UNDER 457 PLAN. The plan |
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administrator of a 457 plan may develop and implement procedures to |
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efficiently administer a program under the plan that allows a |
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qualified vendor to lend money to a participating employee. |
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SECTION 4. (a) The legislature validates an act taken |
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before the effective date of this Act by a political subdivision to |
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establish and administer: |
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(1) a qualified Roth contribution program in |
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accordance with Section 402A, Internal Revenue Code of 1986; |
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(2) a program in accordance with federal law under |
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which an employee may designate or convert all or a portion of the |
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employee's contribution under a 457 plan as or to a Roth |
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contribution at the time the contribution is made; or |
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(3) a loan program under a 457 plan. |
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(b) Subsection (a) of this section does not apply to a |
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matter that on the effective date of this Act: |
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(1) is involved in litigation, if the litigation |
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ultimately results in the matter being held invalid by a final court |
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judgment; or |
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(2) has been held invalid by a final court judgment. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |