34 Tex. Admin. Code § 87.13 - Disclosure
(a) Approval of a disclosure form in prior
plan.
(1) A prior plan vendor may complete an
annual disclosure form for each investment product in which a plan participant
has an account balance. If a variable annuity product has several investment
choices, the plan administrator may require all disclosures related to those
investment choices. A prior plan vendor may be required by plan administrator
to complete a disclosure on each investment product that has plan participant
funds.
(2) Upon receipt, the plan
administrator shall review a disclosure form to determine whether it complies
with the requirements of this section in addition to any other applicable state
or federal regulatory requirements. The plan administrator must approve the
disclosure form if it complies. Otherwise, the plan administrator shall
disapprove the disclosure form.
(3)
A prior plan vendor shall submit its disclosure form to the plan administrator
upon request even if the disclosure form has not changed. The disclosure form
must be submitted within 30 days of the plan administrator's request.
(b) Contents of disclosure forms.
(1) A prior plan vendor must uniformly state
on all its disclosure forms basic information common to all qualified
investment products offered by the prior plan vendor and also disclose any
other state or federal regulatory information required.
(2) A prior plan vendor may not describe two
or more qualified investment products on the same disclosure form.
(3) A prior plan vendor must attach to a
disclosure form any information that will not conveniently fit on the
disclosure form itself. Information that a prior plan vendor may attach to a
disclosure form includes schedules of payments, fees, cash values, or any other
items required to be disclosed.
(4)
A disclosure form must contain the current interest rate and the date on which
the rate could or will change. A disclosure form must include the date the fees
or penalties will expire for participants, if applicable.
(5) If a qualified investment product has a
variable interest rate, the disclosure form for that product must contain:
(A) the word "variable"; and
(B) a blank for the prior plan vendor's
representative to enter the current interest rate.
(6) A prospectus must be submitted for each
of those qualified investment products, (if applicable).
(c) Use of disclosure forms.
(1) A prior plan vendor or vendor
representative must enter the fees/charges and product information on a
disclosure form when a participant and the prior plan vendor or representative
sign the participation agreement and/or change agreement and the disclosure
form.
(2) The prior plan vendor or
vendor representative must enter the current interest rate and the effective
date of that rate in the appropriate blanks.
(3) A prior plan vendor representative fails
to provide a disclosure form if the vendor or representative does not enter all
the required information.
(4) If a
prior plan vendor representative misstates the current interest rate on a
disclosure form, the plan administrator may:
(A) consider the prior plan vendor or
representative as having failed to provide a disclosure form; or
(B) bind the prior plan vendor to the
interest rate as stated on the form.
(d) Life insurance products.
(1) This subsection applies when an employee
of a prior plan vendor or a prior plan vendor representative sells an existing
replacement life insurance product to a participant.
(2) The employee or representative shall
deliver to the prior plan vendor offering the product and to the participant a
written statement containing:
(A) the
specific reasons why the participant's best interests would benefit from the
replacement product;
(B) the exact
time that will be necessary for the cash value of the replacement life product
to reach the cash value of the original life product as of the date of the
replacement, if applicable.
(3) Before a transfer or new deferral may
become effective, the written statement must be filed with the plan
administrator.
(4) An employee of a
prior plan vendor or a prior plan vendor representative does not satisfy
paragraph (2) of this subsection unless the participant signs the statement. If
the participant refuses to sign the statement, then the employee or
representative may not sell an existing replacement life product to the
participant. The employee and representative shall permanently retain a copy of
the signed written statement.
Notes
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