34 Tex. Admin. Code § 87.9 - Investment Products
(a) Prohibited
activity. A prior plan vendor or prior plan vendor representative may not
solicit investments in an investment product after August 31, 2000.
(b) New qualified investment products.
(1) Notwithstanding anything to the contrary
in the sections in this chapter, other than paragraph (2) of this subsection,
the plan administrator may not:
(A) approve
an investment product as a qualified investment product; or
(B) issue a product approval
notice.
(2) Paragraph
(1)(A) and (B) of this subsection do not apply to a qualified investment
product that the plan administrator approved for participation in the plan
before May 7, 1990. If the plan administrator has not executed a product
contract with a prior plan vendor that is sponsoring a qualified investment
product, the plan administrator and the prior plan vendor shall execute a
product contract no later than the 90th day after May 7, 1990. If a product
contract is not executed, the plan administrator shall terminate the qualified
investment product's participation in the plan.
(c) Eligibility of investment products. The
investment products that are eligible for approval as qualified investment
products are:
(1) fixed and variable rate
annuities;
(2) life insurance
(except that new life policies may not be offered in the plan by any vendor
after December 31, 1992);
(3)
stable value account;
(4)
self-directed brokerage account;
(5) target date retirement funds;
(6) mutual funds; and
(7) money market accounts, certificates of
deposit, share certificates or passbook savings accounts offered by a bank,
savings and loan association, or credit union.
(d) Review of investment products.
(1) General requirements. The plan
administrator may not issue a product approval notice concerning an investment
product unless:
(A) the prior plan vendor
offering the investment product submits to the plan administrator the
documentation and information the plan administrator requires;
(B) the prior plan vendor offering the
product agrees to accept both transfers to and the investment of deferrals in
its product;
(C) the plan
administrator finds that the advertising material for the product, if any,
complies with the sections in this chapter;
(D) the plan administrator determines that
the disclosure form for the product complies with the sections in this
chapter;
(E) the plan administrator
finds that the investment product has a guaranteed minimum interest rate if the
product has a variable interest rate;
(F) the plan administrator determines that
the investment product complies with §
87.7(b)(5) of
this title (relating to prior plan vendor participation), if the product is a
mutual fund;
(G) the plan
administrator concludes that the inclusion of the investment product in the
plan would be in the best interests of the plan; and
(H) the plan administrator ascertains that
the vendor has obtained the necessary approvals from the appropriate regulatory
agencies.
(2) Additional
requirements for approving investment products offered by insurance companies.
Before the plan administrator may sign a product contract, the plan
administrator must:
(A) obtain written
confirmation from the Texas Department of Insurance that the investment product
has been approved for sale in Texas;
(B) determine that the amount of the
investment product's premiums, payments, and benefits are not calculated with
regard to the sex of the person insured or of the recipient of the benefits;
and
(C) determine that the
investment product does not insure anyone other than a participant.
(e) Product contracts.
(1) The plan administrator may not sign a
product contract with a prior plan vendor unless the plan administrator has
already issued a product approval notice concerning the investment product that
will be covered by the product contract.
(2) The plan administrator may not sign a
product contract that does not comply with the sections in this chapter and
applicable law.
(3) The plan
administrator may, in its sole discretion, permit a prior plan vendor to
replace, substitute, or merge an existing plan product with another product, if
procedures established by the plan administrator are met.
(f) Withdrawal of a qualified investment
product from the plan.
(1) A prior plan
vendor may withdraw a qualified investment product from the plan after
notifying, in writing, the plan administrator and all participants whose
deferrals and investment income are invested in the qualified investment
product. The prior plan vendor must ensure that the plan administrator and the
participants receive the written notice no later than the 60th day before the
effective date of the withdrawal.
(2) A prior plan vendor may establish the
effective date of a withdrawal of the vendor's qualified investment product.
The prior plan vendor must clearly state the effective date in the written
notice required by paragraph (1) of this subsection.
(3) Notwithstanding paragraph (2) of this
subsection, if a qualified investment product has a specific term, such as a
three-year certificate of deposit or a 30-day passbook account, the effective
date of the withdrawal may not be before the term of the product has expired
for every participant unless approved by the plan administrator, the prior plan
vendor must hold the participants, the plan and plan administrator harmless
from any fees or penalties that may be applicable in connection with such
premature termination or withdrawal. The term of a product will be deemed
expired if all participants have transferred their funds to another qualified
investment product.
(4) After
receiving notice of withdrawal, the plan administrator shall contact each
affected participant to submit a prior funds transfer form for the disposition
of his or her deferrals and investment income. For each participant from whom
the plan administrator has not received a prior funds transfer form by the
effective date of the withdrawal, the plan administrator shall initiate a
transfer of all deferrals and investment income from the qualified investment
product being withdrawn to the default fund in the revised plan.
(5) When a prior plan vendor withdraws a
qualified investment product from the plan, the vendor may not charge a fee or
permit to be charged or penalty to participants, the plan or plan administrator
for transfers made after the notice of withdrawal.
(6) When a prior plan vendor that is an
insurance company with existing life policies in the plan withdraws a life
insurance product from the plan, this paragraph applies in addition to the
preceding paragraphs of this subsection.
(A)
In this paragraph, the term "withdrawn life insurance product" means a life
insurance product that is no longer a qualified investment product because the
life insurance company offering the product has withdrawn the product from the
plan.
(B) A participant whose
deferrals and investment income have been invested in a withdrawn life
insurance product may continue life insurance coverage with the insurance
company offering the product.
(C)
If the insurance company has a life insurance product remaining in the plan
that is comparable to the withdrawn life insurance product, this paragraph
applies. The insurance company shall offer continuing coverage in:
(i) a qualified investment product that is
comparable to the withdrawn life insurance product; and
(ii) a life insurance product that is not a
qualified investment product but is comparable to the withdrawn life insurance
product.
(D) If the
insurance company does not have a life insurance product remaining in the plan
that is comparable to the withdrawn life insurance product, this paragraph
applies. The company must offer continuing life insurance coverage to each
participant whose deferrals and investment income were invested in the
withdrawn life insurance product. The insurance company shall offer continuing
coverage in a life insurance product that is comparable to the withdrawn life
insurance product.
(E) If a
participant continues life insurance coverage in a life insurance product that
is not a qualified investment product, the participant must pay the premiums
for the coverage directly to the insurance company. The premiums may not be
paid with deferrals or investment income.
(F) A participant may exercise the
participant's right to continue life insurance coverage only if the participant
mails to the insurance company written notice of intention to continue the
coverage. The written notice must be postmarked no later than the 60th day
after the effective date of the withdrawal of the life insurance product from
the plan. However, an insurance company may increase the 60-day time limit for
a participant or for all participants.
(G) When a participant elects to continue
life insurance coverage, the insurance company with which the coverage is
continuing may not:
(i) refuse to continue
the life insurance;
(ii) require a
postponement or an interruption in coverage for any length of time;
(iii) require the participant to provide
evidence of insurability;
(iv)
require the participant to apply for coverage;
(v) require the participant to select a
different life insurance product from the withdrawn life insurance
product;
(vi) discriminate in any
manner against the participant because of the company's withdrawal of the
product;
(vii) treat the
participant differently than the company would treat a non-participant with the
same life insurance coverage; or
(viii) increase the premiums charged to the
participant solely because the company withdrew a life insurance product from
the plan or because the participant elected to continue coverage.
(H) A prior plan vendor must
inform the participant in the written notice required by paragraph (1) of this
subsection that the participant has the rights specified in this
paragraph.
(I) If a prior plan
vendor does not comply with subparagraph (H) of this paragraph, then a
participant may exercise the participant's right to continue insurance up to
the 120th day after the prior plan vendor actually mails written notice to the
participant containing a full explanation of the participant's
rights.
Notes
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No prior version found.