34 Tex. Admin. Code § 87.1

Current through Reg. 49, No. 45; November 8, 2024

Section 87.1 - Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Account--A record that a prior plan vendor or revised plan vendor uses to record the value of the deferred compensation activity credited to the participant, including annual deferrals, earnings or investment losses, transfers and any distributions made to a participant or on behalf of the participant's beneficiary.

(2) Basic pension plan--The retirement program in which an employee must participate.

(3) Beneficiary--The designated person (or if none, the participant's estate) who is entitled to receive benefits under the plan after the death of a participant.

(4) Beneficiary designation form--A form authorized and approved by the plan administrator to designate a participant's beneficiary.

(5) Benefits coordinator--An employee of a state agency who has been designated by the agency to perform certain administrative functions with respect to the plan.

(6) Board of Trustees--The Board of Trustees of the Employees Retirement System of Texas.

(7) Call-in day--The first five working days of the month.

(8) Change agreement--A contract signed by a participant to request certain changes concerning the participant's deferrals, investment income, and participation in the plan.

(9) Code--The Internal Revenue Code of 1986, as now in effect or as hereafter amended. All citations to sections of the Code are to such sections as they may from time to time be amended or renumbered.

(10) Data collection center--A private entity used by the State Treasury Department to collect information from state depositories regarding deposits of state funds.

(11) Day--A calendar day.

(12) DCP--Deferred compensation plan.

(13) Deferral--The amount of compensation a participant has agreed to defer under the plan.

(14) Distribution agreement--A contract signed by a participant or beneficiary indicating the disposition of the participant's deferrals and investment income.

(15) Disclosure form--A document completed by a prior plan vendor's representative and signed by the vendor representative disclosing the rate of return, fees, withdrawal penalties, and payout options for the qualified investment product selected.

(16) Eligible rollover distribution--Any distribution of all or any portion of a participant's account balance, including an individual retirement account described in §408(a) of the Code, an individual retirement annuity described in §408(b) of the Code, a qualified trust described in §401(a) of the Code, an annuity plan described in §403(a) or §403(b) of the Code, that accepts the rollover distribution, except that an eligible distribution does not include:

(A) any installment payment for a period of 10 years or more;

(B) any distribution as a result of an unforeseeable emergency; or

(C) for any other distribution, the portion, if any, of the distribution that is required under §401(a)(9).

(17) Enrollment form--formerly known as participation agreement. A contract signed by an employee agreeing to defer the receipt of part of the employee's compensation in accordance with the plan and containing certain information regarding prior plan vendors, investment products, and other matters.

(18) Emergency withdrawal application--A form completed by a participant requesting the full or partial distribution of the participant's deferrals and investment income because of an unforeseeable emergency.

(19) Employee--A person who provides services as an officer or employee to a state agency.

(20) Executive director--The executive director of the Employees Retirement System of Texas.

(21) FDIC--The Federal Deposit Insurance Corporation or its successor in function. The FDIC consists of two funds, the Savings Association Insurance Fund (SAIF), which insured savings associations and savings banks, and the Bank Insurance Fund (BIF), which insures commercial banks.

(22) Fee--The term includes a fee, penalty, charge, assessment, market value adjustment, forfeiture, or service charge.

(23) Includible income--The total of:

(A) the value of salary or wages;

(B) plus the value of longevity pay, hazardous duty pay, imputed income, special duty pay, sick, vacation, back pay and benefit replacement pay; and

(C) minus the present value of contributions to the Employees Retirement System, the Teacher Retirement System, the Optional Retirement Program, and the TexFlex program administered by the Employees Retirement System.

(24) Home office--The primary location at which a prior plan vendor maintains its files and other records concerning the vendor's participation in the plan and the participants whose deferrals and investment income have been invested in the vendor's qualified investment products. The term is usually equivalent to the vendor's headquarters.

(25) Inactive prior plan vendor--A prior plan vendor is an inactive prior plan vendor if no new deferrals have been invested in any of the vendor's qualified investment products for 12 consecutive months.

(26) Includible compensation--An employee's actual wages in box 1 of Form W-2 for a year for services and compensation from a state agency that is includible in a participant's includible income under §401(a)(17) of the Code and increased (up to the dollar maximum) by any compensation reduction election under §§125, 132(f), 401(k), 403(b) or 457(b) of the Code.

(27) Inherited IRA--An IRA that becomes property through inheritance of someone other than the spouse of the deceased owner of the IRA. The beneficiary must receive the distribution by December 31 of the fifth year after the death of the owner. This type of IRA does not allow for tax deductible contributions nor rollovers to and from other IRAs. The IRA can be paid as an annuity or in periodic installments not extending beyond the beneficiary's life expectancy.

(28) Investment income--The interest, capital gains, and other income earned through the investment of deferrals in qualified investment products.

(29) Investment product--The term includes a life insurance product, fixed or variable rate annuity, stable value account, mutual fund, certificate of deposit, money market account, self-directed brokerage account, or passbook savings account. An investment product that is in any respect different from another investment product of the same vendor is a different investment product.

(30) Investment provider--a prior plan vendor or revised plan vendor that offers an investment product in the plan.

(31) Qualified military service--a uniformed service while on active or inactive duty, including training periods. Uniformed services include the Army, Navy, Marine Corps, Air Force, Coast Guard, and Public Health Service Commission Corps, the reserve components of those services as well as training or service in the National Guard or Air National Guard and any other category of persons designated by the President in a time of war or emergency.

(32) NCUA--National Credit Union Administration, a United States Government Agency, which regulates charters and insures deposits of the nation's federal credit unions. Shares and deposits in credit unions are insured by the NCUSIF as detailed in this section.

(33) NCUSIF--National Credit Union Share Insurance Fund, is administered by the NCUA as detailed in this section and insures members' share and deposit accounts at federally insured credit unions.

(34) Non-filer--A prior plan vendor which does not ensure that the plan administrator receives a quarterly report by the due date specified in § 87.19(d)(1) of this title (relating to Reporting and Recordkeeping by Prior Plan Vendors).

(35) Non-spousal beneficiary--Any beneficiary other than a spouse or ex-spouse.

(36) Normal retirement age--A range of ages beginning with the earliest age at which a person is eligible to retire under the participant's basic pension plan as referenced in § 87.5(g) of this title (relating to Participation by Employees).

(37) One-time election form--A form completed by a participant requesting the full distribution of deferred compensation funds with a total balance that does not exceed the dollar limit under the Code §457(e)(9), EGTRRA, or the dollar limit under §411(a)(11) of the Code, if greater, as of the date that payments commence. Also known as the de minimis distribution election.

(38) Participant--A current, retired, or former employee who either has elected to defer a portion of the employee's current compensation, previously deferred compensation or has a balance in the plan.

(39) Participation agreement--A contract signed by an employee agreeing to defer the receipt of part of the employee's compensation in accordance with the plan and containing certain information regarding prior plan vendors, investment products, and other matters.

(40) Plan--The deferred compensation program of the state of Texas that is governed by the Code §457 and authorized by Chapter 609, Government Code. This plan is a continuation of the plan previously administered by the Comptroller of Public Accounts.

(41) Plan administrator--The Board of Trustees of the Employees Retirement System of Texas or its designee.

(42) Prior plan--Refers to the State of Texas 457 Deferred Compensation Plan, the vendors and products approved by the Board of Trustees of the Employees Retirement System of Texas prior to September 1, 2000.

(43) Prior plan vendor--A vendor in the prior plan with whom the plan administrator has signed a vendor contract. The term includes a prior plan vendor's officers and employees. The prior plan vendor may be an insurance company, bank, savings and loan, credit union, or mutual fund. The term applies only to vendors approved and implemented by the Board of Trustees before January 1, 2000.

(44) Product approval notice--A written notice from the plan administrator to a prior plan vendor informing the vendor that a particular investment product has been approved for participation in the plan.

(45) Product contract--A contract between an investment provider and the plan administrator concerning the participation of one of the vendor's investment products in the plan.

(46) Product type--A categorization of an investment product according to its relevant characteristics. Examples of product types are life insurance products, mutual funds, certificates of deposit, savings accounts, share accounts, stable value account, self-directed brokerage account, and annuities.

(47) Public safety employee--Any employee of a state or political subdivision who provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such state or political subdivision. It may also include a chaplain or a member of an ambulance or rescue crew. This does not include judges, Texas Department of Criminal Justice guards, probation, parole, juvenile delinquency or similar officers.

(48) Qualified investment product--An investment product concerning which the plan administrator and the sponsoring prior plan or revised plan vendor have signed a product contract.

(49) Revised plan--Refers to the State of Texas 457 Deferred Compensation Plan and the vendors and products approved by the Board of Trustees of the Employees Retirement System of Texas after August 31, 2000 for the Texa$aver program. The term "Texa$aver program" is used as it is defined in Texas Government Code § 609.502.

(50) Revised plan vendor--An insurance company, brokerage firm, or mutual fund distributor that sells investment products in the revised plan. The term includes a vendor's officers and/or employees. This applies only to vendors approved and implemented by the Board of Trustees subsequent to December 31, 1999.

(51) Separation from service--A termination of the employment relationship between a participant and the participant's employing state agency, as determined in accordance with the agency's established practice. The term excludes a paid or unpaid leave of absence.

(52) Spousal beneficiary--The current or ex-spouse of a participant who is designated to receive a participant's account balance.

(53) State agency--A board, commission, office, department, or agency in the executive, judicial, or legislative branch of state government. The term includes an institution of higher education as defined by the Education Code, § 61.003. The term shall not include the University of Texas System.

(54) Third Party Administrator (TPA)--An entity under the direction of the plan administrator that operates independently of both the employer and investment providers to perform agreed upon administrative services to a tax-deferred defined contribution plan. These tasks may include recordkeeping, preparation of participant statements, monitoring deferral limits, and other specified services.

(55) Transfer--The redemption of deferrals and investment income from a qualified investment product for investment in another qualified investment product.

(56) Trust--The deferred compensation trust fund established to hold and invest deferrals and investment income under the plan for the exclusive benefit of participants and their beneficiaries.

(57) Trustee--The Board of Trustees of the Employees Retirement System of Texas.

(58) Unforeseeable emergency distribution--A severe financial hardship of the participant resulting from: an illness or accident, loss of property due to casualty, funeral expenses or other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant.

(59) Valuation date--A point in time in which an asset is assigned a dollar value. It may be the designated time of closing (daily, last day of the calendar month, the last day of the calendar quarter, each December 31) for determination of account balances in a defined contribution plan.

(60) Vendor contract--A contract between the plan administrator and an investment provider concerning the vendor's participation in the plan.

(61) Vendor representative--An agent, independent agent, independent contractor, or other representative of a prior plan who is not an employee or officer of the vendor.

(62) 401(a)(9), §401(a)(9) and Section 401(a)(9)--These terms refer to Internal Revenue Code §401(a)(9).

(63) 457, §457 and Section 457--These terms refer to Internal Revenue Code §457.

34 Tex. Admin. Code § 87.1

The provisions of this §87.1 adopted to be effective March 28, 1991, 16 TexReg 1560; amended to be effective January 10, 1992, 16 TexReg 7743; amended to be effective November 23, 1992, 17 TexReg 7911; amended to be effective January 1, 1994, 18 TexReg 8460; amended to be effective January 5, 1996, 20 TexReg 11022; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective March 21, 1997, 22 TexReg 2513; amended to be effective February 12, 1998, 23 TexReg 1113; amended to be effective September 10, 1998, 23 TexReg 9067; amended to be effective January 10, 1999, 24 TexReg 165; amended to be effective January 5, 2003, 27 TexReg 12370;amendedtobeeffectiveSeptember11, 2003, 28 TexReg 7785; amended to be effective September 30, 2004, 29 TexReg 9204; amended to be effective May 29, 2005, 30 TexReg 3023; amended to be effective January 10, 2006, 31 TexReg 170; amended to be effective June 14, 2007, 32 TexReg 3357; amended to be effective December 31, 2007, 32 TexReg 10054