Section 87.19 - Reporting and Recordkeeping by Prior Plan Vendors(a) Definition of current market value. In this section, the term "current market value" has the following meanings. (1) For an investment in a qualified investment product offered by a bank, credit union, or savings and loan association, current market value means the amount of deferrals plus investment income minus withdrawals minus applicable fees.(2) For an investment in a mutual fund, current market value means the price of each share at the end of the calendar quarter multiplied by the number of shares purchased with deferrals and investment income minus applicable fees.(3) For an investment in a term life insurance product, the current market value is usually zero.(4) For an investment in a life insurance product, current market value means the cash value of the product minus applicable fees.(5) For an investment in an annuity, current market value equals the amount of deferrals plus investment income minus payouts minus applicable fees. For annuitized accounts, current market value means the present value of all remaining payments, taking into consideration the prevailing statutory interest rates pursuant to the Texas Insurance Code, Article 3.28.(b) Reports to participants or beneficiaries. (1) Generally. (A) A prior plan vendor shall issue a report after the end of each calendar quarter to each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the prior plan vendor, except if the investment is in a product that is annuitized.(B) The report shall cover all transactions during a calendar quarter.(C) A prior plan vendor shall ensure that the participant or beneficiary receives the report no later than the 45th day after the end of each calendar quarter.(D) The report must show for each qualified investment product: (i) the amount of the participant's or beneficiary's deferrals and investment income in the product, including transfers;(ii) the amount of applied product costs or surrender charges;(iii) the date and amount of withdrawals during the reporting period; and(iv) the current market value of the participant's or beneficiary's deferrals and investment income.(2) Investments in life insurance products. The requirements of the preceding paragraph apply to investments of deferrals and investment income in life insurance products except: (A) the report is due at least once each calendar year instead of after each calendar quarter; and(B) the period covered by the report may be either the calendar year or the product year.(3) Final reports. If a participant or beneficiary receives a lump-sum distribution, the prior plan vendor or TPA from whom the lump-sum distribution is made shall issue a final report to the participant or beneficiary containing the information required in paragraph (1) of this subsection. The report must accompany the lump-sum distribution.(c) Capital category reports. Once each quarter, or more frequently if appropriate, a prior plan vendor which is a bank or savings and loan association shall report to the plan administrator that financial information regarding capital categories and risk-based ratios described in § 87.7(i) and (j) of this title (relating to prior plan vendor participation).(d) Reports and remittance to the plan administrator. (1) Frequency and coverage of reports and payment of fees. Every vendor in the prior plan that has participant or beneficiary deferrals, and/or investment income, must ensure that the plan administrator receives a report no later than the 15th day after the end of each calendar quarter. The fiscal year end report must include transactions for July and August. Every prior plan vendor must also remit any fees assessed to it by the plan administrator, no later than the 15th day after the end of each quarter. Every vendor must ensure that the plan administrator receives a special report at the end of the fiscal year (August 31st), no later than fifteen days past fiscal year end - September 15th, in addition to the normal quarterly reporting schedule. The report must be in the format specified in this subsection and must cover all transactions during the calendar quarter.(2) Content of reports. For each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the vendor, the report required by this subsection must contain but is not limited to: (A) the participant's or beneficiary's name, agency code and social security number(s);(B) a list of the qualified investment products in which the participant's or beneficiary's deferrals and investment income have been invested;(C) the amount of monthly deferrals for the reporting period separated and listed per month;(D) the interest and other income earned or lost during the reporting period through the investment of the deferrals and investment income;(E) the amount of federal income tax withheld during the reporting period;(F) the current market value of each participant's or beneficiary's deferrals and investment income in each qualified investment product, including, if appropriate, the number of shares and per share market value;(G) the amount of fees that the prior plan vendor charged during the reporting period;(H) the amount transferred in and out as a result of a change of product within a company, identified separately by each internal transfer;(I) the amount of each plan administrator directed transfer in or out; and(J) the amount of each separate net distribution to the participant or beneficiaries, except that multiple payments that fall on the same day should be combined into one account for quarterly reporting purposes.(K) a report specifying how the fees assessed to the prior plan vendor by the plan administrator were calculated and the asset base on which the fee was based.(3) Format of reports. (A) All reports must be in the format prescribed by the plan administrator and follow the DCP quarterly reporting specifications on a: (i) 5 1/4 or 3 1/2 inch high quality PC diskette;(iii) electronic file transfer - use of file transfer protocol (FTP), via the Internet or as an attachment to an electronic mail (E-mail).(B) Only prior plan vendors with less than fifty participants are eligible to report on a manual form.(C) Before a prior plan vendor may use a medium other than a manual form to file a quarterly report with the plan administrator, the vendor must submit a written request along with an electronic transfer file, or diskette to the plan administrator. The ERS must approve and make arrangements with the prior plan vendor prior to testing the electronic file transfer. The electronic transfer file, or diskette must be in the format and contain the information prescribed by the DCP reporting specifications and contain the information that the plan administrator requires including the items listed in paragraph (d)(2)(A) - (J) of this subsection. Failure to submit data in the specified format will result in the return of the media without processing. If the plan administrator determines that the electronic transfer file or diskette is inadequate, the plan administrator shall ensure that the number of participants whose deferrals and investment income are invested at any given time in the vendor's qualified investment products does not exceed 49.(D) The product types must be defined and coded as prescribed by the plan administrator and as in the DCP quarterly reporting specifications.(E) If a participant or beneficiary has invested deferrals and investment income in two or more qualified investment products offered by the same prior plan vendor and the products are of the same type, then the prior plan vendor must report a cumulative total of those deferrals and investment income.(4) A prior plan vendor that fails to submit to the plan administrator any required report with an authorized signature or the assessed fee will be subject to formal reprimand. After two formal reprimands, a vendor may be expelled from the plan and subject to further liability as applicable.(5) Late reports and/or fee payment. (A) A report or fees are delinquent if the plan administrator receives the report and/or fees after the due date.(B) A report or fees that are received before the due date but which are returned to the vendor for completion or correction are delinquent if the plan administrator does not receive the completed or corrected version of the report or correct amount of fees within 10 days after the original due date.(e) Recordkeeping. A prior plan vendor shall retain records concerning investments in each qualified investment product by each participant. The records must be retained until the expiration of the second year after the prior plan vendor has distributed all the participant's deferrals and investment income.(f) Quarterly reconciliation. In accordance with § 87.3(b)(3)(H) of this title (relating to Participation by State Agencies), a benefits coordinator may be responsible for balancing participant and beneficiary records and reconciling those records with the data provided by qualified vendors and the plan administrator. Prior plan vendors shall assist the plan administrator and state agencies with correcting and explaining any discrepancies. Failure to assist the plan administrator and state agencies with this reconciliation will be considered a rules violation, and the plan administrator may take appropriate action under § 87.21 of this title (relating to Remedies).34 Tex. Admin. Code § 87.19
The provisions of this §87.19 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 November 9, 1994, 19 TexReg 8617; amended to be effective January 5, 1996, 20 TexReg 11022; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective December 8, 1997, 22 TexReg 11718; amended to be effective January 5, 2003, 27 TexReg 12370; amended to be effective September 11, 2003, 28 TexReg 7785; amended to be effective September 30,2004,29TexReg 9204; amended to be effective May 29, 2005, 30 TexReg 3023; amended to be effective September 14, 2006, 31 TexReg 7367; amended to be effective December 31, 2007, 32 TexReg 10054