CHAPTER 830. OPTIONAL RETIREMENT PROGRAM - Texas Statutes

GOVERNMENT CODE

TITLE 8. PUBLIC RETIREMENT SYSTEMS

SUBTITLE C. TEACHER RETIREMENT SYSTEM OF TEXAS

CHAPTER 830. OPTIONAL RETIREMENT PROGRAM

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 830.001. PURPOSE OF CHAPTER. The purpose of this chapter

is to establish a complete retirement program for faculty members

employed in state-supported institutions of higher education as

an incentive that will attract high quality faculties and thereby

improve the level of education at state-supported colleges and

universities.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.001 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989.

Sec. 830.0011. DEFINITION. Notwithstanding Section 821.001, in

this chapter "retirement system" means the Teacher Retirement

System of Texas or the Employees Retirement System of Texas, as

the context requires.

Added by Acts 1995, 74th Leg., ch. 586, Sec. 33, eff. Aug. 28.

1995.

Sec. 830.002. OPTIONAL RETIREMENT PROGRAM. (a) The optional

retirement program established as provided by this subtitle shall

provide for contributions to any type of investment authorized by

Section 403(b) of the Internal Revenue Code of 1986 (26 U.S.C.

Section 403), as it existed on January 1, 1981, and for the

purchase of fixed or variable retirement annuities that meet the

requirements of that section and Section 401(g) of the Internal

Revenue Code of 1986 (26 U.S.C. Section 401).

(b) Participation in the optional retirement program is an

alternative to active membership in the retirement system.

(c) The Texas Higher Education Coordinating Board shall develop

policies, practices, and procedures as necessary in accordance

with applicable statutes to provide greater uniformity in the

administration of the retirement annuity insurance program

available to employees of Texas state colleges and universities

through the optional retirement program.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 207, ch. 18,

Sec. 35, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 36.002 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg.,

ch. 242, Sec. 11.117, eff. Sept. 1, 1991.

Sec. 830.003. APPLICATION. In this chapter, the term

"institution of higher education" includes the Texas Higher

Education Coordinating Board, the Texas State Technical College

System, and the institutions defined in Section 821.001(10), but

excludes the Rodent and Predatory Animal Control Service.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.003 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 287, Sec. 31,

eff. Sept. 1, 1991.

Sec. 830.004. ADMINISTRATION. (a) A governing board may

provide for contributions to any type of investment authorized by

Section 403(b) of the Internal Revenue Code of 1986 (26 U.S.C.

Section 403), as it existed on January 1, 1981, and may arrange

the purchase of annuity contracts from any insurance or annuity

company that is qualified to do business in this state.

(b) If a governing board has more than one component

institution, agency, or unit under its jurisdiction, the

governing board may provide a separate optional retirement

program for each component or may place two or more components

under a single program.

(c) An institution of higher education may establish a

governmental excess benefit arrangement as provided by Section

415(m) of the Internal Revenue Code of 1986 (26 U.S.C. Section

415(m)) for the purpose of providing to participants in the

optional retirement program any portion of a participant's

benefits that would otherwise be payable under the terms of the

program except for the limitation on benefits imposed by Section

415 of the Internal Revenue Code of 1986 (26 U.S.C. Section 415).

The governing board of an institution of higher education may

take any action necessary to establish and implement a

governmental excess benefit arrangement authorized in accordance

with this subsection.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 208, ch. 18,

Sec. 36, eff. Nov. 10, 1981. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 36.004 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1997, 75th Leg.,

ch. 697, Sec. 1, eff. June 17, 1997.

Sec. 830.005. EXEMPTION FROM TAXES. If qualified to do business

in this state, a life insurance or annuity company is exempt from

the payment of franchise or premium taxes on annuity or group

insurance policies issued under a benefit program authorized and

at least partly paid for by the governing board of an institution

of higher education or the Texas Education Agency.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.005 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1991, 72nd Leg., ch. 391, Sec. 73, eff.

July 1, 1991; Acts 1997, 75th Leg., ch. 165, Sec. 6.24, eff.

Sept. 1, 1997.

Sec. 830.006. REPORTS FROM INSTITUTIONS. (a) The governing

board of each institution of higher education, other than the

Texas Higher Education Coordinating Board, shall annually submit

a report to the coordinating board that includes information

concerning the number of participants and eligible positions and

the amount of contributions.

(b) The governing board of each institution required to file a

report under Subsection (a) shall keep records, make

certifications, and furnish to the Texas Higher Education

Coordinating Board information and reports as required by the

coordinating board to enable it to carry out its functions under

this subtitle.

(c) The Texas Higher Education Coordinating Board shall prepare

the report required by Subsection (a) and shall maintain the

information required by Subsection (b) with respect to its own

employees.

Added by Acts 1991, 72nd Leg., ch. 242, Sec. 11.118, eff. Sept.

1, 1991.

SUBCHAPTER B. PARTICIPATION

Sec. 830.101. ELIGIBILITY TO PARTICIPATE. (a) The governing

board of each institution of higher education shall provide an

opportunity to participate in the optional retirement program to

all faculty members in the component institutions governed by the

board. The State Board of Education shall provide an opportunity

to participate in the optional retirement program to the

commissioner of education.

(b) Eligibility to participate in the optional retirement

program is subject to rules adopted by the Texas Higher Education

Coordinating Board.

(c) A person who before September 1, 1987, had chosen to

participate in the optional retirement program and who was

participating in the program on September 1, 1987, is entitled to

continue to participate in the program until the person

terminates participation as provided by Section 830.105(a).

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 58, Sec. 2,

eff. Oct. 20, 1987. Renumbered from Vernon's Ann.Civ.St. Title

110B, Sec. 36.101 and amended by Acts 1989, 71st Leg., ch. 179,

Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch.

391, Sec. 74, eff. July 1, 1991.

Sec. 830.102. OPTION TO PARTICIPATE. (a) A member of the

retirement system who is eligible to participate in the optional

retirement program may elect to continue as a member of the

retirement system or to participate in the optional retirement

program.

(b) A person eligible to participate in the optional retirement

program on the date the program becomes available at the person's

place of employment must elect to participate in the program no

later than August 1 of the calendar year after the year in which

the program becomes available.

(c) A person who becomes eligible to participate in the optional

retirement program after the date the program becomes available

at the person's place of employment must elect to participate

before the 91st day after becoming eligible.

(d) An eligible person who does not elect to participate in the

optional retirement program is considered to have chosen to

continue membership in the retirement system.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.102 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989.

Sec. 830.103. EFFECT OF TRANSFERS AND CHANGES IN EMPLOYMENT

STATUS. (a) An institution of higher education shall accept the

transfer of a participant's optional retirement program from

another institution of higher education or from the Texas

Education Agency. The Texas Education Agency shall accept the

transfer of a participant's optional retirement program from an

institution of higher education if the participant becomes

commissioner of education.

(b) If, after participating in the optional retirement program

for at least one year, a person becomes employed in an

institution of higher education in a position normally covered by

the retirement system, the person shall continue participation in

the optional retirement program if the person has had no

intervening employment in the public schools other than as

commissioner of education or a position in an institution of

higher education.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.103 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1991, 72nd Leg., ch. 391, Sec. 75, eff.

July 1, 1991; Acts 1997, 75th Leg., ch. 165, Sec. 6.25, eff.

Sept. 1, 1997.

Sec. 830.104. WITHDRAWAL OF CONTRIBUTIONS TO THE RETIREMENT

SYSTEM. (a) A person who is a participant in the optional

retirement program may withdraw accumulated contributions from

the retirement system.

(b) An application to withdraw contributions under this section

must be in writing and on a form prescribed by the board of

trustees.

(c) Before the first anniversary of the date an application is

received, the retirement system shall pay a withdrawing member

the member's accumulated contributions.

(d) A person who withdraws contributions under this section

relinquishes all accrued rights in the retirement system.

(e) Nothing in Section 830.105 precludes the election by a

participant to withdraw accumulated contributions under this

section.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.104 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989.

Sec. 830.105. TERMINATION OF PARTICIPATION. (a) A person

terminates participation in the optional retirement program,

without losing any accrued benefits, by:

(1) death;

(2) retirement; or

(3) termination of employment in all institutions of higher

education.

(b) A change of company providing optional retirement program

benefits or a participant's transfer between institutions of

higher education is not a termination of employment.

(c) The benefits of an annuity purchased under the optional

retirement program are available only if the participant obtains

the age of 70-1/2 years or terminates participation in the

program as provided by Subsection (a).

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 208, ch. 18,

Sec. 37, eff. Nov. 10, 1981; Acts 1987, 70th Leg., ch. 173, Sec.

1, eff. Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title

110B, Sec. 36.105 and amended by Acts 1989, 71st Leg., ch. 179,

Sec. 1, eff. Sept. 1, 1989.

Sec. 830.106. ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP. A

participant in the optional retirement program is not eligible

for membership in the retirement system unless the person:

(1) terminates employment covered by the optional retirement

program; and

(2) becomes employed in the public school system or with a state

agency in a position that is not eligible for participation in

the optional retirement program.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.106 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1995, 74th Leg., ch. 586, Sec. 34, eff.

Aug. 28, 1995.

Sec. 830.107. INVESTMENT ADVISORY FEES. (a) A participant in

the optional retirement program may authorize the payment of

investment advisory fees from the amount in the participant's

custodial account or annuity if:

(1) the investment advisory fees for each fiscal year do not

exceed two percent of the annual value of the participant's

custodial account or annuity as of the last day of that fiscal

year;

(2) the fees are paid directly to a registered investment

advisor that provides investment advice to the participant;

(3) the investment advisor to whom the fees are paid is

registered with the Securities and Exchange Commission under the

Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.)

and is engaged full-time in the business of providing investment

advice;

(4) the participant and the investment advisor enter into a

contract, for a term of no more than one year, for services that

provides for the payment of fees as provided by this section; and

(5) the attorney general has received an official determination

from the Internal Revenue Service that payment of investment

advisory fees as prescribed by this section is not a distribution

of funds that is prohibited or subject to taxation and penalty

under the Internal Revenue Code.

(b) The attorney general shall request an official determination

from the Internal Revenue Service concerning whether the payment

of investment advisory fees as prescribed by this section is a

distribution of funds that is prohibited or subject to taxation

and penalty under the Internal Revenue Code. If the attorney

general receives an official determination from the Internal

Revenue Service as specified by this subsection, the attorney

general shall file the official determination with the secretary

of state's office for publication in the Texas Register.

Added by Acts 1991, 72nd Leg., ch. 16, Sec. 11.07(a), eff. Aug.

26, 1991.

SUBCHAPTER C. CONTRIBUTIONS AND BENEFITS

Sec. 830.201. CONTRIBUTIONS. (a) Each fiscal year the state

shall contribute to the optional retirement program an amount

equal to 8-1/2 percent of the aggregate annual compensation of

all participants in the program during that year. A participant

in the optional retirement program shall contribute to the

program 6.65 percent of the person's annual compensation.

(b) Contributions required by this section shall be credited to

the benefit of the participant.

(c) In this section, "annual compensation" has the meaning

assigned to that term by Section 821.001(4).

(d) For a person who first became a participant in the optional

retirement program beginning after August 31, 1996, the

compensation limitation of Section 401(a)(17), Internal Revenue

Code of 1986 (26 U.S.C. Section 401), applies.

(e) For a person who first became a participant in the optional

retirement program before September 1, 1996, the compensation

limitation under Section 401(a)(17), Internal Revenue Code (26

U.S.C. Section 401), does not apply. For these persons, the

amount of compensation allowed to be taken into account under the

plan shall be the amount allowed to be taken into account as of

July 1, 1993.

(f) Subsection (e) of this section does not apply to a person

whose compensation in excess of the compensation limitation of

Section 401(a)(17), Internal Revenue Code (26 U.S.C. Section

401), or whose state retirement contribution under this

subchapter, is paid from general revenue funds or any student

tuition or fee assessed under Chapters 54 or 55, Education Code.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1985, 69th Leg., ch. 228, Sec. 5, eff.

Sept. 1, 1985. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 36.201 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 736,

Sec. 2, eff. June 15, 1995.

Sec. 830.2015. SUPPLEMENTAL CONTRIBUTIONS FROM INSTITUTIONS OF

HIGHER EDUCATION. (a) Each fiscal year, the governing board of

an institution of higher education may make a contribution to the

optional retirement program as provided by this section. The

governing board may use any source of funds for the contribution.

(b) A contribution under this section may be any amount that is

equal to or less than the difference between the amount the state

is required to contribute under Section 830.201 to the benefit of

each participant employed by the institution of higher education

and the amount the state appropriates for that purpose.

(c) The governing board of an institution of higher education

may contribute an amount under this section to the benefit of a

participant employed by an institution of higher education on or

before August 31, 1995, that is different from the amount the

governing board contributes to the benefit of a participant

employed by an institution of higher education after that date.

Added by Acts 2003, 78th Leg., ch. 418, Sec. 1, eff. June 20,

2003.

Sec. 830.202. COLLECTION AND DISBURSEMENT OF CONTRIBUTIONS. (a)

The contributions of participants in the optional retirement

program shall be made by salary reduction pursuant to an

agreement made under Section 830.204.

(b) The comptroller of public accounts shall pay the state's

contributions to the optional retirement program to the

appropriate institutions of higher education and, if applicable,

to the Texas Education Agency.

(c) The disbursing officer of an institution of higher education

and, if applicable, of the Texas Education Agency shall pay the

contributions collected under this section to a company providing

an optional retirement program for that institution not later

than the third business day after the date the funds become

legally available. If possible, the disbursing officer shall send

the state's contributions and the participants' contributions

together, and otherwise shall send the participants'

contributions at the time of withholding and the state's

contributions on receipt from the comptroller. This subsection

does not apply to a supplemental payroll. This subsection applies

only to a currently authorized company or a company with at least

50 participants at the institution.

(d) An institution of higher education and, if applicable, the

Texas Education Agency shall certify to the comptroller, in the

manner provided for estimate of state contributions to the

retirement system, estimates of funds required for the payments

by the state under this section.

(e) The disbursing officer of an institution of higher education

and, if applicable, of the Texas Education Agency, shall:

(1) send contributions to a company providing an optional

retirement program for the institution by electronic transfer if

the institution is currently able to send funds by electronic

transfer; or

(2) certify to the Texas Higher Education Coordinating Board

that the company is unable to receive funds by electronic

transfer and send contributions by paper check.

(f) The company shall allocate and credit the contemporaneous

deposit to each participant's account on the receipt of the

electronic funds transfer and the electronic information on the

amount to be allocated and credited to each participant's

account. A company who violates this section shall become

ineligible for certification as a company eligible to provide an

optional retirement program.

(g) At least once each fiscal year, an institution of higher

education and the Texas Education Agency shall give notice to

each participant in the optional retirement program at the

institution or agency indicating which companies are unable to

receive funds by electronic transfer.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 173, Sec. 2, eff. Aug.

31, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.202 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 391, Sec. 76,

eff. July 1, 1991; Acts 1997, 75th Leg., ch. 165, Sec. 6.26, eff.

Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1359, Sec. 1, eff. Sept.

1, 1997.

Sec. 830.203. COLLECTION OF CONTRIBUTIONS FROM NONEDUCATIONAL

AND GENERAL FUNDS. (a) In this section:

(1) "General academic teaching institution" has the meaning

assigned by Section 61.003, Education Code.

(2) "Medical and dental unit" has the meaning assigned by

Section 61.003, Education Code.

(3) "Noneducational and general funds" means all funds of an

institution of higher education except those funds used as a

method of financing for an institutional appropriation in the

General Appropriations Act or dedicated by the Constitution of

the State of Texas.

(b) The governing board of each general academic teaching

institution and the governing board of each medical and dental

unit shall reimburse the state, from noneducational and general

funds of the institution or unit, for state contributions that

are made based on any portion of an optional retirement program

participant's salary that is paid from the noneducational and

general funds.

(c) The designated disbursing officer of each general academic

teaching institution and the designated disbursing officer of

each medical and dental unit shall submit to the retirement

system, at a time and in the manner prescribed by the retirement

system, a monthly report containing:

(1) the name of each optional retirement program participant

employed by the institution or unit who, for the most recent

payroll period, was paid wholly or partly from noneducational and

general funds;

(2) the amount of the employee's salary for the most recent

payroll period that was paid from noneducational and general

funds;

(3) a certification of the total amount of employer

contributions due under this section for the payroll period; and

(4) any other information the retirement system determines is

necessary to administer this section.

(d) A monthly report required under Subsection (c) shall be

accompanied by payment of the amount certified under Subdivision

(3) of that subsection.

(e) After the end of each fiscal year, the retirement system

shall report to the comptroller of public accounts and the State

Auditor the name of any general academic teaching institution and

any medical and dental unit delinquent in the reimbursement of

contributions under this section for the preceding fiscal year

and the amount by which each reported institution or unit is

delinquent.

(f) Any portion of the reimbursement required under this section

to be made for a fiscal year by a general academic teaching

institution or a medical and dental unit that remains unpaid on

the first day of the next fiscal year accrues interest, beginning

on that day or the due date for the portion, whichever is later,

at an annual rate, compounded monthly, equal to the rate

established under Section 825.313(b)(1), plus two percent.

(g) The retirement system shall submit all money it receives

under this section to the comptroller of public accounts for

deposit in the general revenue fund.

Added by Acts 1985, 69th Leg., ch. 99, Sec. 2, eff. Sept. 1,

1985. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.2021 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989. Amended by Acts 1999, 76th Leg., ch. 1118,

Sec. 11, eff. Sept. 1, 1999.

Sec. 830.204. SALARY REDUCTION AGREEMENT. (a) A participant in

the optional retirement program and either the employing

institution of higher education or, as applicable, the Texas

Education Agency, acting through its governing board, shall

execute an agreement under which the salary of the participant is

reduced by the amount of the contribution required under Section

830.201 and under which the employer or agency contributes an

amount equal to the reduction for any type of investment

authorized in Section 403(b) of the Internal Revenue Code of 1986

(26 U.S.C. Section 403) or toward the purchase of an annuity

under the program.

(b) An agreement under this section is irrevocable until the

earlier of the time:

(1) the participant ceases participation in the optional

retirement program; or

(2) it is determined by the Internal Revenue Service or by

legislative enactment that the contributions of participants to

the optional retirement program are elective deferrals within the

meaning of Section 402 of the Internal Revenue Code of 1986 (26

U.S.C. Section 402).

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 208, ch. 18,

Sec. 38, eff. Nov. 10, 1981; Acts 1987, 70th Leg., ch. 173, Sec.

3, eff. Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title

110B, Sec. 36.203 and amended by Acts 1989, 71st Leg., ch. 179,

Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch.

391, Sec. 77, eff. July 1, 1991; Acts 1997, 75th Leg., ch. 165,

Sec. 6.27, eff. Sept. 1, 1997.

Sec. 830.205. BENEFITS. Benefits in the optional retirement

program vest in a participant after one year of participation in

one or more optional retirement plans operating under this

chapter.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

36.204 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1991, 72nd Leg., ch. 391, Sec. 78, eff.

July 1, 1991.