| (D) Representative's ORP Knowledge. ORP employers may
require ORP companies to certify that their designated representatives
are sufficiently trained and knowledgeable about ORP, including an
understanding of the statutory distribution restrictions that must
be included in all ORP contracts.
(E) Responsibility to Correct Mistakes. ORP employers
may require a company to fully rectify, at the company's cost, any
mistakes made by a designated company representative concerning the
delivery of incorrect ORP information and any resulting problems.
(16) Solicitation Practices. Each ORP employer shall
establish the following procedures related to company solicitation
practices.
(A) Sales Presentations. Authorized representatives
shall be permitted to make sales presentations to ORP-eligible employees
on the ORP employer's premises, under the following conditions:
(i) only at the employee's request;
(ii) as a guest of the employee and ORP employer; and
(iii) in compliance with the ORP employer's applicable
policies and procedures.
(B) Prohibited Gifts. ORP company representatives shall
be prohibited from providing gifts or monetary rewards directly or
indirectly to any employee of the ORP employer for information on
newly eligible employees.
(C) Bulk Campaigning Prohibited. Authorized representatives
shall be responsible for providing appropriate sales literature and
service at locations designated by the ORP employer. Unless specifically
authorized by the ORP employer, ORP company representatives shall
be prohibited from using campus bulk mailing (including electronic
mail) or telephone campaigning.
(D) Violations. ORP employers shall reserve the right
to restrict solicitation privileges of authorized representatives
based on violations of the solicitation procedures in this paragraph
and each ORP employer's local policies and procedures.
(d) Qualified Domestic Relations Orders (QDROs).
(1) Company Responsibilities. Each ORP employer shall
ensure that all ORP contracts include a provision that the ORP company
is solely responsible for determining whether a domestic relations
order is qualified and payable in accordance with Texas Government
Code, Chapter 804. In lieu of requiring a contractual provision, ORP
employers may require companies to certify, as part of the ORP employer's
ORP company authorization process as provided in subsection (c) of
this section, that the ORP company is solely responsible for determining
whether a domestic relations order is qualified and payable in accordance
with Texas Government Code, Chapter 804.
(2) Company Interpretation. ORP employers may include
criteria relating to an ORP company's interpretation of Texas Government
Code, Chapter 804, in the ORP employer's ORP company authorization
or certification process as provided in subsection (c) of this section.
(e) Investment Advisory Fees. Participants may pay
certain investment advisory fees with tax-deferred funds in their
ORP account in accordance with the following conditions.
(1) Investment advisory fees may only be paid with
amounts in a participant's ORP account in accordance with the following
provisions.
(A) The investment advisory fees for each fiscal year
shall not exceed two percent of the annual value of the participant's
account as of the last day of that fiscal year.
(B) The fees shall be paid directly to a registered
investment advisor that provides advice to the participant.
(C) The investment advisor to whom the fees are paid
shall be registered with the Securities and Exchange Commission and
any other applicable federal or state agencies, and shall be engaged
full-time in the business of providing investment advice.
(D) The participant and the investment advisor shall
enter into a contract for a term of no more than one year. A contract
that automatically renews each year shall be considered acceptable
as long as both parties have the right to sever the relationship,
with reasonable notification, at any time.
(2) An ORP employer shall not prohibit participants
from utilizing this right and shall not restrict the payment percentage
to less than two percent.
(3) An ORP employer may include in its ORP company
authorization or certification process, as provided in subsection
(c) of this section, a provision that prohibits commissions to an
individual who also receives investment advisory fees for the same
ORP account.
(4) An ORP company may request the ORP employer to
sign a statement that investment advisory fees are permissible under
the plan to provide assurance to the company that it is releasing
ORP funds to the advisor in accordance with applicable ORP provisions.
(A) An ORP employer shall not sign the company's form
indicating that investment advisory fees are permissible under the
plan unless the ORP employer has received satisfactory documentation
that the four conditions described in paragraph (1) of this subsection
have been met.
(B) An ORP employer shall not sign a form that actually
authorizes the payments because that is a relationship between the
advisor, the participant and the company.
(f) Distribution Restrictions.
(1) Restricted Access.
(A) No Pre-Termination Access unless Age 70-1/2. ORP
participants shall not access any of their ORP funds by any means
(including partial or full withdrawals) until the earlier of the date
that they:
(i) terminate all employment with all ORP employers;
or
(ii) reach age 70-1/2 years.
(B) No Loans or Hardship Withdrawals.
(i) Loans, financial hardship withdrawals, or any other
method that provides a participant with any type of access to ORP
funds prior to the earlier of termination of employment or attainment
of age 70-1/2 shall not be permitted.
(ii) ORP products may provide for loans or hardship
withdrawals after the participant's termination of employment or attainment
of age 70-1/2, if permissible under applicable laws, regulations and
plan provisions.
(C) Previously Contributed Amounts. ORP contributions
made during prior periods of employment with the same or another ORP
employer and ORP contributions made to previously selected ORP companies
with the current ORP employer shall be under the same statutory distribution
restrictions as the contributions in the participant's current active
account.
(D) Employment Transfer is not a Termination. A participant's
transfer of employment between Texas public institutions of higher
education without a break in service, as defined in §25.3 of
this title (relating to Definitions), shall not be considered a termination
of employment for ORP purposes, unless the new position is non-benefits-eligible,
as defined in §25.5(g) of this title (relating to Employment
in a Non-Benefits-Eligible Position).
(E) Transfer of Funds is not a Termination. A transfer
of ORP funds between ORP accounts or ORP companies (contract exchange)
shall not be considered a termination of employment for ORP purposes.
(F) Simultaneous Contributions and Withdrawals. An
ORP participant shall not simultaneously make ORP contributions and
withdraw funds from ORP accounts unless that participant is at least
age 70-1/2.
(G) Documentation of Restrictions. ORP employers shall
ensure that all ORP contracts specifically contain the statutory ORP
distribution restriction provisions, which are sometimes referred
to as the ORP endorsement.
(2) Authorization to Release ORP Funds. An ORP company
shall not release any ORP funds to a participant until receipt of
notification from the participant's ORP employer that a break in service
or retirement has occurred, except when the participant has reached
age 70-1/2, in which case, the ORP company may release funds upon
verification that the participant has reached age 70-1/2. The ORP
employer's termination notification may be referred to as a vesting
letter because it indicates whether the participant has met the ORP
vesting requirement.
(A) Unvested Participants. If a participant terminates
prior to meeting the vesting requirement, the ORP employer's notification
shall include a request for the return of the participant's forfeited
ORP employer contributions, as provided in §25.6(a)(11) of this
title (relating to Forfeited ORP Employer Contributions).
(B) Vested Participants. If a participant terminates
after meeting the vesting requirement, all funds shall be available
in accordance with applicable federal law, plan provisions and contractual
provisions, but non-ORP-related early withdrawal penalties, such as
additional federal income taxes or contractual surrender fees, may
apply depending on factors such as the participant's product selection
and age at termination.
Cont'd... |
