| (7) A prior plan vendor may not require a participant to withdraw some or all of the participant's deferrals and investment income so that the prior plan vendor may avoid the collateralization requirements imposed by the plan administrator. A prior plan vendor may not establish a maximum amount of deferrals that a participant may invest in the vendor's qualified investment products. (8) Notwithstanding a prior plan vendor's reinvestment of deferrals and investment income in investment products offered by the prior plan vendor's trust department or by other prior plan vendors, the deferrals and investment income are deemed invested in the vendor's qualified investment products for the purpose of this subsection. (9) The plan administrator, in its discretion, may immediately transfer under-collateralized funds plus any amount reasonably necessary to prevent future under-collateralization. The transfer shall be carried out in accordance with the procedures set forth in §87.15 of this title. The prior plan vendor may not charge the participant a fee or penalty due to a withdrawal of under-collateralized funds. (j) Collateralization by savings and loan associations. (1) This subsection applies only to a prior plan vendor that is a savings and loan association. (2) In this subsection, the term "deferred compensation information" means: (A) the amount by which the balance of each account as of the end of the previous month exceeds the amount insured by the FDIC; and (B) the number of accounts whose balances exceed the amount insured by the FDIC. (3) At the plan administrator's discretion, the plan administrator may require a prior plan vendor to report deferred compensation information and additional information to the data collection center no later than 1 p.m., central time, on a call-in day that the plan administrator considers necessary to evaluate the collateralization requirement under this subsection. (4) Once each quarter, a prior plan vendor shall furnish to the plan administrator the following information certified by its chief financial officer: (A) its current capital category as defined in the Prompt Corrective Action regulations, 12 Code of Federal Regulations, Part 325, Subpart B, i.e., well-capitalized, adequately capitalized, etc.; (B) its total capital to risk-weighted assets ratio as defined in the applicable FDIC regulations; (C) its Tier 1 capital to total book assets ratio as defined in the applicable FDIC regulations; (D) its Tier 1 capital to risk-weighted ratio; (E) its most recent call report and/or other financial report that can be used to substantiate subparagraphs (A) - (D) of this paragraph; and (F) if applicable, evidence of a waiver from the FDIC that permits the prior plan vendor to accept brokered deposits. (5) A prior plan vendor shall immediately notify the plan administrator if the prior plan vendor's capital category changes before its next call report or if its waiver from the FDIC with regard to brokered deposits expires, is revoked, or materially changes. (6) A prior plan vendor must collateralize deferrals and investment income as required by the plan administrator. If a monthly report indicates that a prior plan vendor will lose or has lost FDIC pass-through insurance, the prior plan vendor shall immediately pledge additional collateral and comply with the directives of the plan administrator. The plan administrator may suspend or expel an under-collateralized prior plan vendor in accordance with §87.21(a)(8) of this title (relating to Remedies). (7) A prior plan vendor may not require a participant to withdraw some or all of the participant's deferrals and investment income so that the prior plan vendor may avoid the collateralization requirements imposed by the plan administrator. A prior plan vendor may not establish a maximum amount of deferrals that a participant may invest in the vendor's qualified investment products. (8) Notwithstanding a prior plan vendor's reinvestment of deferrals and investment income in investment products offered by the prior plan vendor's trust department or by other vendors, the deferrals and investment income are deemed invested in the vendor's qualified investment products for the purpose of this subsection. (9) The plan administrator, in its discretion, may immediately transfer under-collateralized funds plus any amount reasonably necessary to prevent future under-collateralization. The transfer shall be carried out in accordance with the procedures set forth in §87.15 of this title. The prior plan vendor may not charge the participant a fee or penalty due to a withdrawal of under-collateralized funds. (k) Limits on account balances in credit unions. (1) This subsection applies only to a qualified vendor that is a credit union. (2) A prior plan vendor may not accept deferrals to an account if the deferrals would cause the balance of the account to exceed $250,000 (as amended), the amount insured by the National Credit Union Administration and National Credit Union Share Insurance Fund unless the vendor or participant has complied with paragraph (6) of this subsection. (3) In this subsection, the term "deferred compensation information" means: (A) the amount by which the balance of each account as of the end of the previous month exceeds $250,000 (as amended); (B) the qualified investment product in which the participant's future deferrals will be invested, in lieu of investing them in the credit union's qualified investment products. (C) the total amount by which the balances of all reported accounts exceed $250,000 (as amended). (4) Once each month, a prior plan vendor shall report deferred compensation information to the plan administrator no later than 1 p.m., central time, on a call-in day. If a prior plan vendor has no accounts that exceed $250,000 (as amended), the prior plan vendor must report that fact to the plan administrator. (5) The plan administrator shall notify the benefits coordinator for each participant whose account exceeds $250,000 (as amended). Upon receiving the notice, the benefits coordinator shall request the participant to specify in a change agreement: (A) the qualified investment product to which at least the amount in the account in excess of $250,000 (as amended) will be moved; and (B) the qualified investment product in which the participant's future deferrals will be invested, in lieu of investing them in the credit union's qualified investment products. (6) If a participant does not want funds in excess of $250,000 (as amended) transferred from the credit union, the participant may keep funds at the credit union if: (A) the credit union will pledge collateral for all funds in excess of $250,000 (as amended) in accordance with plan administrator procedures; or (B) the participant acknowledges and accepts the liability of uninsured funds through a signed statement on forms furnished by the plan administrator. (7) If a participant does not submit a change agreement to the benefits coordinator immediately after receiving a request from the participant's benefits coordinator in accordance with paragraph (5) of this subsection and if paragraph (6) of this subsection is not complied with, the benefits coordinator shall notify the plan administrator. Upon receiving the notification, the plan administrator shall: (A) initiate a transfer of the amount in the account in excess of $250,000 (as amended) in accordance with §87.15 of this title; and (B) prohibit the participant from deferring additional amounts to the prior plan vendor's qualified investment products. (l) Audits. The plan administrator may audit or cause an audit to be performed of a current or former prior plan vendor related to the vendor's participation in the plan. (m) The plan administrator may expel a prior plan vendor that fails to maintain all requirements needed to become a prior plan vendor. Such vendor may not charge or permit to be charged a fee or penalty to participants, the plan or plan administrator for the transfers made due to expulsion. |
| Source Note: The provisions of this §87.7 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 September 19, 1995, 20 TexReg 6932; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective July 10, 2000, 25 TexReg 6558; 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, 29 TexReg9204;amendedto be effective September 14, 2006, 31 TexReg 7367; amended to be effective June 14, 2007, 32 TexReg 3357; amended to be effective December 31, 2007, 32 TexReg 10054 |
