| (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.
(3) Prohibited Distribution by ORP Company. If an ORP
company provides a participant with any access to ORP funds prior
to the earlier of the participant's termination of employment with
all ORP employers or attainment of age 70-1/2, then the ORP employer,
as the plan sponsor, and the ORP company, as the trustee of the funds,
shall rectify the situation in accordance with applicable IRS procedures.
(g) ORP Employer Reports.
(1) Required Information. All ORP employers shall submit
the following information to the Board:
(A) number of ORP participants;
(B) amount of contributions sent to ORP companies;
(C) list of ORP-eligible positions; and
(D) any other information required by the Board.
(2) Annual Report.
(A) Format. The required information shall be provided
in a reporting format developed by the Board, which may include an
electronic format.
(B) Due Date. The required information shall be reported
on a fiscal year basis and shall normally be due on October 1 of each
year for the most recent fiscal year ending August 31.
(3) Additional Information as Needed. ORP employers
shall provide additional information to the Board as needed to carry
out its functions under the ORP statute, which may be in the form
of ad hoc reports, formal or informal surveys, or other format, and
may be requested in an electronic format.
(h) Required Notices to Employees.
(1) Basic Information for Newly Eligible Employees.
On or before an ORP-eligible employee's initial ORP eligibility date,
which is the first day of his or her 90-day ORP election period, each
institution shall provide the ORP-eligible employee with written introductory
information on ORP developed by the Board and titled, "An Overview
of TRS and ORP for Employees Eligible to Elect ORP."
(A) Uniform and Unbiased. The purpose of this notification
requirement is to ensure that all employees who become eligible to
elect ORP are provided general, uniform and unbiased information on
which to base their decision.
(B) Electronic Notification. An institution may meet
this notification requirement by:
(i) placing a link on its website to the Board's ORP
website;
(ii) providing the ORP-eligible employee with local
internet/intranet access to the link to the Board's ORP website; and
(iii) within the required timeframe, notifying the
ORP-eligible employee in writing of the location of the link to the
Board's ORP website.
(2) ORP Election Period Dates. Each ORP employer shall,
within 15 business days of an ORP-eligible employee's initial ORP
eligibility date, provide written notification to the ORP-eligible
employee that indicates the beginning and ending dates of his or her
ORP election period and the local procedures for submitting the election
form and additional required paperwork.
(3) Participant's ORP Responsibilities. On or before
an ORP-eligible employee's initial ORP eligibility date, which is
the first day of his or her 90-day ORP election period, each ORP employer
shall provide written notification to the ORP-eligible employee that:
(A) an election of ORP entails certain responsibilities
for the employee, including selection and monitoring of ORP companies
and investments; and
(B) the ORP employer has no fiduciary responsibility
for the market value of a participant's ORP investments or for the
financial stability of the ORP companies chosen by the participant.
(4) Possible Retiree Group Insurance Eligibility. ORP
employers shall include in their normal out-processing procedures
for terminated employees, a notification to ORP participants that
includes the following information:
(A) the participant's possible future eligibility for
retiree group insurance as an ORP retiree;
(B) the ORP employer's policies for handling certification
that an ORP participant meets the eligibility requirements for enrollment
in retiree group insurance as an ORP retiree; and
(C) for ORP employers that are covered under the group
insurance program administered by ERS, a caution to the participant
to refrain from withdrawing all of his or her ORP funds if the participant
enrolls in the group insurance program administered by ERS as an ORP
retiree or anticipates enrolling at a later date.
(D) The notification may be either general in nature
or specific to each participant.
(5) Verification of Notification Receipt. ORP employers
shall develop forms and/or procedures to carry out the notification
requirements in this subsection that provide documentation of the
employee's acknowledgement of receipt of this information, including
the date of receipt, such as a signature or electronic verification.
|
| Source Note: The provisions of this §25.6 adopted to be effective May 23, 2004, 29 TexReg 5079; amended to be effective November 28, 2005, 30 TexReg 7873; amended to be effective August 30, 2016, 41 TexReg 6484 |
