MARK WHiTE Attorney General 

# The Attorney General of Texas September 22, 1980

Honorable Kenneth II. Ashworth Opinion No. MW-244 Commissioner Coordinating Board Re: Whether an optional retireTexas College and University System ment program annuity contract may Austin, Texas 78711 provide for incidental, death benefits
Dear Mr.Ashworth:
You have skmitted the following question for an Attorney General Opinion: May an annuity contract which provides for

“incidental” death benefits (as defined by Internal Revenue Ruling 70-581, the 100to 1rule) qualify for the Optional Retirement Program as &fined in section 51.352(6)ofthe Texas Education Code?
The Optional Retirement Program is established by section 51.353of the Education Code. “Optional Retirement ProgramV’Is defined by section 51.352(6)as:

the program under this Subchapter to provide fixed or variable retirement annuities which meet the requirements of Sections 403(b) and 401(g)of the Internal Revenue Code of 1954,as amended, and the benefits of such annuities are to be available only upon termination of employment in the Texas public institutions of higher education, retirement, death or total disability ofthe participating faculty member.
An annuity contract providing for “incidental” death benefits as defined by Revenue Ruling 70-581 is an annuity contract for purposes of section 403(b) of the Internal Revenue Code. Revenue Ruling 70-581dealt with a contract which provided for a life annuity at age 65 and a death benefit if the person died before retirement equal to $1,000for each $10of expected monthly annuity. The life insurance protection was deemed incidental when the death benefit did not exceed the 100to 1ratio.
In cur opinion, an annuity contract which provides for an incidental death benefit as defined by Revenue Ruling 70-581qualifies for the Optional Retirement Program as defined by section 51.352(6). It meets the requirements of section 403(b) of the Internal Revenue Code. Section 401(g)

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of the code &fines “annuity” for the purposes of section 403 and other sections; therefore the annuity under consideration neoessarily meets the requirements of section 401(g). The benefits ofthe annuity are available onretirement or death. Thus, webelieve the annuity fulfills the requirements ofsection 51.352(6). Attorney General Opinion M-595 (1970)construed an earlier version of section 51.352(b) as limited to retirement annuities and not including a life insurance feature. The predecessor ofpresent section 51.352(6)read asfollows:

optional Retirement Program’ means the optional retirement program created by this Act to provide fixed or variable retirement annuties, including retirement unit annuity certificates ofparticipaton for faculty members.
Acts 1967,60th Leg., ch. 729, §2, at 1956. WhenAttorney General Opinion M-595was issued, the definition of “Optional Retirement Program” did not refer to section 403(b) of the Internal Revenue Code. Nor did it state that annuity benefits might be available on the participant’s death. Webelieve the 1973amendments broadened the definition of “Optional Retirement Program” so that it can now include the incidental death benefit Pou inquire about. construction Acts 1973, 63d Leg., ch. 52!, Sl, at 1308. The

o the term “Optional Retirement Program” given m Attorney General Opinion M-595 (1970)isnot applicable to the amended definition. SUMMARY
An annuity contract which provides for incidental death benefits as &fined in Internal Revenue Ruling 70-581 qualifies for the Optional Retirement Program as &fined in section 51.352(6)ofthe Education Code. A

MARK WHITE Attorney General ofTexas JOHN W.FAINTER, JR. First Assistant Attorney General Prepared bySusan Garrison Assistant Attorney General APPROVED: OPINION COMMITTEE C. Robert Heath, Chairman Jon Bible Susan Garrison Rich Gilpin Eva Loutzenhiser Bruce Youngblwd

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