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 100 to 1 rule) qualify for 

the Optional Retirement Program as &fined in 

section 51.352(6) of the Texas Education Code? 

The Optional Retirement Program is established by section 51.353 of 

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 of the 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 70-581 dealt 

with a contract which provided for a life annuity at age 65 and a death 

benefit if the person died before retirement equal to $1,000 for each $10 of 

expected monthly annuity. The life insurance protection was deemed 

incidental when the death benefit did not exceed the 100 to 1 ratio. 

In cur opinion, an annuity contract which provides for an incidental 

death benefit as defined by Revenue Ruling 70-581 qualifies 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) 

p. 770 
Honorable Kenneth H. Ashworth - Page Two (NW-244) 

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 of the annuity are available on retirement or death. Thus, 

we believe the annuity fulfills the requirements of section 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 of present section 51.352(6) read as follows: 

optional Retirement Program’ means the optional retirement program created by this Act to provide fixed or variable 

retirement annuties, including retirement unit annuity certificates of participaton for faculty members. 

Acts 1967, 60th Leg., ch. 729, §2, at 1956. When Attorney General Opinion M-595 was 

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. We believe the 1973 amendments broadened the 

definition of “Optional Retirement Program” so that it can now include the incidental 

death benefit 

P 

ou 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) is not 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) of the Education Code. 

A 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

Prepared by Susan Garrison 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

C. Robert Heath, Chairman 

Jon Bible 

Susan Garrison 

Rich Gilpin 

Eva Loutzenhiser 

Bruce Y oungblwd 

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