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OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AlJSTlN 

Honorable John S. Rudd, JP., Acting Director 

Tecoher Retirement System of Texas 

Aus tin, Texas 

Deer Sir: Opinion Bo. O-4071 

Rer Optional selection of service 

retirement benefit6 under 

Teacher Retirement Act. 

We have reoeived your letter of recent data in which 

you aek the opinion of thla department as to the propor interpretation Of SUb6eotlOn,i', Section 5, of the Teacher Retliwment 

Act (Article 2922-1, Vernon16 Annotated Civil Statutes). Such 

Pl’OViEiOll IWAd in m3?t 66 fO11OUEl 

"With the provislon that no,optional aeleotlon 

Shall be 8ffeCtiV8 in oa6e a beneficiary diea.vlthln 

thirty (30) days after retirement, ma that such 8 

beneficiary shall be considered a6 an active member 

at the time of death, until the first payment on account of any eervlce benefit beCOme normally due, 

any member may eleot to reoeive his membership snnuity In an annuity payable throughout life, or he 

may eleot to receive the actuarial equivslent at thst , 

time, of hi6 membership annuity in a r8dUoed member6hip annuity payable throughout life vith the provi6iOIl that; 

"Option (1) Upon hi6 death, his reduoed mmbership annuity ehall be COntinUed throughout the life 

of, and paid to, 6uoh ger6On a6 he Sha11 nC66iiIat.e by 

written deEi@XLtiOn duly acknowledged and flled vith 

the State Board of Trustees at the time of.his retirement; or 

"Option (2). Upon his death, one4alf of his ceduced membership annuity shall be continued through the 

life of, and paid to, such person as he shall nominate 

by written dealgnation duly aoknowledged and filed tith 

the State Board of Trustees at the time of his retirement: or 
Honorable John 9. Rudd, Jr., Pse 2 

"Option (3). Some other benefit or benefit.6 

shall be paid either to the member, or to euch per6on 

or persona as he shall nominate, provided such other 

benefit or benefits, together with the reduced membership annuity, shall be certified by the actuary to 

be of equivalent actuarial value to his membership 

annuity, and approved by the State Board of Trustees.' 

Pou wish to know whether this provieion me.sns that in 

the event a retired member fsils to file a duly executed eleotlon _ 

of the manner in which he de6iP66 his annuity to be paid by the 

time the flrat mohthly payment under such membership annuity 16 

due, such beneficiary's membership annuity shall automatically 

become an annuity payable throughout life, and the beneflolary 

shall not thereafter have the right to elect any other option. 

If ue answer this question in the negative, .you vant to know 

vhether the Teacher Retirement Board may pa66 a regulation to 

the e6m8 affect. 

At first glance It would appear that the retired member 

murrt We s positive election before the first psyment beoomes 

due. But we do not believe that this was the legislative intent. 

A reading of the provlelons of Article III, Seatlon 488, 

Constitution of Texas, and the entire Tesdher Retirement Act convinces un that the normal mode of payment of 6n annuity la to the 

teacher himself on a monthly basis. The object of the act, primarily at least, is for the benefit and protection of the teacher 

himself after his retirement. The optional provision6 deal with 

the payment of a reduced annuity to the retired member and ,to 

such other person as such member de6ignateE. We believe that then 

optional selections are the exceptions from the general rule that 

the annuity la payable to the retired member throughout hla life. 

We alao believe that the retired member by silence indicates his 

election to receive his annuity as one payable throughout hi6 

life. 

The language is that "until the first payent on sccount of any service benefit becomes normally due, the member 

may elect to receive his membership annuity in 6.n annuity payable 

throughout life, or he mey elect to receive the actuarial equivalent of his membership in a reduced membership annuity payable 

throughout life with one of the options. 

in equal monthly installments. 

The a:;;~, i~~gyy;;;, . 

Sec. 1, Subsets. 
Honorable John 3. Rudd, Jr. Page 3 

me tLme given by the statute to select an option if the retired 

member desires to do so la "until the first payment . . . becomea 

normally due." It la veil settled that an option muat be accepted within the time specified or the aooeptance vi11 be Ineffective. 

In 10 Tex. Jur. 59, it is said? 

"Time is generally regarded as being of the 

eseence of option contracts, and the option must be 

ac6epted.vlthl.n the time preecribed unless a provielon limiting the time has been valved." 

.Therefore, under the statute the selection of the option must be 

before the firat payment becomes nomally due. 

It foflovs from vhat ve have said that vhere a beneflolary fulls to elect the muu~er in vhloh he desires his annuity to be paid by the time his first monthly payment 18 due, 

hi8 Cmnu1t.g shall be psld 68 an 6nrnl1tg payable throughout lire. 

While the language ueed Is certainly susceptible to the interpretatlon which ve have given, ve vould advise the Teacher Retirement Board t0 pa88 a BSgLIlatlOIi tO'the z+aLue effect a0 that til 

doubt vi>1 be eliminated. 

Yours very truly