Texas Administrative Code › Title 19 - EDUCATION › Part 1 - TEXAS HIGHER EDUCATION COORDINATING BOARD › Chapter 25 - OPTIONAL RETIREMENT PROGRAM › Subchapter A - OPTIONAL RETIREMENT PROGRAM › Section 25.6 - Uniform Administration of ORP

Current through Reg. 49, No. 28; July 12, 2024
(a)
				  Contributions.
(1) Tax-Deferred. All ORP
				  contributions shall be made on a tax-deferred basis.
(2) IRS Limits on Defined Contributions.
				  Contributions to a participant's ORP account shall not exceed the maximum
				  amount allowed under §415(c) of the Internal Revenue Code of 1986, as
				  amended.
(A) 415(m) Plan. Institutions are
				  authorized by the ORP statute to establish a plan authorized under §415(m)
				  of the Internal Revenue Code of 1986, as amended, for a participant's ORP
				  contributions that exceed the 415(c) limit.
(B) Stopping ORP Contributions. In the
				  absence of a 415(m) plan, an ORP employer shall discontinue ORP contributions
				  for participants who reach the 415(c) limit for the remainder of the applicable
				  tax year.
(C) Interaction with
				  TSA/TDA Program. An employee's contributions under the voluntary supplemental
				  Tax-Sheltered Annuity/Tax-Deferred Account Program shall be included in the
				  415(c) limit.
(3) No
				  Co-Mingling of ORP and non-ORP Funds.
(A) No
				  Non-Texas ORP Funds. No non-Texas ORP funds, including any withdrawn TRS member
				  contributions, may be rolled over or transferred to an ORP account prior to the
				  participant's termination of ORP participation.
(B) No TSA/TDA Funds. Amounts that have been
				  contributed by the participant through the Tax-Sheltered Annuity/Tax-Deferred
				  Account Program may not be rolled over or transferred to an ORP account prior
				  to the participant's termination of ORP participation.
(C) Texas ORP Contract Required. ORP
				  contributions may only be made to a contract that is authorized by the
				  participant's current ORP employer for Texas ORP contributions, even if the
				  participant already has a contract with a company from a prior period of
				  employment with another employer, whether a Texas ORP employer or
				  not.
(4) No Dual
				  Contributions. A contribution to the applicable retirement system and to an ORP
				  company within the same calendar month shall not be permitted, except when a
				  person terminates employment in a position covered by the applicable retirement
				  system and, prior to the end of the calendar month in which the termination
				  occurs, becomes employed in an ORP-eligible position at a different ORP
				  employer and elects to participate in ORP by signing and submitting the TRS 28
				  ORP election form (or its successor) or, for employees of the Board, the ORP
				  election form provided by the Board, on a date that results in an ORP
				  participation start date that is prior to the end of that same calendar month,
				  as provided in §
											25.4(g)
				  of this title (relating to Participation Start Date).
(5) Eligible Compensation.
(A) Definition. For purposes of determining
				  the amount of a participant's ORP contribution, institutions shall use the same
				  definition of eligible compensation that is used for TRS members in §
												821.001 of the Texas
				  Government Code.
(B) IRS Limits.
				  The maximum amount of salary that can be taken into account for ORP purposes
				  shall not exceed the limits established by §401(a)(17) of the Internal
				  Revenue Code of 1986, as amended. An individual who first participated in ORP
				  prior to September 1, 1996, regardless of a subsequent break in service, shall
				  qualify for the "grandfathered" rate established by IRC
				  §401(a)(17).
(C) Stopping ORP
				  Contributions. An ORP employer shall discontinue ORP contributions for
				  participants who reach the 401(a)(17) limit for the remainder of the applicable
				  tax year.
(6)
				  Contribution Rates. The amount of each participant's ORP contribution shall be
				  a percentage of the participant's eligible compensation as established by the
				  ORP statute and the General Appropriations Act for each biennium. Each
				  contribution shall include an amount based on the employee rate and an amount
				  based on the employer rate.
(A) Employee
				  Rate. The employee contribution rate shall neither exceed nor be less than the
				  rate established in the ORP statute for employee contributions.
(B) Employer Rate. The employer contribution
				  rate shall consist of a state base rate (minimum), as established each biennium
				  in the General Appropriations Act, and an optional supplemental rate, as
				  provided in subparagraph (C) of this subsection.
(C) Supplemental Employer Rate. Institutions
				  may provide a supplement to the state base rate under the following conditions:
(i) Amount of Supplemental Rate. The
				  supplemental rate may be any amount that, when added to the state base rate,
				  does not exceed the maximum employer rate established in the ORP statute. For
				  example, if the state base rate is 6 percent and the maximum statutory rate is
				  8.5 percent, then the supplement may be any amount up to and including 2.5
				  percent.
(ii) Component Institution
				  Policies. Governing boards may establish a supplemental rate policy that covers
				  all component institutions or may establish different policies for one or more
				  individual components.
(iii) Annual
				  Determination. The governing board of each institution shall determine the
				  amount of the supplement once per year, to be effective for the entire
				  year.
(iv) Method 1--All
				  Participants. Institutions may provide the same supplemental rate to all ORP
				  participants, regardless of the participant's first date to participate in ORP
				  or a break in service. If this method is selected, each ORP participant shall
				  receive the same supplemental rate as every other participant.
(v) Method 2--Two Groups. Institutions may,
				  instead of providing the same supplemental rate to all participants, provide
				  two different supplemental rates based on a participant's first date to
				  participate in ORP, as follows.
(I)
				  Grandfathered. Each participant whose first date to participate in ORP in lieu
				  of the applicable retirement system at any ORP employer, is prior to September
				  1, 1995, shall receive the same supplemental rate as other participants in this
				  group, regardless of any break in service. This group of participants shall be
				  referred to as the grandfathered group.
(II) Non-Grandfathered. Each participant
				  whose first date to participate in ORP in lieu of the applicable retirement
				  system at any ORP employer is on or after September 1, 1995, shall receive the
				  same supplemental rate as other participants in this group, regardless of any
				  break in service. This group of participants shall be referred to as the
				  non-grandfathered group.
(vi) All ORP employers shall maintain
				  documentation of a participant's first date to participate in ORP in lieu of
				  the applicable retirement system at any ORP employer and shall provide that
				  information to any future ORP employers of the participant for purposes of
				  determining the participant's grandfather status. This information shall be
				  maintained for as long as the employer's plan exists regardless of whether the
				  ORP employer provides a supplemental employer rate contribution and regardless
				  of the amount of any supplemental employer rate contribution
				  provided.
(7)
				  Proportionality. ORP employers shall pay ORP employer contributions from the
				  appropriate funding source in accordance with applicable proportionality
				  provisions, including provisions in the General Appropriations Act and §
											830.201 of the
				  Texas Government Code.
(8)
				  Three-Day Submission Deadline. ORP employers shall send ORP contributions to
				  the ORP company within three business days of legal availability, except for
				  contributions made on a supplemental payroll or contributions that are sent to
				  a grandfathered company with less than 50 participants.
(A) Legal Availability. Contributions shall
				  generally be considered legally available on payday. For ORP employers that
				  normally pay participants on a twice-monthly basis, the three-day minimum shall
				  apply to each payday in the month.
(B) Grandfathered Company. For purposes of
				  this paragraph, a grandfathered company shall be a company that is no longer on
				  a particular ORP employer's list of authorized ORP companies, but that
				  continues to receive ORP contributions for certain participants as authorized
				  by that ORP employer.
(C) Exception
				  Deadline. Contributions that are excepted from the three-day submission
				  deadline shall be sent to the company as soon as practicable, but not later
				  than 10 business days after they are legally available.
(9) Electronic Funds Transfer (EFT).
(A) Requirement. ORP employers shall send all
				  ORP contributions, including contributions based on a supplemental payroll and
				  contributions sent to a grandfathered company as defined in paragraph (8) of
				  this subsection, to each ORP company by electronic funds transfer (EFT) if the
				  ORP employer is currently able to send funds by EFT and the company is
				  currently able to receive funds by EFT.
(B) Inability to Receive. If a company is
				  unable to receive funds by EFT, the ORP employer shall send contributions to
				  the ORP company by check and provide the following notifications.
(i) Certification. The ORP employer shall
				  certify to the Board, on the ORP employer's annual ORP report as required by
				  subsection (g) of this section, that the company is unable to receive funds by
				  EFT.
(ii) Participant Notification.
				  At least once per fiscal year, the ORP employer shall provide notice to each
				  participant indicating which ORP companies are unable to receive funds by
				  EFT.
(10)
				  Same-Day Credit. ORP companies shall deposit each participant's ORP
				  contributions into the accounts and/or funds designated by the participant
				  effective on the same business day that the contributions are received by the
				  company if the funds are received before the close of business and on the next
				  business day if the funds are received after the close of business. A company
				  that does not comply with this provision shall not be eligible to be authorized
				  as an ORP company by any ORP employer.
(11) Forfeited ORP Employer Contributions. If
				  a participant forfeits ORP employer contributions under §
											25.5(a)
				  of this title (relating to Vesting Requirement), the ORP employer shall return
				  the forfeited contributions to the originating fund in accordance with the
				  following procedures.
(A) 93-Day Deadline for
				  Request. Not later than 93 calendar days after the last day of the calendar
				  month in which an unvested participant terminates all employment with all ORP
				  employers, the ORP employer shall send a request to the ORP company or
				  companies for a return of the ORP employer contributions that were sent to the
				  company or companies for that participant during that period of employment.
				  This request may be referred to as a vesting letter because it indicates that
				  the participant has not met the vesting requirement.
(i) 93 Days is Outside Limit. An ORP employer
				  may send the request for forfeited ORP employer contributions immediately upon
				  a participant's termination if the ORP employer has knowledge that the
				  participant has not become employed and is not anticipating becoming employed
				  in a position that is eligible for ORP in lieu of the same retirement system at
				  the same or another ORP employer within the 93-day period.
(ii) If Deadline is Missed. If the ORP
				  employer fails to request the forfeited amounts within the 93-day deadline,
				  then the ORP employer shall make the request immediately upon discovering the
				  oversight, even if the participant later resumes participation after the 93-day
				  deadline as described in subparagraph (B) of this paragraph.
(B) If Participant Returns After
				  93 Days. If an unvested participant returns to employment that is eligible for
				  ORP in lieu of the same retirement system at the same or another ORP employer
				  and resumes active participation on a date that is more than 93 calendar days
				  after the last day of the calendar month in which he or she previously
				  terminated participation, the participant's unvested ORP employer contributions
				  from the prior period of employment shall still be forfeited, even if the
				  participant subsequently satisfies the vesting requirement.
(C) Forfeited Amount. The forfeited amount
				  shall be the actual amount of ORP employer contributions sent to the
				  participant's ORP accounts during his or her current period of employment.
(i) Excess Amounts not Included. The
				  forfeited amount shall not include any amounts in the participant's ORP account
				  in excess of the actual ORP employer contributions that are attributable to net
				  earnings.
(ii) If Account is Less
				  than Actual Amount. The entire amount of actual ORP employer contributions
				  shall be returned even if the account balance is less than the amount of the
				  actual ORP employer contributions because of investment loss, transfer, or
				  other occurrence or transaction.
(I)
				  Company's Responsibility. The ORP company shall be responsible for making
				  arrangements to cover any loss of unvested ORP employer contributions, so that
				  the entire amount of actual ORP employer contributions is returned to the ORP
				  employer upon request.
(II)
				  Certification. Before an ORP employer may authorize a company to receive ORP
				  contributions from unvested participants, as provided in subsection (c) of this
				  section, the ORP employer shall require the company to certify that the entire
				  amount of actual unvested ORP employer contributions will be returned upon
				  request. The ORP employer may require the company to indicate what method will
				  be used, for example, restriction of unvested funds to money market or similar
				  accounts.
(D)
				  Company Response Deadline. Within 30 days of receiving the ORP employer's
				  request for a return of unvested ORP employer contributions, the ORP company
				  shall:
(i) process a reimbursement to the ORP
				  employer; and
(ii) send
				  notification of the transaction to the employee indicating the reason for the
				  reduction in the account balance.
(E) Deposit into Originating Fund. The ORP
				  employer shall deposit the reimbursed ORP employer contributions into the
				  originating fund or funds in accordance with instructions from the Texas
				  Comptroller of Public Accounts and any other applicable policies and
				  procedures.
(F) Resumption of
				  Participation within 93 Days.
(i) If unvested
				  ORP employer contributions are returned to the originating fund when the
				  participant did, in fact, resume ORP participation in lieu of the same
				  retirement system at the same or another ORP employer within 93 calendar days
				  of the last day of the calendar month in which the termination of participation
				  occurred, the ORP employer that requested the reimbursement shall, immediately
				  upon being notified of the employee's resumption of participation, return the
				  reimbursed amount to the ORP company for re-deposit into the participant's
				  account.
(ii) The ORP employer with
				  which the participant resumes participation, if not the ORP employer that
				  requested the reimbursement, shall notify the ORP employer that requested the
				  reimbursement of the participant's status as soon as practicable after the
				  participant resumes participation.
(iii) The entire amount of actual ORP
				  employer contributions that were returned to the originating fund under the
				  provisions in this paragraph shall be sent back to the company. There shall be
				  no allowance for any earnings or losses on the ORP employer contributions that
				  may have accrued during the time that the amounts were not in the participant's
				  account.