Court Opinion

ID: 4131817
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:19:55.986691+00
Date Added: 2024-06-11T09:36:32.964592
License: Public Domain

The Attorney               General of Texas
                                           September        22,    1980
MARK WHiTE
Attorney General
                   Honorable Kenneth II. Ashworth                 Opinion No. MW-244
                   Commissioner
                   Coordinating Board                             Re: Whether an optional retire-
                   Texas 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 require-
                              ments 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 retire-
           ment program created by this Act to provide fixed or variable
           retirement annuties, including retirement unit annuity certifi-
           cates 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     ou inquire about.   Acts 1973, 63d Leg., ch. 52!, Sl, at 1308. The
construction o P 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 Youngblwd

                                         p.   771