Texas 2023 - 88th Regular

Texas House Bill HB4863 Compare Versions

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1	1	88R11834 KFF-D
2	2	By: Jetton H.B. No. 4863
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to contributions to, benefits from, and the administration
8	8	of the Teacher Retirement System of Texas.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 803.202, Government Code, is amended by
11	11	adding Subsection (d) to read as follows:
12	12	(d) A member of the Teacher Retirement System of Texas who
13	13	is subject to Chapter 826 is eligible to participate in the program
14	14	provided by this chapter.
15	15	SECTION 2. Section 805.0015, Government Code, is amended to
16	16	read as follows:
17	17	Sec. 805.0015. APPLICABILITY. This chapter does not apply
18	18	to:
19	19	(1) a member of the employees retirement system who is
20	20	subject to Chapter 820; or
21	21	(2) a member of the teacher retirement system who is
22	22	subject to Chapter 826.
23	23	SECTION 3. Section 821.001, Government Code, is amended by
24	24	adding Subdivision (5-a) to read as follows:
25	25	(5-a) "Cash balance group member" means a member
26	26	subject to Chapter 826.
27	27	SECTION 4. Sections 822.005(a) and (c), Government Code,
28	28	are amended to read as follows:
29	29	(a) A person may withdraw all of the accumulated
30	30	contributions credited in the member's savings account if the
31	31	member:
32	32	(1) [who] is absent from service except by death or
33	33	retirement; or
34	34	(2) is participating in the optional defined
35	35	contribution plan under Chapter 827 [may withdraw all of the
36	36	accumulated contributions credited to the person in the member
37	37	savings account].
38	38	(c) Except as provided by Subsection (a)(2), a [A] person is
39	39	not entitled to withdraw contributions if the person is employed,
40	40	has applied for employment, or has received a promise of employment
41	41	with an employer covered by the retirement system.
42	42	SECTION 5. Section 823.001, Government Code, is amended to
43	43	read as follows:
44	44	Sec. 823.001. TYPES OF CREDITABLE SERVICE. The types of
45	45	service creditable in the retirement system are membership service
46	46	and, if applicable:
47	47	(1) prior service;
48	48	(2) [membership service;
49	49	[(3)] military service; and
50	50	(3) [(4)] equivalent membership service.
51	51	SECTION 6. Subchapter A, Chapter 823, Government Code, is
52	52	amended by adding Section 823.0015 to read as follows:
53	53	Sec. 823.0015. PROVISIONS APPLICABLE TO CASH BALANCE GROUP
54	54	MEMBERS. The following provisions of this chapter do not apply to a
55	55	cash balance group member:
56	56	(1) Sections 823.004 and 823.006; and
57	57	(2) Subchapters D, E, and F.
58	58	SECTION 7. Section 823.203, Government Code, is amended to
59	59	read as follows:
60	60	Sec. 823.203. MEMBERSHIP SERVICE FOR OPTIONAL RETIREMENT
61	61	PROGRAMS [PROGRAM]. A member may not establish service credit in
62	62	the retirement system for any period when the member was
63	63	participating in the optional defined contribution plan under
64	64	Chapter 827 or the optional retirement program under Chapter 830.
65	65	SECTION 8. Sections 824.002(a) and (e), Government Code,
66	66	are amended to read as follows:
67	67	(a) The effective date of a member's service retirement is
68	68	the last day of the later of the following months:
69	69	(1) any month in a three-month period in which the
70	70	third month is the month in which the member applies for retirement
71	71	as provided by Section 824.201 or 826.051;
72	72	(2) the month in which the member satisfies age and
73	73	service requirements for service retirement as provided by Section
74	74	824.202 or 826.052; or
75	75	(3) the month in which the member's employment in a
76	76	position included in the coverage of the retirement system ends.
77	77	(e) Except as provided by Section 823.403(d), if
78	78	applicable, not later than two months after the later of a member's
79	79	retirement date or the last day of the month in which the member's
80	80	application for retirement is submitted, and before the later of
81	81	the due date for the first monthly annuity payment or the date on
82	82	which the retirement system issues the first monthly annuity
83	83	payment, a member applying for service retirement may, after
84	84	providing notice to the retirement system:
85	85	(1) [,] reinstate withdrawn contributions;
86	86	(2) if applicable, make deposits for military service
87	87	and equivalent membership service;[,] and
88	88	(3) receive service credit as provided by this
89	89	subtitle.
90	90	SECTION 9. Section 824.1011(a), Government Code, is amended
91	91	to read as follows:
92	92	(a) A retiree who is receiving a standard service or
93	93	disability retirement annuity under Section 824.203 or 824.304(b)
94	94	or a cash balance annuity under Subchapter B, Chapter 826, and who
95	95	marries after the date of the person's retirement may replace the
96	96	annuity by selecting an optional retirement annuity under Section
97	97	824.204(c)(1), (c)(2), or (c)(5) or under Section 824.308(c)(1),
98	98	(c)(2), or (c)(5), as applicable, and designating the person's
99	99	spouse as beneficiary before the second anniversary of the marriage
100	100	in the same manner as an annuity selection and designation of
101	101	beneficiary may be made before retirement.
102	102	SECTION 10. Subchapter C, Chapter 824, Government Code, is
103	103	amended by adding Section 824.2005 to read as follows:
104	104	Sec. 824.2005. INAPPLICABILITY OF SUBCHAPTER TO CASH
105	105	BALANCE GROUP MEMBERS. This subchapter does not apply to a cash
106	106	balance group member.
107	107	SECTION 11. Section 824.203, Government Code, is amended by
108	108	amending Subsection (a) and adding Subsection (e) to read as
109	109	follows:
110	110	(a) Except as provided by Subsections (c), [and] (d), and
111	111	(e), the standard service retirement annuity is an amount computed
112	112	on the basis of the member's average annual compensation for the
113	113	five years of service, whether or not consecutive, in which the
114	114	member received the highest annual compensation, times 2.3 percent
115	115	for each year of service credit in the retirement system.
116	116	(e) For a member who retires on or after September 1, 2024,
117	117	and whose five highest years of compensation under the retirement
118	118	system include one or more years in which the member's compensation
119	119	exceeded $100,000, the maximum amount that may be used for any year
120	120	in computing the member's average annual compensation under
121	121	Subsection (a) is $100,000. The board of trustees by rule may, in
122	122	the board's discretion, from time to time adjust the limit on member
123	123	compensation prescribed by this subsection to reflect the rate of
124	124	growth of inflation in this state.
125	125	SECTION 12. Subchapter G, Chapter 824, Government Code, is
126	126	amended by adding Section 824.6005 to read as follows:
127	127	Sec. 824.6005. INAPPLICABILITY OF SUBCHAPTER TO CASH
128	128	BALANCE GROUP MEMBERS. This subchapter does not apply to a cash
129	129	balance group member.
130	130	SECTION 13. Sections 825.307(a) and (b), Government Code,
131	131	are amended to read as follows:
132	132	(a) The retirement system shall deposit in a member's
133	133	individual account in the member savings account, as applicable:
134	134	(1) the amount of contributions to the retirement
135	135	system that is deducted from the member's compensation;
136	136	(2) the portion of a deposit made on or after
137	137	resumption of membership that represents the amount of retirement
138	138	benefits received;
139	139	(3) the portion of a deposit to reinstate service
140	140	credit previously canceled that represents the amount withdrawn or
141	141	refunded;
142	142	(4) the portion of a deposit to establish military
143	143	service credit required by Section 823.302(c);
144	144	(5) the portion of a deposit to establish USERRA
145	145	credit required by Section 823.304(c);
146	146	(6) the portion of a deposit to establish:
147	147	(A) equivalent membership service credit
148	148	required by Section 823.401(d), 823.402(e), 823.403(d),
149	149	823.404(c), or 823.406(b) or former Section 823.405; or
150	150	(B) unreported service credit or compensation
151	151	required by Section 825.403(h); and
152	152	(7) interest earned on money in the account as
153	153	provided by:
154	154	(A) Subsections (b) and (c) and Section
155	155	825.313(c); or
156	156	(B) Sections 826.102 and 826.103.
157	157	(b) Except as provided by Section 826.102 or 826.103,
158	158	interest [Interest] on a member's contribution is earned monthly
159	159	and computed at the rate of two percent a year. Except as provided
160	160	by Subsection (c), interest is computed based on the mean balance in
161	161	the member's account during that fiscal year and shall be credited
162	162	on August 31 of each year.
163	163	SECTION 14. Section 825.309, Government Code, is amended by
164	164	adding Subsection (c) to read as follows:
165	165	(c) This section does not apply to a cash balance group
166	166	member.
167	167	SECTION 15. Section 825.311, Government Code, is amended to
168	168	read as follows:
169	169	Sec. 825.311. INTEREST ACCOUNT. Except as provided by
170	170	Section 826.102 or 826.103, in [In] the interest account the
171	171	retirement system shall:
172	172	(1) deposit all income, interest, and dividends from
173	173	deposits and investments of assets of the retirement system;
174	174	(2) accumulate net capital gains and losses resulting
175	175	from the sale, call, maturity, conversion, or recognition of
176	176	changes in carrying values of investments of the retirement system;
177	177	and
178	178	(3) accumulate net income or losses from other
179	179	investments.
180	180	SECTION 16. Section 825.402, Government Code, is amended to
181	181	read as follows:
182	182	Sec. 825.402. RATE OF CERTAIN MEMBER CONTRIBUTIONS. The
183	183	rate of contributions for each member of the retirement system,
184	184	other than a cash balance group member, is:
185	185	(1) five percent of the member's annual compensation
186	186	or $180, whichever is less, for service rendered after August 31,
187	187	1937, and before September 1, 1957;
188	188	(2) six percent of the first $8,400 of the member's
189	189	annual compensation for service rendered after August 31, 1957, and
190	190	before September 1, 1969;
191	191	(3) six percent of the member's annual compensation
192	192	for service rendered after August 31, 1969, and before the first day
193	193	of the 1977-78 school year;
194	194	(4) 6.65 percent of the member's annual compensation
195	195	for service rendered after the last day of the period described by
196	196	Subdivision (3) and before September 1, 1985;
197	197	(5) 6.4 percent of the member's annual compensation
198	198	for service rendered after August 31, 1985, and before September 1,
199	199	2014;
200	200	(6) 6.7 percent of the member's annual compensation
201	201	for service rendered after August 31, 2014, and before September 1,
202	202	2015;
203	203	(7) 7.2 percent of the member's annual compensation
204	204	for service rendered after August 31, 2015, and before September 1,
205	205	2016;
206	206	(8) 7.7 percent of the member's annual compensation
207	207	for service rendered after August 31, 2016, and before September 1,
208	208	2017;
209	209	(9) for compensation paid on or after September 1,
210	210	2017, and before September 1, 2019, the lesser of:
211	211	(A) 7.7 percent of the member's annual
212	212	compensation; or
213	213	(B) a percentage of the member's annual
214	214	compensation equal to 7.7 percent reduced by one-tenth of one
215	215	percent for each one-tenth of one percent that the state
216	216	contribution rate for the fiscal year to which the compensation
217	217	relates is less than the state contribution rate established for
218	218	the 2015 fiscal year;
219	219	(10) for compensation paid on or after September 1,
220	220	2019, and before September 1, 2021, the lesser of:
221	221	(A) 7.7 percent of the member's annual
222	222	compensation; or
223	223	(B) a percentage of the member's annual
224	224	compensation equal to 7.7 percent reduced by one-tenth of one
225	225	percent for each one-tenth of one percent that the state
226	226	contribution rate for the fiscal year to which the compensation
227	227	relates is less than the state contribution rate established for
228	228	that fiscal year under Section 825.404(a-2);
229	229	(11) for compensation paid on or after September 1,
230	230	2021, and before September 1, 2023, the lesser of:
231	231	(A) eight percent of the member's annual
232	232	compensation; or
233	233	(B) a percentage of the member's annual
234	234	compensation equal to eight percent reduced by one-tenth of one
235	235	percent for each one-tenth of one percent that the state
236	236	contribution rate for the fiscal year to which the compensation
237	237	relates is less than the state contribution rate established for
238	238	that fiscal year under Section 825.404(a-2); and
239	239	(12) for compensation paid on or after September 1,
240	240	2023, the lesser of:
241	241	(A) 8.25 percent of the member's annual
242	242	compensation; or
243	243	(B) a percentage of the member's annual
244	244	compensation equal to 8.25 percent reduced by one-tenth of one
245	245	percent for each one-tenth of one percent that the state
246	246	contribution rate for the fiscal year to which the compensation
247	247	relates is less than the state contribution rate established for
248	248	that fiscal year under Section 825.404(a-2).
249	249	SECTION 17. Section 825.403(a), Government Code, is amended
250	250	to read as follows:
251	251	(a) Each payroll period, each employer shall deduct from the
252	252	compensation of each member employed by the employer the amount
253	253	required by Section 825.402 or 826.101, as applicable.
254	254	SECTION 18. Sections 825.404(b) and (e), Government Code,
255	255	are amended to read as follows:
256	256	(b) Before November 2 of each even-numbered year, the board
257	257	of trustees, in coordination with the Legislative Budget Board,
258	258	shall certify to the comptroller of public accounts for review and
259	259	adoption an estimate of the amount necessary to pay the state's
260	260	contributions to the retirement system for the following biennium,
261	261	including the amount necessary to pay the state's contributions
262	262	under the optional defined contribution plan under Chapter 827.
263	263	For qualifying employees under Subsection (a-1)(1), the board of
264	264	trustees shall include only the amount payable by the state under
265	265	Subsection (a-1)(1) in determining the amount to be certified.
266	266	(e) All money appropriated by the state to the retirement
267	267	system shall be paid to the state contribution account in equal
268	268	monthly installments as provided by Section 403.093(c), except for
269	269	the payment of the state's contributions under Section 827.108(a).
270	270	SECTION 19. The heading to Section 825.4092, Government
271	271	Code, is amended to read as follows:
272	272	Sec. 825.4092. EMPLOYER CONTRIBUTIONS FOR CERTAIN EMPLOYED
273	273	RETIREES.
274	274	SECTION 20. Section 825.4092(a), Government Code, is
275	275	amended to read as follows:
276	276	(a) This section applies to an employer who reports to the
277	277	retirement system the employment of a retiree other than a retiree
278	278	under Chapter 826.
279	279	SECTION 21. Subtitle C, Title 8, Government Code, is
280	280	amended by adding Chapters 826 and 827 to read as follows:
281	281	CHAPTER 826. CASH BALANCE BENEFIT
282	282	SUBCHAPTER A. GENERAL PROVISIONS
283	283	Sec. 826.001. DEFINITION. In this chapter, "accumulated
284	284	account balance" means the total of amounts in a member's
285	285	individual account in the member savings account, including:
286	286	(1) amounts deducted from the compensation of the
287	287	member;
288	288	(2) other member deposits required to be placed in the
289	289	member's individual account; and
290	290	(3) interest credited to amounts in the member's
291	291	individual account, including interest and gain sharing interest
292	292	credited in accordance with Sections 826.102 and 826.103,
293	293	respectively.
294	294	Sec. 826.002. APPLICABILITY. (a) Except as provided by
295	295	Subsection (b), this chapter applies only to a member who:
296	296	(1) was hired on or after September 1, 2024; and
297	297	(2) was not a member on the date the member was hired.
298	298	(b) A person described by Subsection (a) may make a one-time
299	299	election to cease membership in the retirement system and begin
300	300	participation in the optional defined contribution plan under
301	301	Chapter 827. For purposes of Chapter 827, a person who makes an
302	302	election under this subsection is considered hired on the date
303	303	immediately following the date the person's membership in the
304	304	retirement system terminates. The election must be on a form and in
305	305	the manner prescribed by the board of trustees.
306	306	Sec. 826.003. CONFLICT OF LAW. To the extent of a conflict
307	307	between this chapter, including a rule adopted by the retirement
308	308	system under authority of this chapter, and any other law, this
309	309	chapter prevails.
310	310	Sec. 826.004. RULES. The board of trustees may adopt rules
311	311	necessary to implement this chapter.
312	312	SUBCHAPTER B. CASH BALANCE BENEFITS
313	313	Sec. 826.051. APPLICATION FOR CASH BALANCE BENEFIT. (a) A
314	314	member may apply for a cash balance annuity by filing an application
315	315	for retirement with the board of trustees.
316	316	(b) An application for a cash balance annuity may not be
317	317	made:
318	318	(1) after the date the member wishes to retire; or
319	319	(2) more than 90 days before the date the member wishes
320	320	to retire.
321	321	Sec. 826.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A
322	322	member is eligible to retire and receive a cash balance annuity if
323	323	the member:
324	324	(1) is at least 65 years old and has five years of
325	325	service credit in the retirement system; or
326	326	(2) is at least 62 years old, has at least five years
327	327	of service credit in the retirement system, and the sum of the
328	328	member's age and amount of service credit in the retirement system,
329	329	including months of age and credit, equals or exceeds the number 80.
330	330	Sec. 826.053. CASH BALANCE BENEFITS FOR MEMBERS. (a) The
331	331	state match for the cash balance benefit for service credited to the
332	332	retirement system is an amount computed by multiplying the member's
333	333	accumulated account balance by 150 percent.
334	334	(b) The retirement system shall compute a member's cash
335	335	balance annuity under this section by taking the sum of the member's
336	336	accumulated account balance and the state match computed under
337	337	Subsection (a) and annuitizing that amount over the life expectancy
338	338	of the member as of the effective date of the member's retirement
339	339	using mortality and other tables adopted by the board of trustees
340	340	for that purpose under Section 825.105.
341	341	Sec. 826.054. DEATH AND DISABILITY BENEFITS.
342	342	(a) Notwithstanding any other law, a member subject to this
343	343	chapter, a retiree receiving a cash balance annuity under this
344	344	chapter, or the beneficiary of a member or retiree described by this
345	345	subsection, who qualifies for a death or survivor benefit annuity
346	346	or a disability retirement annuity under Chapter 824 is entitled to
347	347	a cash balance annuity under Section 826.053 instead of the annuity
348	348	otherwise provided under Chapter 824.
349	349	(b) The board of trustees may enter into contracts to
350	350	provide additional death and disability benefits under this
351	351	chapter.
352	352	SUBCHAPTER C. CONTRIBUTIONS AND INTEREST
353	353	Sec. 826.101. COLLECTION OF MEMBER CONTRIBUTIONS. Each
354	354	payroll period, each employer shall cause to be deducted from the
355	355	compensation of a member subject to this chapter a contribution of
356	356	8.25 percent of the compensation of the member.
357	357	Sec. 826.102. ANNUAL INTEREST ADJUSTMENT. Each fiscal
358	358	year, the retirement system shall deposit for a member subject to
359	359	this chapter an amount equal to four percent of the member's
360	360	accumulated account balance deposited into the member's individual
361	361	account in the member savings account.
362	362	Sec. 826.103. GAIN SHARING INTEREST ADJUSTMENT. (a) Each
363	363	fiscal year and subject to Subsection (b), the retirement system
364	364	shall compute the gain sharing interest rate by:
365	365	(1) determining the average return on the investment
366	366	of the system's cash and securities during the preceding five
367	367	fiscal years, expressed as a percentage rate;
368	368	(2) subtracting four percentage points from the
369	369	percentage rate determined under Subdivision (1); and
370	370	(3) multiplying the resulting difference under
371	371	Subdivision (2) by 50 percent.
372	372	(b) Subject to Subsection (c), in addition to the amount
373	373	deposited under Section 826.102, each fiscal year, the retirement
374	374	system shall:
375	375	(1) deposit into each member's individual account in
376	376	the member savings account an amount equal to the gain sharing
377	377	interest rate determined under Subsection (a) for the fiscal year
378	378	multiplied by the member's accumulated account balance; and
379	379	(2) recalculate the annuity of a retiree or annuitant
380	380	under this chapter by multiplying the annuity by an amount equal to
381	381	the gain sharing interest rate determined under Subsection (a).
382	382	(c) The gain sharing interest rate applied under Subsection
383	383	(b) may not be less than zero or more than three percent.
384	384	(d) Subsection (b) applies only to a retiree or annuitant
385	385	who is receiving a cash balance annuity under Section 826.053.
386	386	CHAPTER 827. OPTIONAL DEFINED CONTRIBUTION PLAN
387	387	SUBCHAPTER A. GENERAL PROVISIONS
388	388	Sec. 827.001. DEFINITIONS. In this chapter:
389	389	(1) "Optional defined contribution plan" means the
390	390	plan established under this chapter.
391	391	(2) "Qualified plan" means an employees' deferred
392	392	compensation plan qualified under Section 403(b), Internal Revenue
393	393	Code of 1986, and regulations adopted under that section.
394	394	Sec. 827.002. EXCESS BENEFIT ARRANGEMENT. The retirement
395	395	system may establish a governmental excess benefit arrangement as
396	396	provided by Section 415(m), Internal Revenue Code of 1986, and
397	397	regulations adopted under that section, for the purpose of
398	398	providing to participants in the optional defined contribution plan
399	399	any portion of a participant's benefits that would otherwise be
400	400	payable under the terms of the plan except for the limitation on
401	401	benefits imposed by Section 415, Internal Revenue Code of 1986, and
402	402	regulations adopted under that section.
403	403	Sec. 827.003. RULES. The board of trustees shall adopt any
404	404	rules necessary to administer this chapter.
405	405	SUBCHAPTER B. AUTHORITY TO ESTABLISH PLAN
406	406	Sec. 827.051. ESTABLISHMENT OF PLAN; ADMINISTRATION. (a)
407	407	The retirement system shall establish and administer an optional
408	408	defined contribution plan that is a qualified plan and under which a
409	409	person eligible for cash balance group membership under Chapter 826
410	410	may elect to pay contributions to the optional defined contribution
411	411	plan for the purchase of investment products selected by the person
412	412	from among products that are authorized to be provided under a
413	413	qualified plan and that are offered by a single vendor authorized to
414	414	provide the products in this state and selected by the board of
415	415	trustees under Subsection (b).
416	416	(b) The board of trustees shall adopt rules for the
417	417	selection of companies that may provide investment products under
418	418	the optional defined contribution plan. The rules must provide for
419	419	the selection of a single vendor that must provide a variety of
420	420	investment products authorized for a qualified plan. The vendor
421	421	must offer at least one product that provides a set of target date
422	422	funds based on portfolios that automatically rebalance over time.
423	423	The board of trustees shall rebid the contract to provide
424	424	investment products at least once every five years.
425	425	(c) A provider of investment products is exempt from the
426	426	payment of franchise or premium taxes on products issued under the
427	427	optional defined contribution plan.
428	428	SUBCHAPTER C. PLAN REQUIREMENTS
429	429	Sec. 827.101. ELIGIBILITY AND ELECTION TO PARTICIPATE IN
430	430	PLAN. (a) Instead of participating as a member of the retirement
431	431	system under Chapter 826, a person who holds a position included in
432	432	the coverage of the retirement system is eligible to participate in
433	433	the optional defined contribution plan unless the person is
434	434	participating in the optional retirement program under Chapter 830.
435	435	(b) Participation in the optional defined contribution plan
436	436	is an alternative to participation as a contributing member of the
437	437	retirement system for the same period.
438	438	(c) Except as provided by Section 826.002(b), a person
439	439	eligible to participate in the optional defined contribution plan
440	440	may elect to participate in the plan not later than the 90th day
441	441	after the date the person begins service in a position included in
442	442	the coverage of the retirement system. The election must be on a
443	443	form and in the manner prescribed by the board of trustees. If a
444	444	person does not make an election as provided by this subsection, the
445	445	person is considered to have elected to begin or continue
446	446	participation as a member of the retirement system under Chapter
447	447	826.
448	448	(d) Except as provided by Section 827.105, an election made
449	449	under this section is irrevocable.
450	450	Sec. 827.102. EFFECT OF EMPLOYMENT CHANGES. A person
451	451	participating in the optional defined contribution plan continues
452	452	to participate in the plan when the person changes employment to
453	453	another position included in the coverage of the retirement system.
454	454	Sec. 827.103. WITHDRAWAL OF RETIREMENT SYSTEM
455	455	CONTRIBUTIONS. A person who participates in the optional defined
456	456	contribution plan may withdraw benefits attributable to
457	457	contributions in the manner and with the effect provided by
458	458	Subchapter A, Chapter 822.
459	459	Sec. 827.104. IMMEDIATE VESTING OF BENEFITS; TERMINATION OF
460	460	PARTICIPATION. (a) Benefits in the optional defined contribution
461	461	plan that are attributable to a participant's contribution under
462	462	Section 827.108(a) vest in the participant immediately.
463	463	(b) Benefits in the optional defined contribution plan that
464	464	are attributable to the state's contribution under Section
465	465	827.108(a) vest in a participant immediately.
466	466	(c) A person terminates participation in the optional
467	467	defined contribution plan, without losing any vested benefits, by:
468	468	(1) death;
469	469	(2) retirement;
470	470	(3) termination of employment in all positions
471	471	included in the coverage of the retirement system; or
472	472	(4) election to participate as a cash balance group
473	473	member made in accordance with Section 827.105.
474	474	(d) The benefits of a product purchased under the optional
475	475	defined contribution plan become available under the terms of the
476	476	product but not before the participant terminates participation
477	477	under Subsection (c) or attains 70-1/2 years of age.
478	478	(e) Benefits in the optional defined contribution plan that
479	479	are attributable to the state's contribution under Section
480	480	827.108(a) that are not vested in a participant who terminates
481	481	participation shall be used to offset the amount of the state's
482	482	contribution.
483	483	Sec. 827.105. ONE-TIME MEMBERSHIP ELECTION; RESUMPTION OF
484	484	RETIREMENT SYSTEM MEMBERSHIP. (a) A person who is eligible to
485	485	participate in the optional defined contribution plan may make a
486	486	one-time election to cease participation in the plan and begin
487	487	participation as a member of the retirement system under Chapter
488	488	826. For purposes of Chapter 826, a person who makes an election
489	489	under this subsection is considered hired on the date immediately
490	490	following the date the person's participation in the plan
491	491	terminates. The election must be on a form and in the manner
492	492	prescribed by the board of trustees.
493	493	(b) A participant in the optional defined contribution plan
494	494	is not eligible to begin or resume active membership in the
495	495	retirement system unless the person terminates participation under
496	496	Section 827.104 and assumes or resumes, after the month following
497	497	the month in which the person terminates participation unless
498	498	subject to Subsection (a), a position included in the coverage of
499	499	the retirement system. A person who assumes or resumes a position
500	500	becomes an active member of the retirement system under Chapter 826
501	501	unless the person elects to resume participation in the optional
502	502	defined contribution plan in the manner and within the time
503	503	provided for beginning participation under Section 827.101.
504	504	Sec. 827.106. CREDITABLE SERVICE. A person may not
505	505	establish in the retirement system credit for service performed
506	506	during a period the person was participating in the optional
507	507	defined contribution plan.
508	508	Sec. 827.107. INVESTMENT ADVISORY FEES. (a) A participant
509	509	in the optional defined contribution plan may authorize the payment
510	510	of investment advisory fees from the amount in the participant's
511	511	custodial account or product if:
512	512	(1) the investment advisory fees for each fiscal year
513	513	do not exceed two percent of the annual value of the participant's
514	514	custodial account or product as of the last day of that fiscal year;
515	515	(2) the fees comply with applicable regulations of the
516	516	Securities and Exchange Commission;
517	517	(3) the investment advisor to whom the fees are paid is
518	518	registered with the Securities and Exchange Commission under the
519	519	Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.)
520	520	and regulations adopted under that Act and is engaged full-time in
521	521	the business of providing investment advice;
522	522	(4) the participant and the investment advisor enter
523	523	into a contract for services that may be terminated by either party
524	524	at any time and that provides for the payment of fees as provided by
525	525	this section; and
526	526	(5) the retirement system has received an official
527	527	determination from the Internal Revenue Service that payment of
528	528	investment advisory fees as prescribed by this section is not a
529	529	distribution of funds that is prohibited or subject to taxation and
530	530	penalty under the Internal Revenue Code of 1986 and regulations
531	531	adopted under that code.
532	532	(b) The executive director of the retirement system shall
533	533	request an official determination from the Internal Revenue Service
534	534	concerning whether the payment of investment advisory fees as
535	535	prescribed by this section is a distribution of funds that is
536	536	prohibited or subject to taxation and penalty under the Internal
537	537	Revenue Code of 1986 and regulations adopted under that code. If
538	538	the executive director receives an official determination from the
539	539	Internal Revenue Service as specified by this subsection, the
540	540	executive director shall file the determination with the secretary
541	541	of state's office for publication in the Texas Register.
542	542	Sec. 827.108. CONTRIBUTIONS. (a) A participant in the
543	543	optional defined contribution plan shall make contributions to the
544	544	plan at the same rate that a member of the retirement system is
545	545	required to contribute under Section 826.101, and the state and
546	546	each employer shall make contributions to the plan for each
547	547	participant at the same rate, and in the same manner, as the state
548	548	and each employer are required to make for contributing members of
549	549	the retirement system who are subject to Chapter 826.
550	550	(b) A participant in the optional defined contribution plan
551	551	and the participant's employer shall execute an agreement under
552	552	which the salary of the participant is reduced by the amount of the
553	553	contribution required by Subsection (a). An agreement under this
554	554	subsection is irrevocable until the participant terminates
555	555	participation in the plan under Section 827.104.
556	556	(c) Contributions shall be made in the manner provided for
557	557	cash balance group members under Subchapter E, Chapter 825, as
558	558	applicable, and Subchapter C, Chapter 826.
559	559	Sec. 827.109. HEALTH BENEFIT AND OTHER COVERAGES. A person
560	560	who participates or who is eligible to participate in the optional
561	561	defined contribution plan established under this chapter is
562	562	eligible for health benefits and other coverages under Subtitle H,
563	563	Title 8, Insurance Code, and Subchapter D, Chapter 22, Education
564	564	Code, if applicable, to the same extent as a person who is a member
565	565	or who is eligible to be a member of the retirement system.
566	566	SECTION 22. Section 830.002(b), Government Code, is amended
567	567	to read as follows:
568	568	(b) Participation in the optional retirement program is an
569	569	alternative to active membership in the retirement system or
570	570	participation in the optional defined contribution plan under
571	571	Chapter 827.
572	572	SECTION 23. Sections 830.102(a) and (d), Government Code,
573	573	are amended to read as follows:
574	574	(a) A person included in the coverage [member] of the
575	575	retirement system who is eligible [to participate in the optional
576	576	retirement program] may elect to [continue as a member of the
577	577	retirement system or to] participate in the optional retirement
578	578	program.
579	579	(d) An eligible person who does not elect to participate in
580	580	the optional retirement program is considered to have chosen to
581	581	continue membership in the retirement system or to participate in
582	582	the optional defined contribution plan under Chapter 827, as
583	583	applicable.
584	584	SECTION 24. Section 830.106, Government Code, is amended to
585	585	read as follows:
586	586	Sec. 830.106. ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP OR
587	587	PARTICIPATION IN OPTIONAL DEFINED CONTRIBUTION PLAN. A
588	588	participant in the optional retirement program is not eligible for
589	589	membership in the retirement system or participation in the
590	590	optional defined contribution plan under Chapter 827 unless the
591	591	person:
592	592	(1) terminates employment covered by the optional
593	593	retirement program; and
594	594	(2) becomes employed in the public school system or
595	595	with a state agency in a position that is not eligible for
596	596	participation in the optional retirement program.
597	597	SECTION 25. (a) The Teacher Retirement System of Texas
598	598	shall offer participation in the optional defined contribution plan
599	599	described by Chapter 827, Government Code, as added by this Act,
600	600	beginning September 1, 2024.
601	601	(b) The change in law made by this Act applies only to a
602	602	period of service described by Section 827.101(c), Government Code,
603	603	as added by this Act, that begins on or after September 1, 2024.
604	604	SECTION 26. This Act takes effect immediately if it
605	605	receives a vote of two-thirds of all the members elected to each
606	606	house, as provided by Section 39, Article III, Texas Constitution.
607	607	If this Act does not receive the vote necessary for immediate
608	608	effect, this Act takes effect September 1, 2023.