Section 87.15 - Transfers(a) Transfers initiated by participants. A participant may initiate a transfer of all or part of the participant's deferrals and investment income at any time. The number of transfers that a participant may initiate per year is unlimited.(b) Transfers initiated by the plan administrator. (1) Generally. (A) The plan administrator may initiate a transfer of all or part of a participant's deferrals and investment income if the plan administrator determines that the transfer would be in the best interests of the plan or the participant.(B) Without limiting the plan administrator's authority to initiate a transfer as specified elsewhere in the sections in this chapter, the plan administrator may initiate a transfer of all deferrals and investment income that are invested in: (i) the qualified investment products of inactive prior plan vendors;(ii) the qualified investment products of prior plan vendors whose participation in the plan has terminated; and(iii) qualified investment products whose participation in the plan has terminated.(2) Transfers from credit unions. (A) The plan administrator shall initiate a transfer of a participant's deferrals and investment income from a credit union's qualified investment product in accordance with § 87.7(k)(7) of this title (relating to prior plan vendor participation).(B) The authority to initiate a transfer under this paragraph is in addition to the authority under paragraph (1) of this subsection.(c) Value of amounts involved in a transfer initiated by the plan administrator. (1) This subsection applies only when the plan administrator initiates a transfer from a qualified investment product because the prior plan vendor sponsoring the product: (A) has become an inactive prior plan vendor; or(B) has violated a section in this chapter.(2) The prior plan vendor who offers the qualified investment product from which the transfer is being made may not charge or permit to be charged a fee or penalty to participants, the plan or plan administrator.(3) The amount involved in a transfer must be equal to the total amount of deferrals and investment income that were invested in the qualified investment product as of the date on which the plan administrator initiates the transfer.(4) Notwithstanding paragraph (3) of this subsection: (A) an insurance company may deduct from the amount involved in a transfer the actual cost of insuring the participant whose deferrals and investment income are being moved. The period of insurance coverage that may be considered while calculating the actual cost of insuring the participant: (i) starts on the day on which the deferrals and investment income were invested in the product; and(ii) ends on the day on which the plan administrator initiates the transfer; and(B) the amount involved in a transfer from a mutual fund must be equal to the current market value of the deferrals and investment income as defined in § 87.19(a)(2) of this title (relating to reporting and recordkeeping by prior plan vendors) without considering the deduction of any fees.(5) This subsection prevails over a conflicting provision in a vendor contract, product contract, disclosure agreement, or any other document.(d) Procedures for making a transfer of all deferrals and investment income from a qualified investment product. (1) This subsection applies when the plan administrator initiates a transfer of all deferrals and investment income of every participant from a qualified investment product.(2) The plan administrator shall send a written notice to the prior plan vendor who is sponsoring the qualified investment product. The notice must require the prior plan vendor to: (A) immediately issue a check or cause a wire-transfer to be made in a lump-sum amount equal to the deferrals and investment income being moved or the plan administrator may choose: (i) to not immediately exercise the requirement of paragraph (2)(A) of this subsection if it is in the best interest of participants; or(ii) to request the vendor to issue separate checks or cause separate wire transfers in behalf of each affected participant; and(B) promptly send a list to the plan administrator containing: (i) the name of each participant whose deferrals and investment income were moved;(ii) the amount of the deferrals and investment income that was moved, on a participant-by-participant basis;(iii) the social security number of each affected participant;(iv) the name of the employing state agency of each affected participant;(vi) participant's address; and(vii) distribution status and frequency.(3) If a check is used to make a plan-to-plan transfer in the prior or revised plan, this paragraph applies. (A) The plan administrator, in its discretion, may direct the prior plan vendor to make the check payable to the payee specified by the plan administrator, which may be the revised plan or an eligible plan in the case of a plan-to-plan transfer. An eligible post-severance plan-to-plan transfer may include a transfer to another eligible governmental plan. If the plan administrator directs the prior plan vendor to send funds directly to the revised plan, the plan administrator shall provide instructions concerning the investment of the amounts transferred. The plan administrator or TPA may require such documentation as is satisfactory to the plan administrator or TPA, as either deems necessary, to effectuate the transfer in accordance with §457(e)(10) of the Code and §1.457-10(b) of the Income Tax Regulations. The TPA or plan administrator shall confirm that the other plan is an eligible governmental defined benefit plan as defined in §1.457-2(f) of the Income Tax Regulations. If the specified payee is another prior plan vendor, the prior plan vendor shall promptly deposit the check into the applicable account previously agreed upon. The prior plan vendor shall use its best efforts to ensure that the plan administrator or the specified payee receives the check no later than the 15th day after the prior plan vendor receives notification of the transfer. The amount so transferred shall be credited to the participant's account balance and shall be held, accounted for, administered and otherwise treated in the same manner as a deferral by the participant under the plan, except that the transferred amount shall not be considered an annual deferral under the plan in determining the maximum deferral.(B) If the check is sent to the plan administrator, the plan administrator must endorse the check and deposit the check with the TPA selected by the plan administrator.(C) Upon receiving verification of a completed transfer from the qualified vendor selected by the plan administrator, and receiving a list of affected participants from the prior plan vendor, the plan administrator shall notify each affected participant concerning the transfers.(4) If a wire-transfer is used to make a transfer, this paragraph applies. (A) The prior plan vendor must ensure that the TPA selected by the plan administrator to hold these funds receives the wire-transfer within 48 hours.(B) The TPA selected by the plan administrator shall promptly deposit the wire-transfer into the applicable account previously agreed upon, and notify the plan administrator concerning the deposit.(C) The receiving TPA or prior plan vendor shall acknowledge receipt of the deferrals and investment income in the manner required by the plan administrator.(D) Upon approval of the plan administrator, the prior plan vendor transferring funds may cause a wire transfer to be made in lieu of issuing a check: (i) if the prior plan vendor sending funds complies with procedures specified by the plan administrator;(ii) the prior plan vendor receiving funds is approved by the plan administrator to accept a wire transfer of funds; and(iii) the prior plan vendor receiving funds complies with procedures specified by the plan administrator.(5) If a participant initiates a transfer, this paragraph applies. (A) A participant may initiate a transfer of the participant's deferrals and investment income through the execution of a prior funds transfer form in accordance with § 87.5(h) of this title (relating to Participation by Employees).(B) After receiving a completed Prior Funds Transfer form, the plan administrator shall notify the TPA.(C) The plan administrator, in its discretion, may direct the prior plan vendor to make the check payable to the payee specified by the plan administrator, which may be the TPA or an eligible plan in the case of a plan-to-plan transfer. An eligible plan-to-plan post-severance transfer may include a transfer to another eligible governmental plan. If the plan administrator directs the prior plan vendor to send funds directly to the TPA, the plan administrator shall provide instructions concerning the investment of the amounts transferred. If the specified payee is the TPA, they shall promptly deposit the check into the applicable account previously agreed upon. The prior plan vendor shall use its best efforts to ensure that the plan administrator or the specified payee receives the check no later than the 15th day after the prior plan vendor receives notification of the transfer.(D) If the check is sent to the plan administrator, the plan administrator shall: (i) endorse the check in favor of the TPA that will be receiving the transfer; and(ii) mail to the TPA that will be receiving the transfer the endorsed check and written instructions concerning the investment of the amounts transferred.(E) The TPA must send written confirmation to the plan administrator concerning the TPA's receipt of the transferred funds and written instructions. The TPA must ensure that the plan administrator receives the written confirmation no later than the 15th day after the TPA receives the transferred funds and instructions.(F) Upon approval of the plan administrator, the vendor transferring funds may cause a wire transfer to be made in lieu of issuing a check: (i) if the prior plan vendor sending funds complies with procedures specified by the plan administrator;(ii) the prior plan vendor receiving funds is approved by the plan administrator to accept a wire transfer of funds; and(iii) the prior plan vendor receiving funds complies with procedures specified by the plan administrator.(e) Resolving transfer-related problems. A prior plan vendor shall use its best efforts, exercise good faith and reasonable diligence in resolving all transfer-related administrative problems with the plan administrator or participant within a reasonable length of time, not to exceed 30 days, after receiving a transfer notification. The plan administrator may not complete any forms provided by a prior plan vendor in connection with a transfer.(f) Transfers into life insurance products. (1) The only transfer allowed into a life product is a transfer from an existing life insurance product to a life insurance product approved by the plan administrator.(2) This paragraph is effective until December 31, 1998. When a participant chooses to transfer deferrals and investment income to an existing replacement life insurance product within the same prior plan vendor, the State of Texas: (A) retains all of the incidents of ownership of the life insurance product;(B) is the sole beneficiary of the life insurance product;(C) is not required to transfer the life insurance product to the participant or the participant's beneficiary; and(D) is not required to pass through the proceeds of the product to the participant or the participant's beneficiary.(3) This paragraph is effective January 1, 1999, and thereafter. When a participant chooses to transfer deferrals and investment income to a life insurance product within the same prior plan vendor, the life insurance product shall be held in trust for the exclusive benefit of the participant and beneficiaries.(g) Telephone transfers. (1) A prior plan vendor may apply for approval to offer to participants the capability of making transfers of plan deferrals and investment earnings currently on account with that prior plan vendor from one qualified investment product or products to another qualified investment product or products within that prior plan vendor via telephone instructions given by the participant or plan administrator.(2) When a participant is in distribution, the telephone transfer option may be used; however, it must be used in accordance with § 87.17(i)(6)(C) of this title (relating to Transfers).(3) The prior plan vendor and the participant must obtain approval from the plan administrator and must follow all instructions and procedures prescribed by the plan administrator.34 Tex. Admin. Code § 87.15
The provisions of this §87.15 adopted to be effective March 28, 1991, 16 TexReg 1560; amended to be effective January 10, 1992, 16 TexReg 7743; amended to be effective November 23, 1992, 17 TexReg 7911; amended to be effective November 9, 1994, 19 TexReg 8617; amended to be effective January 5, 1996, 20 TexReg 11022; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective September 10, 1998, 23 TexReg 9067; amended to be effective January 10, 1999, 24 TexReg 165; amended to be effective January 5, 2003, 27 TexReg 12370; amended to be effective September 30, 2004, 29 TexReg 9204; amended to be effective May 29, 2005, 30 TexReg 3023