Section 87.9 - Investment Products(a) Prohibited activity. A prior plan vendor or prior plan vendor representative may not solicit investments in an investment product after August 31, 2000.(b) New qualified investment products. (1) Notwithstanding anything to the contrary in the sections in this chapter, other than paragraph (2) of this subsection, the plan administrator may not: (A) approve an investment product as a qualified investment product; or(B) issue a product approval notice.(2) Paragraph (1)(A) and (B) of this subsection do not apply to a qualified investment product that the plan administrator approved for participation in the plan before May 7, 1990. If the plan administrator has not executed a product contract with a prior plan vendor that is sponsoring a qualified investment product, the plan administrator and the prior plan vendor shall execute a product contract no later than the 90th day after May 7, 1990. If a product contract is not executed, the plan administrator shall terminate the qualified investment product's participation in the plan.(c) Eligibility of investment products. The investment products that are eligible for approval as qualified investment products are: (1) fixed and variable rate annuities;(2) life insurance (except that new life policies may not be offered in the plan by any vendor after December 31, 1992);(3) stable value account;(4) self-directed brokerage account;(5) target date retirement funds;(7) money market accounts, certificates of deposit, share certificates or passbook savings accounts offered by a bank, savings and loan association, or credit union.(d) Review of investment products. (1) General requirements. The plan administrator may not issue a product approval notice concerning an investment product unless:(A) the prior plan vendor offering the investment product submits to the plan administrator the documentation and information the plan administrator requires;(B) the prior plan vendor offering the product agrees to accept both transfers to and the investment of deferrals in its product;(C) the plan administrator finds that the advertising material for the product, if any, complies with the sections in this chapter;(D) the plan administrator determines that the disclosure form for the product complies with the sections in this chapter;(E) the plan administrator finds that the investment product has a guaranteed minimum interest rate if the product has a variable interest rate;(F) the plan administrator determines that the investment product complies with § 87.7(b)(5) of this title (relating to prior plan vendor participation), if the product is a mutual fund;(G) the plan administrator concludes that the inclusion of the investment product in the plan would be in the best interests of the plan; and(H) the plan administrator ascertains that the vendor has obtained the necessary approvals from the appropriate regulatory agencies.(2) Additional requirements for approving investment products offered by insurance companies. Before the plan administrator may sign a product contract, the plan administrator must: (A) obtain written confirmation from the Texas Department of Insurance that the investment product has been approved for sale in Texas;(B) determine that the amount of the investment product's premiums, payments, and benefits are not calculated with regard to the sex of the person insured or of the recipient of the benefits; and(C) determine that the investment product does not insure anyone other than a participant.(e) Product contracts. (1) The plan administrator may not sign a product contract with a prior plan vendor unless the plan administrator has already issued a product approval notice concerning the investment product that will be covered by the product contract.(2) The plan administrator may not sign a product contract that does not comply with the sections in this chapter and applicable law.(3) The plan administrator may, in its sole discretion, permit a prior plan vendor to replace, substitute, or merge an existing plan product with another product, if procedures established by the plan administrator are met.(f) Withdrawal of a qualified investment product from the plan. (1) A prior plan vendor may withdraw a qualified investment product from the plan after notifying, in writing, the plan administrator and all participants whose deferrals and investment income are invested in the qualified investment product. The prior plan vendor must ensure that the plan administrator and the participants receive the written notice no later than the 60th day before the effective date of the withdrawal.(2) A prior plan vendor may establish the effective date of a withdrawal of the vendor's qualified investment product. The prior plan vendor must clearly state the effective date in the written notice required by paragraph (1) of this subsection.(3) Notwithstanding paragraph (2) of this subsection, if a qualified investment product has a specific term, such as a three-year certificate of deposit or a 30-day passbook account, the effective date of the withdrawal may not be before the term of the product has expired for every participant unless approved by the plan administrator, the prior plan vendor must hold the participants, the plan and plan administrator harmless from any fees or penalties that may be applicable in connection with such premature termination or withdrawal. The term of a product will be deemed expired if all participants have transferred their funds to another qualified investment product.(4) After receiving notice of withdrawal, the plan administrator shall contact each affected participant to submit a prior funds transfer form for the disposition of his or her deferrals and investment income. For each participant from whom the plan administrator has not received a prior funds transfer form by the effective date of the withdrawal, the plan administrator shall initiate a transfer of all deferrals and investment income from the qualified investment product being withdrawn to the default fund in the revised plan.(5) When a prior plan vendor withdraws a qualified investment product from the plan, the vendor may not charge a fee or permit to be charged or penalty to participants, the plan or plan administrator for transfers made after the notice of withdrawal.(6) When a prior plan vendor that is an insurance company with existing life policies in the plan withdraws a life insurance product from the plan, this paragraph applies in addition to the preceding paragraphs of this subsection. (A) In this paragraph, the term "withdrawn life insurance product" means a life insurance product that is no longer a qualified investment product because the life insurance company offering the product has withdrawn the product from the plan.(B) A participant whose deferrals and investment income have been invested in a withdrawn life insurance product may continue life insurance coverage with the insurance company offering the product.(C) If the insurance company has a life insurance product remaining in the plan that is comparable to the withdrawn life insurance product, this paragraph applies. The insurance company shall offer continuing coverage in: (i) a qualified investment product that is comparable to the withdrawn life insurance product; and(ii) a life insurance product that is not a qualified investment product but is comparable to the withdrawn life insurance product.(D) If the insurance company does not have a life insurance product remaining in the plan that is comparable to the withdrawn life insurance product, this paragraph applies. The company must offer continuing life insurance coverage to each participant whose deferrals and investment income were invested in the withdrawn life insurance product. The insurance company shall offer continuing coverage in a life insurance product that is comparable to the withdrawn life insurance product.(E) If a participant continues life insurance coverage in a life insurance product that is not a qualified investment product, the participant must pay the premiums for the coverage directly to the insurance company. The premiums may not be paid with deferrals or investment income.(F) A participant may exercise the participant's right to continue life insurance coverage only if the participant mails to the insurance company written notice of intention to continue the coverage. The written notice must be postmarked no later than the 60th day after the effective date of the withdrawal of the life insurance product from the plan. However, an insurance company may increase the 60-day time limit for a participant or for all participants.(G) When a participant elects to continue life insurance coverage, the insurance company with which the coverage is continuing may not: (i) refuse to continue the life insurance;(ii) require a postponement or an interruption in coverage for any length of time;(iii) require the participant to provide evidence of insurability;(iv) require the participant to apply for coverage;(v) require the participant to select a different life insurance product from the withdrawn life insurance product;(vi) discriminate in any manner against the participant because of the company's withdrawal of the product;(vii) treat the participant differently than the company would treat a non-participant with the same life insurance coverage; or(viii) increase the premiums charged to the participant solely because the company withdrew a life insurance product from the plan or because the participant elected to continue coverage.(H) A prior plan vendor must inform the participant in the written notice required by paragraph (1) of this subsection that the participant has the rights specified in this paragraph.(I) If a prior plan vendor does not comply with subparagraph (H) of this paragraph, then a participant may exercise the participant's right to continue insurance up to the 120th day after the prior plan vendor actually mails written notice to the participant containing a full explanation of the participant's rights.34 Tex. Admin. Code § 87.9
The provisions of this §87.9 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 January 5, 1996, 20 TexReg 11022; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective January 10, 1999, 24 TexReg 165; amended to be effective July 10, 2000, 25 TexReg 6558; amended to be effective January 5, 2003, 27 TexReg 12370; amended to be effective September 11, 2003, 28 TexReg 7785; amended to be effective September 30, 2004, 29 TexReg 9204; amended to be effective May 29, 2005, 30 TexReg 3023; amended to be effectiveDecember 31, 2007, 32 TexReg 10054; Amended by Texas Register, Volume 40, Number 23, June 5, 2015, TexReg 3576, eff. 6/9/2015