(a) Prohibited activities. A prior plan vendor may not solicit business from employees or participants or otherwise participate in the plan until the prior plan vendor and the plan administrator have signed a vendor contract. No applications have been or will be accepted by the plan administrator for new prior plan vendors since January 1, 2000. For purposes of this Chapter, any language referring to prior plan vendor qualifications, eligibility or participation requirements remains necessary in order for the plan administrator to continue to assess whether the prior plan vendor remains an eligible vendor.
(b) Eligibility requirements of a prior plan vendor.
(1) Banks. The plan administrator shall disapprove a bank's application to become a prior plan vendor if:
(2) Credit unions. The plan administrator shall disapprove a credit union's application to become a prior plan vendor if:
(3) Insurance companies.
(4) Savings and loan associations. The plan administrator shall disapprove a savings and loan association's application to become a prior plan vendor if:
(5) Prior plan vendors of mutual funds. The plan administrator shall disapprove a vendor's application to become a prior plan vendor if the vendor proposes to offer a mutual fund as a qualified investment product and the mutual fund is not:
(c) Procedure for approving a prior plan vendor.
(1) The home office of each prior plan vendor seeking participation in the plan must request an application package from the plan administrator. The plan administrator shall ensure that the application package contains a list of documents and other items that must be submitted to the plan administrator with the application.
(2) The plan administrator may not approve a prior plan vendor for participation in the plan unless:
(3) As a prerequisite to approving an application, the plan administrator shall require a prior plan vendor to:
(4) If the plan administrator approves an application, the plan administrator shall sign and send to the prior plan vendor a vendor contract that complies with the sections in this chapter and applicable law.
(d) Contacts.
(1) In the application package, a prior plan vendor shall designate one individual who will be:
(2) In addition to the requirements of paragraph (1) of this subsection, an out-of-state prior plan vendor shall designate a responsible and knowledgeable individual in Texas who the plan administrator may contact for information about the vendor's activities in the plan.
(3) Each prior plan vendor shall update the designations and information required by this subsection no later than the 30th day after a change.
(4) The designations and updates required by this subsection must contain the names, addresses, and business telephone numbers of the individuals designated.
(e) Change of name or legal status by a prior plan vendor.
(1) If a prior plan vendor's name or legal status changes through merger, sale, dissolution, or any other means, the prior plan vendor must notify the plan administrator in writing no later than the 30th day after the change. The notice must contain a detailed description of the transaction that causes the change.
(2) If a change in legal status results in the prior plan vendor's participation in the plan being conducted by a different legal entity, the new entity must notify the plan administrator no later than the 90th day after the change for approval as a qualified vendor before the entity may participate in the plan. If the new entity is not approved, participant funds would then be transferred to the revised plan. Transfers under this paragraph shall be made in accordance with §87.15(c) and (d) of this title (relating to Transfers) and shall not result in a fee or penalty being charged against the participant's account. Provided, however, that the plan administrator may, in its sole discretion, choose not to apply this paragraph, if it determines that it would be in the best interests of the plan and participants.
(3) If a change in legal status results in a prior plan vendor's participation in the plan being conducted by a different legal entity that is also a prior plan vendor, participant funds may be transferred to that prior plan vendor, who then becomes responsible for the reporting requirements of the transferred funds.
(f) Voluntary termination of participation in the plan.
(1) A prior plan vendor may voluntarily terminate its participation in the plan after notifying, in writing, the plan administrator and all participants whose deferrals and investment income are invested in the vendor's qualified investment products. 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 termination.
(2) A prior plan vendor may establish the effective date of its termination from the plan. 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 the terminating prior plan vendor sponsors qualified investment products that have specific terms, such as a three-year certificate of deposit or a 30-day passbook account, the effective date of the prior plan vendor's termination may not be before the terms of all those products have expired for every participant unless approved by the plan administrator, the prior plan vendor must hold the participants, the plan and the plan administrator harmless from any fees or penalties that may be applicable in connection with such premature termination.
(4) After receiving notice of termination, the plan administrator shall request 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 termination, the plan administrator shall initiate a transfer of all deferrals and investment income from the terminating vendor's qualified investment products to the revised plan.
(5) When a prior plan vendor voluntarily terminates its participation in the plan, the vendor may not charge or permit to be charged a fee or penalty to participants, the plan or plan administrator for the transfers made after the notice of termination.
(6) When a prior plan vendor that is an insurance company voluntarily terminates its participation in the plan, this paragraph applies in addition to the preceding paragraphs of this subsection.