(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:
(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;
(6) mutual funds; and
(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:
(2) Additional requirements for approving investment products offered by insurance companies. Before the plan administrator may sign a product contract, the plan administrator must:
(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.
Source Note: 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 to be effective June 9, 2015, 40 TexReg 3575