As summer draws to a close and a new school year starts, the authority of the Texas Teachers Retirement System (TRS) over 403(b) will end.
HB 2820, which Gov. Greg Abbott (R) has signed into law, will change regulatory authority over the 403(b)s offered to public school teachers in Texas, effective Sept. 1, 2019.
TRS currently has regulatory authority over 403(b) products offered to Texas public school teachers. Insurance companies must certify to TRS that they offer a qualified investment product in order to be eligible to sell annuities and investments to teachers. TRS maintains a list of qualified investment products registered under this law, regulates maximum fees for 403(b) products and exercises other rulemaking authority.
The new law removes that authority from the TRS and changes the requirements that 403(b) providers have to meet in order to offer investment products. Beginning Sept. 1, in order to offer qualified investment products to employees of education institutions in Texas, a company will need to be licensed by the Texas Department of Insurance and be in compliance with minimum capital and surplus requirements.
The law also removes the requirement that eligible 403(b) plan providers have at least five years’ experience in offering qualified investment products and replaces the standard that an eligible 403(b) plan provider had to have its main office, branch office or a trust office in Texas with a requirement that the company have sufficient presence to serve plan participants.