What is a 403(b)-retirement plan?
A 403(b) retirement plan, also known as a tax-sheltered annuity (TSA), allows employees of educational and certain non-profit organizations to contribute to a retirement program on a salary reduction basis. The 403(b) is often referred to as the cousin to the 401(k) plan because it is only for schools, universities and non-profit entities.
Procedure for Enrollment
Texas Benefit Services, L.L.P.
13467 Wetmore Road
San Antonio, TX 78457
Additional Information for School Employees
A very informative Web site regarding financial planning and investing through 403(b) plans is maintained for school employees by the U.S. Securities and Exchange Commission at Just For Teachers: www.sec.gov/investor/teachers.shtml
Background and Explanation
Of 403(b) Certification
Senate Bill 273, 77th Legislature, 2001, set guidelines for certification by companies who offer voluntary 403(b) investment options through salary reduction agreements between public school employees and their local employer.
The law set criteria for qualified companies selling qualified products such as annuities and mutual funds. The law also required TRS to determine additional criteria, as well as to compile a list of companies from which school employees can choose when they wish to use a salary reduction agreement to make their investments. The TRS Board of Trustees adopted administrative initial rules to implement required changes in the law on March 28, 2002.
What this means to public school employees …
Public school employees have the option to enter into investments using payroll reduction with those companies that meet the guidelines set forth by law and rule and are listed on the TRS List of 403(b) Certified Companies. However, a statutory grandfather provision stipulates that this law does not apply to a contract between an employee and a company offering investments or annuities that was entered into before June1, 2002.
What this means to school districts …
The law allows school districts and open enrollment charter schools to enter new payroll reduction agreements with employees for the purchase of these products only if the investments are offered by companies on the TRS list. A grandfather provision in the law exempts those 403(b) contracts between an employee and a company that were entered into before June 1, 2002.
What this means to companies and agents marketing applicable products …
Companies certify to TRS in accordance with the specifications and deadlines prescribed by law and TRS rules if they meet certain criteria required by law and rule. Forms and instructions for company certification are available from this Web site (www.trs.state.tx.us). The uniform disclosure notice to be provided to all potential purchasers of annuity contracts is also available from this Web site (www.trs.state.tx.us).
How to obtain a copy of the law …
A copy of §§4-12, Article 6228a-5, Texas Revised Civil Statutes Annotated, relating to 403(b) Certification page under “Legislation & Rules.” A copy of the full text of the enrolled (final) version of Senate Bill 273, 77th Legislative Session may be found online at www.capital.state.tx.us. For those without Internet access, the law is also available from the Texas Legislative Reference Library which is located in the
How to review the TRS administrative rules …
Current rules may be accessed from the 403(b) Certification page under “Legislation & Rules.”