34 Tex. Admin. Code § 87.19 – Reporting and Recordkeeping by Qualified Vendors

(a) Definition of current market value. In this section, the term "current market value" has the following meanings.
1. (1) For an investment in a qualified investment product offered by a bank, credit union, or savings and loan association, current market value means the amount of deferrals plus investment income minus withdrawals minus applicable fees.
2. (2) For an investment in a mutual fund, current market value means the price of each share at the end of the calendar quarter multiplied by the number of shares purchased with deferrals and investment income minus applicable fees.
3. (3) For an investment in a term life insurance product, the current market value is usually zero.
4. (4) For an investment in a life insurance product, current market value means the cash value of the product minus applicable fees.
5. (5) For an investment in an annuity, current market value equals the amount of deferrals plus investment income minus payouts minus applicable fees. For annuitized accounts, current market value means the present value of all remaining payments, taking into consideration the prevailing statutory interest rates pursuant to the Texas Insurance Code, Article 3.28.
(b) Reports to participants or beneficiaries.
1. (1) Generally.
  1. (A) A qualified vendor shall issue a report after the end of each calendar quarter to each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the vendor, except if the investment is in a product that is annuitized.
  2. (B) The report shall cover all transactions during a calendar quarter.
  3. (C) A qualified vendor shall ensure that the participant or beneficiary receives the report no later than the 45th day after the end of each calendar quarter.
  4. (D) The report must show for each qualified investment product:
    1. (i) amount of the participant's or beneficiary's deferrals and investment income in the product, including transfers;
    2. (ii) the amount of applied product costs or surrender charges;
    3. (iii) the date and amount of withdrawals during the reporting period; and
    4. (iv) current market value of the participant's or beneficiary's deferrals and investment income.
2. (2) Investments in life insurance products. The requirements of the preceding paragraph apply to investments of deferrals and investment income in life insurance products except:
  1. (A) the report is due at least once each calendar year instead of after each calendar quarter; and
  2. (B) the period covered by the report may be either the calendar year or the product year.
3. (3) Final reports. If a participant or beneficiary receives a lump-sum distribution, the qualified vendor from whom the lump-sum distribution is made shall issue a final report to the participant or beneficiary containing the information required in paragraph (1) of this subsection. The report must accompany the lump-sum distribution.
(c) Capital category reports. Once each quarter, or more frequently if appropriate, a qualified vendor which is a bank or savings and loan association shall report to the plan administrator that financial information regarding capital categories and risk-based ratios described in §87.7(j) and (k) of this title (relating to Vendor Participation).
(d) Quarterly reports to the plan administrator.
1. (1) Frequency and coverage of quarterly reports. Every vendor that has participant or beneficiary deferrals, investment income, and/or annuitized accounts must ensure that the plan administrator receives a report no later than the 35th day after the end of each calendar quarter. The report must be in the format specified in this subsection and must cover all transactions during the calendar quarter.
2. (2) Content of quarterly reports. For each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the vendor, the report required by this subsection must contain but is not limited to:
  1. (A) participant's or beneficiary's name, agency code and social security number(s);
  2. (B) list of the qualified investment products in which the participant's or beneficiary's deferrals and investment income have been invested even if the investment is in a product that is annuitized;
  3. (C) the amount of monthly deferrals for the reporting period separated and listed per month;
  4. (D) the interest and other income earned or lost during the reporting period through the investment of the deferrals and investment income;
  5. (E) the amount of federal income tax withheld during the reporting period;
  6. (F) current market value of each participant's or beneficiary's deferrals and investment income in each qualified investment product, including annuitized accounts and including, if appropriate, the number of shares and per share market value;
  7. (G) the amount of fees that the qualified vendor charged during the reporting period;
  8. (H) the amount transferred in and out as a result of a change of product within a company, identified separately by each internal transfer;
  9. (I) the amount of each plan administrator directed transfer in or out; and
  10. (J) the amount of each separate net distribution to the participant or beneficiary(s), except that multiple payments that fall on the same day should be combined into one amount for quarterly reporting purposes.
3. (3) Format of quarterly reports.
  1. (A) All quarterly reports must be in the format prescribed by the plan administrator and follow the DCP quarterly reporting specifications on a:
    1. (i) 10 1/2 inch magnetic tape;
    2. (ii) 3380 magnetic cartridge;
    3. (iii) 5 1/4 or 3 1/2 inch high quality PC diskette;
    4. (iv) manual form; or
    5. (v) electronic file transfer--use of file transfer protocol (FTP), via the Internet or as an attachment to an electronic mail (E-mail).
  2. (B) Only qualified vendors with less than 50 participants are eligible to report on a manual form.
  3. (C) Before a qualified vendor may use a medium other than a manual form to file a quarterly report with the plan administrator, the vendor must submit a written request along with a test tape, cartridge, electronic transfer, or diskette to the plan administrator. The ERS must approve and make arrangements with the qualified vendor prior to testing the electronic file transfer described in subparagraph (A)(v) of this paragraph. The test tape, cartridge, electronic transfer, or diskette must be in the format and contain the information prescribed by the DCP reporting specifications and contain the information that the plan administrator requires including the items listed in paragraph (2)(A)-(J) of this subsection. Failure to submit data in the specified format will result in the return of the media without processing. If the plan administrator determines that the test tape, cartridge, electronic transfer, or diskette is inadequate, the plan administrator shall ensure that the number of participants whose deferrals and investment income are invested at any given time in the vendor's qualified investment products does not exceed 49.
  4. (D) The product types must be defined and coded as prescribed by the plan administrator and as in the DCP quarterly reporting specifications.
  5. (E) If a participant or beneficiary has invested deferrals and investment income in two or more qualified investment products offered by the same qualified vendor and the products are of the same type, then the vendor must report a cumulative total of those deferrals and investment income.
  6. (F) Failure to submit a quarterly report with an authorized signature will result in a formal reprimand. After three formal reprimands, a vendor is subject to suspension or expulsion from the plan.
4. (4) Late quarterly reports.
  1. (A) A report is delinquent if the plan administrator receives the report after the due date.
  2. (B) A report that is received before the due date but which is returned to the vendor for completion or correction is delinquent if the plan administrator does not receive the completed or corrected version of the report within 10 days after the original due date.
(e) Recordkeeping. A qualified vendor shall retain records concerning investments in each qualified investment product by each participant. The records must be retained until the expiration of the second year after the vendor has distributed all the participant's deferrals and investment income.
(f) Quarterly reconciliation. In accordance with §87.3(b)(3)(H) of this title (relating to Participation by State Agencies), an agency coordinator is responsible for balancing participant and beneficiary records and reconciling those records with the data provided by qualified vendors and the plan administrator. Vendors shall assist the plan administrator and state agencies with correcting and explaining any discrepancies. Failure to assist the plan administrator and state agencies with this reconciliation will be considered a rules violation, and the plan administrator may take appropriate action under §87.21 of this title (relating to Remedies).

Source Note:The provisions of this §87.19 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 1, 1994, 18 TexReg 8460; amended to be effective November 9, 1994, 19 TexReg 8617; amended to be effective January 5, 1996, 20 TexReg 11022; amended to be effective November 11, 1996, 21 TexReg 10766; amended to be effective December 8, 1997, 22 TexReg 11718.