1. (a) In this section:

   1. (1) The term "ACH" (Automated Clearing House) means the legal framework of rules and operational procedures adopted by financial institutions for the electronic transfer of funds.
   2. (2) The term "ACH Credit" means an ACH transaction initiated by an Employer for the electronic transfer of funds from the account of an Employer to the account of TCDRS.
   3. (3) The term "ACH Debit" means an ACH transaction initiated by TCDRS for the electronic transfer of funds from the account of an Employer to the account of TCDRS.
   4. (4) The term "electronic transfer of funds" means the transfer of funds, other than by check, draft or similar paper instrument, that is initiated electronically to order, instruct, or authorize a financial institution to debit or to credit an account. Amounts sent to TCDRS by electronic transfer of funds are received on the date the funds are credited to TCDRS's account.
   5. (5) The term "pre-authorized direct debit" means the method available to an Employer for electronically paying required contributions by granting a continuing authorization to TCDRS to initiate an ACH Debit each month for the electronic transfer of funds from the designated bank account of the Employer to the account of TCDRS in an amount equal to the contributions required to be paid based on the monthly report as filed.
   6. (6) The term "wire transfer" generally means a single transaction, initiated by an Employer, in which funds are electronically transferred to the account of TCDRS using the Federal Reserve Banking System rather than the ACH.
2. (b) Monthly amounts required to be contributed to TCDRS in accordance with Chapter 845 of the Texas Government Code must be made by pre-authorized direct debits (ACH Debits), ACH Credits, or wire transfers.

3. (c) An Employer may elect to use the pre-authorized direct debit method of payment by filing a signed authorization agreement with TCDRS in which the Employer has designated a single bank account from which all transfers will be made.

   1. (1) The authorization agreement entered into for this purpose constitutes continuing authority for TCDRS to initiate a direct debit of the Employer's designated bank account each month and shall be effective with respect to each payroll of the Employer.
   2. (2) An authorization agreement shall remain in effect until TCDRS receives a valid new written agreement that designates a different bank account. A new authorization agreement must be filed if there is any change in the designated bank account. TCDRS, in its sole discretion, may terminate the authorization agreement by sending written notice to the Employer. Thereafter, the Employer must remit all contributions by ACH Credit or wire transfer.
   3. (3) Following receipt of a payroll report filed under an unrevoked authorization agreement, TCDRS will initiate an ACH Debit in the amount required to be contributed for that month based on the report; however the actual transfer of funds from the Employer's designated account will not occur prior to the due date of the report.
   4. (4) An Employer that timely files payroll reports with TCDRS is considered to have submitted their required contributions provided that there are sufficient funds available for transfer from the Employer's designated account on the later of the due date of the report or the date the report is received. An ACH Debit that is reversed by an Employer or that fails because sufficient funds are not available for transfer constitutes non-payment of the required contributions with respect to that monthly report and, thereafter, such required contributions will not be considered to have been received until the day the funds are actually credited to the account of TCDRS.
4. (d) An Employer failing to timely file the required information or remit the required contributions by the due date of the report is subject to a penalty for late reporting in accordance with Section 845.407 of the Government Code (relating to Penalty for Late Contributions).

Source Note:The provisions of this §107.5 adopted to be effective January 8, 2026, 51 TexReg 159.