Sec. 1. (a) This section and Section 2 of this Act apply to:
(1) the governing boards of state-supported institutions of higher education;
(2) the Texas Higher Education Coordinating Board;
(3) the Texas Education Agency;
(4) the Texas School for the Deaf;
(5) the Texas School for the Blind and Visually Impaired;
(6) the Texas Department of Mental Health and Mental Retardation and the state schools, state hospitals, and other facilities and institutions under its jurisdiction;
(7) the Texas Department of Health and facilities and institutions under its jurisdiction;
(8) the Texas Juvenile Justice Department and facilities and institutions under its jurisdiction; and
(9) the governing boards of Centers for Community Mental Health and Mental Retardation Services, county hospitals, city hospitals, city-county hospitals, hospital authorities, hospital districts, affiliated state agencies, and each of their political subdivisions.

(b) An entity described by Subsection (a) of this section may enter into agreements with the entity’s employees for the purchase of annuities or for contributions to any type of investment for the entity’s employees as authorized in Section 403(b), Internal Revenue Code of 1986, and its subsequent amendments.
Sec. 2. (a) If an employee of an entity covered by Section 1 of this Act is paid by the Comptroller of Public Accounts, the comptroller may take the action, in regard to that employee, that is authorized by Subsection (b) of this section. If an employee of an entity covered by Section 1 is not paid by the comptroller, the governing board of the entity may take the action in regard to that employee.
(b) The comptroller or the governing board, as appropriate, may:
(1) reduce the salary of participants when authorized by the participants and shall apply the amount of the reduction to the purchase of annuity contracts or to contributions to any type of investment authorized in Section 403(b), Internal Revenue Code of 1986, and its subsequent amendments, the exclusive control of which will vest in the participants; and
(2) develop a system to allow or require participants to electronically authorize:
(A) participation under this Act;
(B) purchases of annuity contracts; and
(C) contributions to investments.
Sec. 3. (a) A state agency may permit some or all of the employees of the agency to participate in an employer-sponsored program described by Section 457(f) of the Internal Revenue Code of 1986, including subsequent amendments of that law.
(b) Repealed by Acts 2003, 78th Leg., ch. 1111, Sec. 46(10), eff. Sept. 1, 2003.
(c) In this section, “state agency” means a board, office, commission, department, institution, court, or other agency in any branch of state government.
Sec. 4. In this section and in Sections 5, 6, 9, 9A, 9B, 10, 11, and 12 of this Act:
(1) “Educational institution” means a school district or an open-enrollment charter school.
(2) “Eligible qualified investment” means a qualified investment product offered by a company that is eligible to offer the product under Section 6 of this Act.
(3) “Employee” means an employee of an educational institution.
(4) “Qualified investment product” means an annuity or investment that:
(A) meets the requirements of Section 403(b), Internal Revenue Code of 1986, and its subsequent amendments;
(B) complies with applicable federal insurance and securities laws and regulations; and
(C) complies with applicable state insurance and securities laws and rules.
(5) “Salary reduction agreement” means an agreement between an educational institution and an employee to reduce the employee’s salary for the purpose of making direct contributions to or purchases of a qualified investment product.
Sec. 5.
(a) An educational institution may enter into a salary reduction agreement with an employee of the institution only if the qualified investment product is an eligible qualified investment.
(b) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(1), eff. September 1, 2019.
(c) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(1), eff. September 1, 2019.
(d) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(1), eff. September 1, 2019.
(e) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(1), eff. September 1, 2019.
(f) To the greatest degree possible, educational institutions that enter into a salary reduction agreement with employees under this section shall require that contributions to eligible qualified investments be made by automatic payroll deduction and deposited directly in the investment accounts.
Sec. 6.
(a) An insurance company is eligible to offer qualified investment products to the employees of educational institutions under this Act if the company satisfies the following criteria:
(1) the company is licensed by the Texas Department of Insurance and is in compliance with minimum capital and surplus requirements, including applicable risk-based capital and surplus requirements prescribed by rules adopted by the department; and
(2) the company has experience in providing qualified investment products and has a specialized department dedicated to the service of qualified investment products, as determined by the educational institution.
(b) A company that offers qualified investment products other than annuity contracts, including a company that offers custodial accounts under Section 403(b)(7), Internal Revenue Code of 1986, is eligible to offer qualified investment products to employees of educational institutions under this Act.
(c) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(d) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(d-1) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(d-2) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(e) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(f) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(f-1) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(g) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(h) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
(i) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(2), eff. September 1, 2019.
Sec. 7. Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(3), eff. September 1, 2019.
Sec. 8. Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(4), eff. September 1, 2019.
Sec. 8A. Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(5), eff. September 1, 2019.
Sec. 9. (a) An educational institution may not:
(1) except as provided by Subdivision (8) of this subsection and Subsection (b) of this section, refuse to enter into a salary reduction agreement with an employee if the qualified investment product that is the subject of the salary reduction is an eligible qualified investment;
(2) require or coerce an employee’s attendance at any meeting at which qualified investment products are marketed;
(3) limit the ability of an employee to initiate, change, or terminate a qualified investment product at any time the employee chooses;
(4) grant exclusive access to an employee by discriminating against or imposing barriers to any agent, broker, or company that provides qualified investment products under this Act;
(5) grant exclusive access to information about an employee’s financial information, including information about an employee’s qualified investment products, to a company or agent or affiliate of a company offering qualified investment products unless the employee consents in writing to the access;
(6) accept any benefit from a company or from an agent or affiliate of a company that offers qualified investment products;
(7) use public funds to recommend a qualified investment product offered by a company or an agent or affiliate of a company that offers a qualified investment product; or
(8) enter into or continue a salary reduction agreement with an employee if the qualified investment product that is the subject of the salary reduction agreement is not an eligible qualified investment without first providing the employee with notice in writing that:
(A) indicates the reason the subject of the salary reduction agreement is no longer an eligible qualified investment; and
(B) clearly states that by signing the notice the employee is agreeing to enter into or continue the salary reduction agreement.
(b) An educational institution may refuse to enter into a salary reduction agreement with an employee if:
(1) the eligible qualified investment product that is the subject of the salary reduction agreement is offered by a company that does not comply with the educational institution’s administrative requirements;
(2) the educational institution imposes the administrative requirements uniformly on all companies that offer eligible qualified investment products; and
(3) the administrative requirements are necessary to comply with employer responsibilities imposed by:
(A) Section 403(b), Internal Revenue Code of 1986, and its subsequent amendments;
(B) any other provision of the Internal Revenue Code of 1986 that applies to Section 403(b);
(C) any regulation adopted in relation to a law described by Paragraph (A) or (B) of this subdivision that is effective after December 31, 2007; or
(D) any change to this Act that becomes effective after January 1, 2007.
Sec. 9A. A person, other than an employee of an educational institution, or an affiliate of the person may not enter into or renew a contract under which the person is to provide services for or administer a plan offered by the institution under Section 403(b), Internal Revenue Code of 1986, unless the person:
(1) holds a license or certificate of authority issued by the Texas Department of Insurance;
(2) is registered as a securities dealer or agent or investment advisor with the State Securities Board; or
(3) is a financial institution that:
(A) is authorized by state or federal law to exercise fiduciary powers; and
(B) has sufficient presence in this state to serve the employees of educational institutions who participate in the plan.
Sec. 9B. (a) This section applies to an entity under this Act that enters into a contract with an educational institution to administer a plan offered by the institution under Section 403(b), Internal Revenue Code of 1986.
(b) If a person described by Subsection (a) holds a meeting at which qualified investment products will be marketed to employees of the educational institution, the person must provide representatives of other companies eligible to sell qualified investment products under Section 6 of this Act an opportunity to attend and market their qualified investment products at the meeting.
Sec. 10. (a) A person commits an offense if the person:
(1) sells or offers for sale an investment product that is not an eligible qualified investment and that the person knows will be the subject of a salary reduction agreement;
(2) violates the licensing requirements of Title 13, Insurance Code, with regard to a qualified investment product that the person knows will be the subject of a salary reduction agreement; or
(3) engages in activity described by Subchapter B, Chapter 541, Insurance Code, with regard to a qualified investment product that the person knows will be the subject of a salary reduction agreement.
(b) An offense under this section is a Class A misdemeanor.
(c) If conduct that constitutes an offense under this section also constitutes a criminal offense under the Insurance Code, the actor may be prosecuted under this section or under the Insurance Code, but not under both this section and the Insurance Code.
Sec. 10A. (a) A person who violates this Act is subject to a civil penalty in an amount that does not exceed:
(1) $10,000 for a single violation; or
(2) $1,000,000 for multiple violations.
(b) For purposes of determining the amount of a civil penalty under this section, the court shall consider the following factors:
(1) the seriousness, nature, circumstances, extent, and persistence of the conduct constituting the violation;
(2) the harm to other persons resulting directly or indirectly from the violation;
(3) cooperation by the person in any inquiry conducted by the state concerning the violation, efforts to prevent future occurrences of the violation, and efforts to mitigate the harm caused by the violation;
(4) the history of previous violations by the person;
(5) the need to deter the person or others from committing such violations in the future; and
(6) other matters as justice may require.
(c) The attorney general may institute an action:
(1) for injunctive relief to restrain a violation by a person who is or who appears to be in violation of or threatening to violate this Act; or
(2) to collect a civil penalty under this section.
(d) An action under this section must be filed in a district court in Travis County.
(e) The attorney general may recover reasonable expenses incurred in obtaining injunctive relief under this section, including court costs, reasonable attorney’s fees, investigative costs, witness fees, and deposition expenses.
Sec. 11. (a) A person who offers to sell an annuity contract that is or will likely be the subject of a salary reduction agreement shall provide notice to a potential purchaser as provided by this section.
(b) Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(6), eff. September 1, 2019.
(c) The notice required under this section must be uniform and:
(1) be in at least 14-point type;
(2) contain spaces for:
(A) the name, address, and telephone number of the agent and company offering the annuity contract for sale;
(B) the name, address, and telephone number of the company underwriting the annuity;
(C) the license number of the person offering to sell the product;
(D) the name of the state agency that issued the person’s license;
(E) the name of the company account representative who has the authority to respond to inquiries or complaints; and
(F) with respect to fixed annuity products:
(i) the current interest rate or the formula used to calculate the current rate of interest;
(ii) the guaranteed rate of interest and the percentage of the premium to which the interest rate applies;
(iii) how interest is compounded;
(iv) the amount of any up-front, surrender, withdrawal, deferred sales, and market value adjustment charges or any other contract restriction that exceeds 10 years;
(v) the time, if any, the annuity is required to be in force before the purchaser is entitled to the full bonus accumulation value;
(vi) the manner in which the amount of the guaranteed benefit under the annuity is computed;
(vii) whether loans are guaranteed to be available under the annuity;
(viii) what restrictions, if any, apply to the availability of money attributable to the value of the annuity once the purchaser is retired or separated from the employment of the employer;
(ix) the amount of any other fees, costs, or penalties;
(x) whether the annuity guarantees the participant the right to surrender a percentage of the surrender value each year, and the percentage, if any; and
(xi) whether the annuity guarantees the interest rate associated with any settlement option; and
(3) state, in plain language:
(A) that the company offering the annuity must comply with Section 6 of this Act and that the annuity must be a qualified investment product;
(B) the civil remedies available to the employee;
(C) that the employee may purchase any eligible qualified investment through a salary reduction agreement;
(D) the name and telephone number of the Texas Department of Insurance division that specializes in consumer protection; and
(E) the name and telephone number of the attorney general’s division that specializes in consumer protection.
(d) A variable annuity must be accompanied by:
(1) a notice that includes any item listed in Subsection (c) of this section that is applicable to variable annuities;
(2) the prospectus; and
(3) any other purchasing information required by law.
(e) An equity-based index contract must state in plain language how the annuity contract will be credited with growth.
(f) If a notice and other information required under this section is not provided, any annuity contract for which the notice is required is voidable at the discretion of the purchaser. Not later than the 30th day after the date an employee notifies the seller in writing of the employee’s election to void the contract, the seller shall refund to the employee:
(1) the amount of all consideration paid to the purchaser; and
(2) 10 percent interest up to the date the employee provides the notice to the seller.
(g) A seller who receives a refund request under this section is not required to make a refund otherwise required by this section if, not later than the 30th day after the date the seller receives a request for a refund from the employee, the seller provides a copy of the notice signed by the employee.
Sec. 12. A company that offers an eligible qualified investment that is subject to a salary reduction agreement shall require that each of its representatives are properly licensed and qualified, by training and continuing education, to sell and service the company’s eligible qualified investments.
Sec. 13. Repealed by Acts 2019, 86th Leg., R.S., Ch. 203 (H.B. 2820), Sec. 1.10(7), eff. September 1, 2019.