24975-24977

EDUCATION CODE
SECTION 24975-24977




24975.  (a) The board may develop one or more deferred compensation
plans under Section 457 of the Internal Revenue Code that an employer
may choose to establish and offer to its employees who are members
or participants of the plan under this part or Part 14 (commencing
with Section 26000) or any employee of a local public agency or
political subdivision of this state that employs persons to perform
creditable service subject to coverage by the plan under this part.
   (b) If an employer adopts a deferred compensation plan described
in subdivision (a):
   (1) The employer shall enter into a written contractual
arrangement with the system under which the system, or a third-party
administrator acting on behalf of the system, shall provide
investment, recordkeeping, and administrative services for the
deferred compensation plan.
   (2) The initial period of the contractual arrangement described in
paragraph (1) shall be for a term of five years.
   (3) The deferred compensation plan shall continue to constitute a
separate plan established and maintained by the adopting employer.
   (4) The system shall be treated as acting on behalf of the
employer in administering the deferred compensation plan.
   (5) The terms and administration of the deferred compensation plan
shall be in accordance with the applicable provisions of Section 457
of the Internal Revenue Code.
   (6) In administering the deferred compensation plan on behalf of
the employer, the board shall have the same investment authority and
discretion and be subject to the same fiduciary standards pursuant to
Chapter 4 (commencing with Section 22250), with respect to amounts
deferred under the deferred compensation plan as applied by the
system with respect to the Teachers' Retirement Fund.
   (c) If an employer establishes and maintains a deferred
compensation plan described in subdivision (a), the deferred
compensation plan shall be offered to all of its employees who are
eligible to participate pursuant to this section.
   (d) An employee participating in a deferred compensation plan
established by an employer under this section shall enter into a
written agreement with the employer for the deferral of compensation
prior to the performance of the services to which that compensation
relates.
   (e) If an employer chooses to establish and maintain a deferred
compensation plan described in subdivision (a) that is to be
administered by the system, the employer shall take all necessary or
appropriate action to implement this section in cooperation with the
system.



24976.  (a) (1) The Teachers' Deferred Compensation Fund is hereby
established to serve as the repository of funds received by the
system pursuant to this chapter, Chapter 36 (commencing with Section
24950) or Chapter 39 (commencing with Section 25100).
   (2) Except as described in paragraph (7), premium and fee revenues
received by the system pursuant to Chapter 36 (commencing with
Section 24950), except Section 24950.5, shall be deposited into the
403(b) Services Operating Account within the Teachers' Deferred
Compensation Fund, and shall only be used to carry out the purposes
of that chapter, excluding Section 24950.5.
   (3) Premium and fee revenues received by the system pursuant to
Section 24950.5 of Chapter 36 shall be deposited into the Roth IRA
Operating Account within the Teachers' Deferred Compensation Fund,
and shall only be used to carry out the purposes of that section.
   (4) Premium and fee revenues received by the system pursuant to
this chapter shall be deposited into the Deferred Compensation
Services Operating Account within the Teachers' Deferred Compensation
Fund, and shall only be used to carry out the purposes of this
chapter.
   (5) Compensation deferrals received by the system pursuant to this
chapter shall be deposited into the Deferred Compensation Investment
Account within the Teachers' Deferred Compensation Fund, and shall
only be used to carry out the purposes of this chapter.
   (6) Fee revenues received by the system pursuant to Chapter 39
(commencing with Section 25100) shall be deposited into the 403(b)
Vendor Registry Operating Account within the Teachers' Deferred
Compensation Fund, and shall only be used to carry out the purposes
of that chapter.
   (7) Fee revenues received by the system pursuant to Sections 24953
and 24977, and any assets in the Teachers' Retirement Program
Development Fund pursuant to Section 22307.5 as of January 1, 2008,
shall be deposited into the Deferred Compensation Administrative and
Compliance Services Operating Account within the Teachers' Deferred
Compensation Fund, and shall only be used to carry out the purposes
of Sections 24953 and 24977.
   (8) Notwithstanding Section 13340 of the Government Code, all
moneys in the Teachers' Deferred Compensation Fund shall be
continuously appropriated without regard to fiscal year to carry out
the purposes of this chapter, Chapter 36 (commencing with Section
24950), and Chapter 39 (commencing with Section 25100).
   (b) With respect to deferred compensation plans administered
pursuant to this chapter, and notwithstanding any other provision of
law, the system may retain a bank or trust company, or a credit
union, to serve as custodian of the moneys of the Teachers' Deferred
Compensation Fund and to provide for safekeeping, recordkeeping,
delivery, securities valuation, or investment performance reporting
services, or services in connection with investment of the Teachers'
Deferred Compensation Fund.
   (c) With respect to deferred compensation plans administered
pursuant to this chapter, the Teachers' Deferred Compensation Fund
shall consist of the following sources and receipts, and
disbursements shall be accounted for as set forth below:
   (1) Premiums determined by the system and paid by participating
employers and employees for the cost of administering the deferred
compensation plan.
   (2) Asset management fees as determined by the system assessed
against investment earnings of investment option or of other
investment funds. These fees shall be disclosed to employees
participating in the deferred compensation plan.
   (3) Compensation deferrals to be paid in monthly installments by
employers sponsoring deferred compensation plans described in Section
24975 for investment by the system. The moneys shall be deposited in
the investment corpus account within the Teachers' Deferred
Compensation Fund and invested in accordance with the investment
options selected by the participating employee.
   (4) Disbursements to participating employees shall be paid from a
disbursement account within the Teachers' Deferred Compensation Fund
in accordance with applicable federal law pertaining to deferred
compensation plans.
   (5) Income, of whatever nature, earned on the Teachers' Deferred
Compensation Fund shall be credited to the appropriate account. The
accounts of participating employees of the employer shall be
individually posted to reflect amounts of compensation deferred and
investment gains and losses. A periodic statement shall be given to
each participating employee.
   (6) The system shall have exclusive control of the administration
and investment of the Teachers' Deferred Compensation Fund.
   (7) All of the system's costs of administering the deferred
compensation plans pursuant to this chapter shall be recovered from
the employees who participate in the plans or assets of the Teachers'
Deferred Compensation Fund in a manner acceptable to the board.



24977.  (a) An employer that employs persons to perform creditable
service subject to coverage by the plan under this part that offers a
deferred compensation plan as described in Section 457 of the
Internal Revenue Code may enter into a written contract with the
system for services regarding that deferred compensation plan
provided by the employer. That contract may include any of the
following services:
   (1) Services to ensure compliance with Section 457 of the Internal
Revenue Code regarding the deferred compensation plan including, but
not limited to, services that permit the system to do any of the
following:
   (A) Administer and maintain written plan documents governing the
employer's plan.
   (B) Review and authorize requests for unforeseeable emergency
withdrawals, transfer requests, loan requests and other disbursements
permitted under Section 457 of the Internal Revenue Code.
   (C) Review and determine domestic relations orders as qualified
domestic relations orders as described in Section 414(p) of the
Internal Revenue Code.
   (D) Provide notice to eligible employees that is consistent with
Title 26 of the Code of Federal Regulations that those employees may
participate in the deferred compensation plan.
   (E) Administer and maintain specimen salary reduction agreements
for the employer and employees of that employer to initiate payroll
deferrals.
   (F) Monitor, from information provided either directly from the
employee, as part of the common remitting services provided pursuant
to paragraph (2), through information provided by the employer, or
through information provided by vendors authorized by the employer to
provide investment products, the maximum contributions allowed by
employees participating in the deferred compensation plan as
described in Sections 414(v) and 457 of the Internal Revenue Code.
   (G) Calculate and maintain vesting information for contributions
made by the employer to the deferred compensation plan.
   (H) Identify and notify employees that are required to take a
minimum distribution of the funds in that employee's deferred
compensation plan as described in Section 401(a)(9) of the Internal
Revenue Code.
   (I) Coordinate responses to the Internal Revenue Service if there
is an Internal Revenue Service audit of the deferred compensation
plan.
   (2) Services to administer the deferred compensation plan that
include, but are not limited to, all of the following:
   (A) Common remitting services.
   (B) General educational information to employees about the
deferred compensation plan that includes, but is not limited to, the
enrollment process, program eligibility, and investment options.
   (C) Internal reports for the employer to ensure compliance with
Section 457 of the Internal Revenue Code and Title 26 of the Code of
Federal Regulations.
   (D) Consulting services related to the design, operation, and
administration of the plan.
   (E) Internal audits, on behalf of an employer, of a provider's
plan compliance procedures with respect to the provider's custodial
account offered under the employer's plan. These audits shall not be
conducted more than once per year for any provider's plan unless
documented evidence indicates a problem in complying with Section 457
of the Internal Revenue Code.
   (b) The system may contract with a third-party administrator for
the administrative and compliance services to employers described in
subdivision (a). For purposes of this subdivision, a "third-party
administrator" shall mean a person or entity other than the system
that provides administrative or compliance services as described in
subdivision (a). If the system contracts with a third-party
administrator, the system shall do all of the following:
   (1) Determine that hiring a third-party administrator is in the
best interest of the participants to the deferred compensation plan,
their beneficiaries, and the employer that provides that deferred
compensation plan.
   (2) Require the third-party administrator to provide proof of
liability insurance and a fidelity bond in an amount determined by
the system to be sufficient to protect the assets of participants and
beneficiaries in the deferred compensation plan.
   (3) Require evidence, if the third-party administrator is related
to or affiliated with a provider of investment products pursuant to
Section 457 of the Internal Revenue Code, that data generated from
the services provided by the third-party administrator are maintained
in a manner that prevents the provider of investment products from
accessing that data.
   (c) Nothing in this section requires an employer to contract with
the system for the administrative or compliance services described in
subdivision (a). A written contract for the administrative or
compliance services described in subdivision (a) shall be on behalf
of and at the request of the employer.
   (d) Any personal information obtained by the system in providing
services pursuant to this section shall be used by the system only to
provide those services for the employer in accordance with the
contract entered into with the employer pursuant to subdivision (b).
   (e) The cost of providing administrative or compliance services
pursuant to this section shall be deemed to be a cost incurred by the
employer and subject to subdivision (b) of Section 44041 or
subdivision (b) of Section 87040.
   (f) In any conflict between this section and Section 44041.5 or
87040.5, including with respect to the provision of services provided
pursuant to a contract between an employer and the system, the
provisions of this section shall prevail.
   (g) The system shall disclose to an employer seeking the services
described in this section any fees, commissions, cost offsets,
reimbursements, or marketing or promotional items received by the
system or a third-party administrator from any plan provider selected
as a vendor of a deferred compensation plan by the employer. If the
system or a third-party administrator is affiliated with or has a
contractual relationship with a provider of deferred compensation
plans, the system or third-party administrator shall disclose the
existence of that relationship to each employer and each individual
participant in the deferred compensation plan.