YOU HAVE FOUND OUR OLD WEB SITE. BE SURE TO CHECK OUT OUR NEW AND IMPROVED SITE!     Texas Acts to Clean Up 403(b) Market     Austin, Texas — The Texas Legislature, in response to growing complaints by teachers and several high profile class action lawsuits, has enacted sweeping changes in the way 403(b) products can be sold to teachers in Texas.   SB 273, which passed both the House and Senate in nearly unanimous votes, radically changes the current system in Texas. Under a 1986 law, school districts in Texas were prohibited from doing any significant screening of 403(b) vendors. This led to often questionable relationships between school officials and financial providers (see: Retirement Savings Plan Cost Teachers, Lawsuits Say). Under the revised law, which goes into effect June 1, 2002, 403(b) vendors will have to:   1. Meet financial strength requirements and not have regulatory actions against them by the Texas Department of Insurance.   2. Apply for and be approved by the Texas Teachers Retirement System.   3. Use disclosure forms in the sale of fixed annuities, variable annuities and equity indexed annuities, which will disclose many of the traps that teachers frequently complain about with annuity products.   4. School districts are also prohibiting from entering into arrangements which favor certain vendors, grant exclusive access, or offer reduced fee cafeteria plan services in exchange for access.     G. Wade Caldwell, an attorney from San Antonio, Texas, who has filed most of the class action lawsuits for teachers complaining about 403(b) products and the marketing gimmicks used to sell them, was cautiously optimistic about the bill. "While we would have preferred a bill which was clearer that TRS should be approving no load mutual funds as the primary option for teachers, the final result is still a great advance for protecting teachers from the unscrupulous annuity salesman. It is particularly important that the legislature outlawed the sleazy deals where school districts are contracting with vendors to give exclusive access to teachers, which gives the appearance that the vendor is endorsed by the school district."   Caldwell also stated that he would next be working with contacts in California to see whether similar legislation could be passed there.   The text of SB 273 can be obtained by going to the Texas Legislature's website, which is www.capitol.state.tx.us/tlo/billnbr.htm.     Home | Disclaimer | © 2001 403(b)wise. All rights reserved.