19-11.001. Definitions

The following words and terms shall have the following meanings for purposes of Chapters 19-11 and 19-13, F.A.C.:

(1) “Accumulated Benefit Obligation,” or “ABO” means the present value of a member’s benefit in the Pension Plan, which is the defined benefit program of the Florida Retirement System (FRS), to which the member would be entitled if the member retired from the Pension Plan. This present value shall be calculated in accordance with the formula set out in Section 121.4501(3)(b)1., F.S., by the Division of Retirement (Division) within the Department of Management Services. The ABO changes on a monthly basis based on the following factors: age, service credit, salary level, and membership class.

(2) “Administrator,” “Investment Plan Administrator,” or “Plan Choice Administrator,” means the entity hired by the State Board of Administration (SBA), pursuant to Section 121.4501(8)(a)1., F.S., to provide administrative services to the Investment Plan or the entity responsible for processing enrollment forms received from employees making a retirement plan choice either by form or electronically.

(3) “Aggregate amount of $75,000 or more” means the total of the amounts transferred out of a fund by a member and into the same fund, in either order (i.e., in/out or out/in) during any rolling 30-calendar day period, regardless of the number of Round Trips.

(4) “Alternate Payee” is the person or persons eligible to receive payments under the Plan in accordance with a Qualified Domestic Relations Order (QDRO). A QDRO can only name a member’s spouse, former spouse, child, or other dependent as an Alternate Payee.

(5) “Annual addition” means the sum for any limitation year of all employer and employee contributions which are treated as annual additions to a defined contribution plan for purposes of Section 415(c) of the U.S. Internal Revenue Code, as amended (“Code”) and forfeitures. Examples of such contributions to a defined contribution plan include the following: employer and employee contributions to the Investment Plan; contributions to the Senior Management Service Optional Annuity Program described in Section 121.055(6), F.S.; contributions to a Code s. 401(k) plan; employer contributions to an individual retirement account; voluntary employee contributions to accounts in a defined benefit plan [but not including contributions to a qualified cost-of-living arrangement in accordance with Code s. 415(k)]; amounts allocated to the separate account of a key employee for post-retirement medical benefits described in Code s. 419A(d)(2); and contributions to an individual medical benefit account, as described in Code s. 415(l). Examples of contributions which are not annual additions for purposes of Section 415(c) of the Code as applied to the Investment Plan include the following: rollover contributions or transfers from another eligible retirement plan to the Investment Plan; contributions to a Code s. 403(b) annuity plan; contributions to a Code s. 457 deferred compensation plan; and contributions which are additional elective deferrals under Code s. 414(v).

(6) “Benefits” is used in the same sense, and has the same meaning, as used in Section 121.4501(7), F.S.

(7) “Code” means the U.S. Internal Revenue Code, as amended. The Code is available free on the Internet at the following web site: uscode.house.gov.

(8) “Compensation” means the monthly salary paid by an employer to a member for work performed arising from that employment, as defined in Section 121.021(22), F.S.

(9) “Complaint” shall mean a member’s written or verbal expression of dissatisfaction with an Investment Plan provider or one of its representatives.

(10) “Death in line of duty” means a death occurring as described in Section 121.021(14), F.S.

(11) “Default” or “default election” arises when a newly-hired employee fails to enroll in the Pension Plan or Investment Plan by 4:00 p.m. (Eastern Time) the last business day of the 8th month following the employee’s month of hire. Such employee is deemed to have defaulted into the Investment Plan as his or her initial plan choice or first election.  If the newly-hired employee is employed in a position included in the Special Risk Class, and fails to enroll in the Pension Plan or Investment Plan by 4:00 p.m. (Eastern Time) of the last business day of the 8th month following the employee’s month of hire, the employee is deemed to have defaulted into the Pension Plan as his or her initial plan choice or first election.

(12) “Defined contribution plan” means a plan, such as the Investment Plan, which provides for an individual account for each member and for benefits based solely on the amount contributed to the member’s account, and any income, expenses, gains and losses, and any forfeitures of accounts of other members which may be allocated to such member’s account.

(13) “De Minimis Distribution” is an automatic distribution made when an inactive member’s account balance is $1,000 or less. However, such a distribution will not occur until the member has been terminated from all employment with FRS employers for a minimum of six (6) calendar months.

(14) “Direct rollover” means a payment by the Investment Plan to another eligible retirement plan specified by the distributee.

(15) “Distributee” means a member or former member who has taken a distribution from the Investment Plan. In addition, the member’s or former member’s surviving spouse and the member’s or former member’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code s. 414(p), are distributees with regard to the interest of the spouse or former spouse. Effective January 1, 2010, a non-spouse beneficiary is also a “distributee,” but the term “eligible retirement plan” for such individual is limited to an individual retirement account described in Code s. 408(a), an individual retirement annuity described in Code s. 408(b), or a Roth individual retirement account or annuity described in Code s. 408A that is treated as an inherited individual retirement account or annuity pursuant to Code s. 402(c)(11).

(16) “Division” means the Division of Retirement within the Department of Management Services.

(17) “Domestic Relations Order,” or “DRO” is any draft DRO, court judgment, decree, or order (including an approval of a property settlement agreement) that relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a member and that is made pursuant to a state domestic relations law (including a community property law).

(18) “Effective date of enrollment,” or “effective enrollment in the FRS Investment Plan” means the employee completed the enrollment into the Plan by filing the appropriate enrollment form, or by electronic means, in the applicable membership class or by filing a separate document for the applicable membership class with the Administrator; the Administrator has entered the employee into its recordkeeping system; and the Administrator has informed the Division of the employee’s effective date of enrollment in either the FRS Pension Plan or the FRS Investment Plan. For purposes of this rule, the term “enrollment form” or “form” shall also refer to the separate document described in paragraphs 19-11.006(2)(e) and 19-11.007(4)(a), F.A.C.

(19) “Electronic Means” shall mean an enrollment or other member directive made on the MyFRS.com website, by telephone or other technology as specified by the SBA.

(20) “Electronic Signature” is any symbol or other data in digital form attached to an electronically transmitted document, and includes a systematic digital authentication, such as a date or time stamp, as verification of the sender’s intent to sign the document. By submitting an electronic signature, a member acknowledges that the electronic signature equivalent to a handwritten signature for the purposes of validity, enforceability, and admissibility.

(21) “Eligible Designated Beneficiary” is either the member’s surviving spouse, the member’s minor child (who is a child younger than 18 years of age), a disabled individual, a chronically ill individual or a person not more than 10 years younger than the member (and would include parents, siblings and unmarried partners of the deceased member if they are not more than 10 years younger than the member).

(22) “Eligible retirement plan” means an individual retirement account described in Code s. 408(a), an individual retirement annuity described in Code s. 408(b), an annuity plan described in Code s. 403(a), an annuity contract described in Code s. 403(b), a Roth individual retirement account or annuity described in Code s. 408A, an eligible deferred compensation plan described in Code s. 457(b) which is maintained by an eligible employer described in Code s. 457(e)(1)(A) or a qualified trust described in Code s. 401(a), that accepts the distributee’s eligible rollover distribution.

(23) “Eligible rollover distribution” means any distribution of all or any portion of the balance of the member’s account(s) in the Investment Plan to the credit of the distributee. An eligible rollover distribution does not include any distribution which is made upon hardship of the employee; any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code s. 401(a)(9); or a deemed distribution of a loan under Code s. 72(p). Any portion of a distribution that consists of after-tax employee contributions which are not includible in gross income may be transferred only to paragraph (1)(a) a traditional individual retirement account or annuity described in Code s. 408(a) (a “traditional IRA”); or (b) a Roth individual retirement account or annuity described in Code s. 408A (a “Roth IRA”); or (2) to a qualified plan or an annuity contract described in Code s. 401(a) and 403(b), respectively, that agrees to separate accounting for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

(24) “Employee” means an eligible employee as defined in Section 121.4501(2)(e), F.S.

(25) “Employer” means an employer as defined in Section 121.4501(2)(f), F.S. For purposes of the Investment Plan, there are three (3) general categories of employers: state agencies; school districts; and local employers.

(26) “Excessive trading” means multiple occurrences of Market Timing Trades by a member. The definition of a Market Timing Trade is set forth in subsection (38) herein.

(27) “Exempt transaction” is any transaction that is initiated for purposes of: depositing employer and employee contributions; a rollover of eligible funds into the plan from an outside retirement plan; processing a distribution; processing a Qualified Domestic Relations Order; or mapping funds from terminated products. Exempt transactions are not included in any calculations for the purposes of Rule 19-11.004, F.A.C.

(28) “FRS Investment Plan,” “Florida Retirement System Investment Plan,” or “Investment Plan” means the defined contribution retirement program of the Florida Retirement System, established in Parts II and III of Chapter 121, F.S. Although the Investment Plan is established in Part II (Florida Retirement System Investment Plan) and Part III (Florida Retirement System Contribution Rates), certain provisions of Part I (General Provisions) of Chapter 121, F.S., also apply to the Investment Plan whenever the provisions of Parts II and III fail to address a specific area or topic covered by the provisions of Part I. The Investment Plan refers to both the FRS Investment Plan and the FRS Investment Plan Hybrid Option, also known as the Hybrid Option.

(29) “FRS Investment Plan Hybrid Option,” or “FRS Hybrid Option” means the plan choice option within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a member chooses to retain his or her accrued service benefit in the Pension Plan, in accordance with Section 121.4501(3)(a), F.S., and further chooses that all future employer and employee contributions be deposited in his or her Investment Plan account.

(30) “FRS Investment Plan providers” are:

(a) The FRS Investment Plan Administrator or Investment Plan Administrator;

(b) Companies providing educational services, which include retirement planning, financial planning services, and retirement plan choice guidance;

(c) Investment managers providing investment services supporting mutual funds or institutional funds offered in the Investment Plan;

(d) Marketing companies providing marketing and educational support for their investment products or providing individual counseling; and,

(e) Any other company or state agency providing Investment Plan services (including the State Board of Administration of Florida).

(31) “FRS Pension Plan,” “Florida Retirement System Pension Plan,” or “Pension Plan” means the defined benefit retirement program of the Florida Retirement System, established in Part I of Chapter 121, F.S.

(32) “Florida Retirement System Trust Fund,” or “FRSTF” shall mean the trust fund holding the assets of the Pension Plan, which is the defined benefit plan of the Florida Retirement System.

(33) “Grace period” means that procedure described in subsections 19-11.006(3) and 19-11.007(5), F.A.C., which permit, under certain circumstances, the voiding of a retirement plan choice election.

(34) “In-service distribution” is an invalid distribution made to a member who is actively employed with an FRS employer at the time of taking a distribution.

(35) “Invalid distribution” is a distribution to a member to which the member was not entitled.

(36) “Investment Plan primary funds,” or “primary funds” shall mean investment funds offered under the Investment Plan. It does not include additional investment opportunities available under the Self-Directed Brokerage Account (“SDBA”).

(37) “Limitation year” is the consecutive twelve (12) month period of time to which Code limitations with respect to compensation, contributions and forfeitures are applied. For the Investment Plan, the limitation year is the calendar year.

(38) “Market losses” shall be defined, for purposes of Section 121.78(3)(c), F.S., (which states that employers shall reimburse Investment Plan members for market losses resulting from late contributions, or from contribution adjustments as a result of employer errors or corrections), as the value of a member’s account that otherwise would have been realized had the employer and employee contributions and accompanying payroll data been submitted on a timely basis. “Market losses” applies only to the monthly contribution or ABO that is late, not to the member’s aggregate value in his or her Investment Plan account.

(39) “Market Timing Trade” is a member-directed series of trades with the following two characteristics:

(a) At least one Roundtrip Trade within a 30-day period; and,

(b) The trade amount for all Roundtrip Trades is an aggregate amount of $75,000 or more.

(40) “Member,” “FRS Investment Plan Member,” or “Investment Plan Member” means an employee who elected to participate, defaulted, or is considered a renewed member pursuant to Section 121.122, F.S., and has an account established, in the Investment Plan as a result of current or previous employment with an FRS employer; a person who has been designated as an alternate payee due to a qualified domestic relations order (“QDRO”); a terminated Deferred Retirement Option Program (DROP) member who has elected to roll over proceeds from their DROP account; or a designated beneficiary when a member is deceased.

(41) “Member’s account,” or “member’s accounts” shall mean an Investment Plan account for an individual Investment Plan member in which employer and employee contributions and, if applicable, Pension Plan benefit transfers, are invested for an Investment Plan member.

(42) “Non-Eligible Designated Beneficiary” is a designated beneficiary that does not fit into one of the five categories of beneficiaries that are considered to be Eligible Designated Beneficiaries, and includes look-through trusts that are compliant with IRS regulations.

(43) “Primary Investment Account,” or “primary account” shall mean the member’s Investment Plan account that is invested in the Investment Plan’s primary funds.

(44) “Qualified Domestic Relations Order,” (“QDRO”) is a domestic relations order that has been determined to meet the Investment Plan’s qualification requirements.

(45) “Required Minimum Distributions,” (“RMD”) are the annual minimum distributions that, pursuant to the Internal Revenue Code, must be taken by members who are age 72 or older (age 73 or older if the member reaches age 72 after December 31, 2022) from their qualified retirement plan accounts, including 401(k), 457, 403(b) plans and IRA accounts, when they terminate employment. The amount of an RMD in any year is based on account balances as of December 31st of the prior year. The member must have terminated all FRS covered employment in order for an RMD to be processed. Once the RMD has been calculated, the RMD will be paid to the member, even if the member returns to active FRS employment during the calendar year.

(46) “Retiree” is a member who has received a self-initiated distribution from the Investment Plan.

(47) “Retirement Date Fund,” or “Target Date Fund” is a diversified portfolio of other Investment Plan primary funds that is based on the amount of time a member has before retirement. The portfolio gradually changes as the member gets closer to retirement.

(48) “Roundtrip Trade” occurs when a member conducts a series of at least two non-exempt transactions that include one or more transfers into an authorized investment fund and one or more transfers out of the same authorized investment fund in either order (i.e., in/out or out/in), regardless of any multiple transfers from or to other different authorized investment funds during the roundtrip. A roundtrip trade includes a trade from an Investment Plan primary fund to the SDBA and a trade from the SDBA to an Investment Plan primary fund.

(49) “SBA” means the State Board of Administration of Florida, the plan sponsor for the Investment Plan.

(50) “Self-Directed Brokerage Account,” or “SDBA” shall mean an account within the Investment Plan that allows a member access to additional investment opportunities that are not available in the Investment Plan primary funds.

(51) “Special risk member,” or “Special Risk Class member” means a member of the Florida Retirement System who meets the eligibility and criteria required under Section 121.0515, F.S., for participation in the Special Risk Class.

(52) “Third Party Administrator,” “Administrator,” “Plan Administrator,” or “TPA” shall mean the Investment Plan Administrator hired by the State Board of Administration of Florida pursuant to Section 121.4501(8), F.S.

(53) “True-up Amount” means the difference between the ABO calculated by using the member’s actual creditable service and the actual final average compensation as of the member’s effective date in the Investment Plan and the ABO initially transferred.

(54) “Volunteer services” means services provided in accordance with Section 121.091(15), F.S.

Rulemaking Authority 121.78(3)(c), 121.4501(8) FS. Law Implemented 121.78, 121.4501 FS. History–New 12-8-02, Amended 3-9-06, 7-12-12, 12-16-12, 6-5-14, 8-18-14, 12-30-15, 4-12-17, 2-12-18, 2-19-19, 5-11-22, 7-26-23, 4-22-24.