19-11.003. Distributions from FRS Investment Plan Accounts  


Effective on Monday, February 12, 2018
  • 1(1) Distributions from Investment Plan accounts are made after the member terminates employment 14from all Florida Retirement System (FRS)-participating employers and meets distribution eligibility requirements as set out below in subsection (2), or after the member’s death38. 39Monies that are rolled over from the Pension Plan Deferred Retirement Option Program (DROP) are available for immediate distribution.

    58(2) Distributions are available after the member terminates with all FRS-participating employers.

    70(a) An Investment Plan member shall not be entitled to an account distribution until the member has terminated employment from all FRS-participating employers, including temporary, part-time, Other Personal Services (OPS) and any regularly established position with an FRS-participating employer, for three (3) full calendar months following the month of termination, 120except as provided in paragraph (d), below127. Example: If a member terminates on May 15, the three full calendar months are June, July, and August. Therefore, the member cannot request a distribution until September.

    155(b) If the member’s termination date has not been submitted by the employer via the monthly payroll file within three (3) calendar months, the employer can complete and return the “Employment Termination Form,” Form ETF-2, rev. 04/17, 193http://www.flrules.org/Gateway/reference.asp?No=Ref-08687, 195which is hereby adopted and incorporated by this reference204. The termination form can be 210obtained by accessing the MyFRS website at MyFRS.com, clicking on Resources, and then on Forms or by calling the MyFRS Financial Guidance Line at 1(866)446-9377, Option 4 or, for members who are deaf, hard of hearing, or speech impaired, TRS 711251. This form has instructions and a section for the employer 262to provide the member’s date of termination269. Alternatively, the employer can log onto the employer page at MyFRS.com and go to Online Payroll and submit the termination date electronically.

    292(c) Upon the expiration of the three (3) calendar months after termination, the member may request a distribution from the Investment Plan Administrator, by calling the toll free MyFRS Financial Guidance Line at 1(866)446-9377, Option 4 (TRS 711), or by logging on to the MyFRS.com website, accessing his or her personal account information, and then requesting the distribution through the online services.

    354(d) 355A member who has reached his or her normal retirement date, as provided in Section 370121.021(29), F.S., 372and 373has terminated employment from all FRS-participating employers for one (1) calendar month may request a one-time distribution of up to 10 percent (10%) of the vested account balance. 401For example, if such a member terminates on May 15, the one calendar month is June. The member can request a one-time distribution of up to 10 percent (10%) in July.

    432(e) A member who transfers to the Pension Plan from the Investment Plan and leaves a balance in the member’s Investment Plan account is a member of the Pension Plan and, as such, the member cannot take a distribution of the surplus Investment Plan funds until the member begins receiving Pension Plan benefits.

    485(3) All distributions of benefits from a member’s account(s) in the Investment Plan shall begin and be made no later than as prescribed by Code s. 401(a)(9) and the regulations issued thereunder, including any proposed regulations, and shall be subject to the incidental death benefit rules of Code s. 401(a)(9)(G). A copy of the Code section can be obtained by accessing the IRS website at irs.gov and clicking on the Tax Professionals section, and then clicking on the Code, Regs. & Guidance section.

    568(a) Distribution of benefits to a member shall be made or commence not later than April 1 following the close of the calendar year during which the member attains age 70 1/2 and has terminated employment from all FRS-participating employers.

    608(b) Any benefits payable to a beneficiary designated by the member shall be distributed 622as set forth in Rule 62719-11.002, 628F.A.C.

    629(4) A member may request benefits to be distributed as a periodic or installment distribution, a partial lump-sum payment, various annuity options, or a lump-sum distribution. A member may elect to have any portion of the eligible rollover distribution paid directly to an eligible retirement plan specified by the member as a direct rollover. 683Any distribution, if applicable, will be subject to the withholding of taxes which are remitted to the Internal Revenue Service.

    703(5) All distributions of benefits must be made in accordance with Code provisions, which shall override any distribution options inconsistent with such provisions.

    726(6) Distributions to Alternate Payees as a result of a Qualified Domestic Relations Order (QDRO).

    741(a) Upon receipt of a QDRO from a court of competent jurisdiction, 753the amount of the member’s Investment Plan assets specified by the QDRO will be transferred to the named alternate payee. The alternate payee may leave the transferred assets in the Investment Plan or request a distribution from the account once the account has been established in the alternate payee’s name as provided in the QDRO and the alternate payee has received a Personal Identification Number (PIN).

    819(b) Upon receipt of the PIN, the alternate payee may request a distribution by calling the toll free MyFRS Financial Guidance Line at 1(866)446-9377, Option 4 or by logging on to MyFRS.com, going to “Manage Investments,” accessing his or her personal account information, and then requesting the distribution through the online services.

    872(7) De Minimus Distributions.

    876(a) If an inactive member’s account balance is $1,000.00 or less, such amount may be subject to an automatic distribution. However, a distribution will not occur until the member has been terminated from all employment with FRS-participating employers for a minimum of six (6) calendar months.

    923(b) If the member meets the termination requirements and upon receiving notification of the automatic distribution, the distribution either will be made as a complete lump-sum liquidation of the account balance, subject to the provisions of the Internal Revenue Code, or if so instructed by the member, a lump-sum direct rollover distribution on the member’s behalf paid directly to the custodian of an eligible retirement plan, as defined by the Internal Revenue Code. If a member rolls money into the Investment Plan from another qualified plan, which brings the account balance greater than $1,000.00, no automatic distribution will occur unless the balance should become $1,000.00 or less in the future.

    1035(c) If such member returns to work for an FRS-participating employer after receiving this automatic distribution, the member is not considered a reemployed retiree and will not be subject to any limitation applicable to such employees.

    1071(8) Required Minimum Distributions (“RMD”).

    1076(a) Members, age 70 1/2 or older, must begin taking an annual minimum distribution from their Investment Plan accounts if they have terminated all employment with FRS-participating employers.

    1104(b) The amount of an RMD in any year is based on account balances as of December 31st of the prior year. 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.

    1153(c) The Investment Plan Administrator will notify a member who is subject to an RMD distribution at the beginning of each calendar year. At the end of the calendar year in which the RMD was required to be paid, if the member has not requested the required RMD distribution amount, the Investment Plan Administrator will initiate an automatic RMD to meet the mandatory required distribution amount. Members have the right to defer the initial RMD to April of the year following the year in which the RMD was payable. Members can defer the initial RMD by calling the Investment Plan Administrator 1254at 1(866)446-9377, Option 4 or, for members who are deaf, hard of hearing, or speech impaired, TRS 711, 1272by November 30.

    1275(d) If such member returns to work with an FRS-participating employer after receiving this automatic distribution, the member is not considered a reemployed retiree and will not be subject to any limitations applicable to such employees.

    1311(9) Pending Distributions.

    1314(a) An Investment Plan member eligible to request a distribution pursant to subsection (2), above, may request a distribution forty five (45) days prior to his or her eligibility date and have it pended for processing until the first business day of the month the member is eligible for the distribution. A member who has reached his or her normal retirement date is eligible to request a distribution fifteen (15) days prior to his or her eligibility date for the one-time distribution of up to ten (10%) of the member’s vested account balance. The distribution will process after 4:00 p.m. (EST) on the first business day of the month the member is eligible for the distribution. The distribution will be based on the total account balance at the close of business on the day the distribution is processed. The member can call the Investment Plan Administrator at 1(866)446-9377, Option 4, or, if deaf, hard of hearing, or speech impaired, at TRS 711, to process the distribution.

    14801. Example 1: A member terminates on May 15. The three calendar months are June, July, and August. Thus, the member is eligible to request a distribution the first business day of September. On July 15, or the first business day after July 15, the member can call the Investment Plan Administrator to process the distribution. The distribution will pend and process on the first business day in September.

    15492. Example 2: A member who has reached his or her normal retirement as provided in paragraph (2)(a), above, terminates on August 15. One full calendar month is the month of September. The member is eligible to request a one-time distribution of up to 10 percent (10%) of the vested account balance on the first business day of October. On September 15, or the first business day after September 15, the member can call the Investment Plan Administrator to process the distribution. The distribution will pend and process on the first business day in October.

    1644(b) A member can make changes to a pending distribution up until 4:00 p.m. (EST) on the pending distribution date. Example: If a pending distribution is scheduled to process on June 1, the member can make changes to the pending distribution up to 4:00 p.m. (EST) on June 1.

    1693(c) A member who returns to employment with an FRS-participating employer during the pending distribution period must notify the Investment Plan Administrator to cancel the distribution.

    1719(d) If the Investment Plan Administrator receives notification that the member’s employment status has changed from terminated to active during the pending distribution period, the pending distribution will be canceled.

    1749(e) A distribution cannot be pended if the member has passed his or her distribution eligibility date.

    1766(10) Invalid distributions.

    1769(a) 1770If a member or a former member of the Investment Plan receives an invalid distribution, the member or former member is required to repay the entire invalid distribution within ninety (90) days of the member’s receipt of a final notification from the SBA, or in lieu of repayment, the member must terminate employment from all FRS-participating employers. If the member fails to repay the invalid distribution, or terminate employment, the employer is liable for the repayment of the invalid distribution even if the member signed a statement at the time the member was hired that no benefit had been received from the Plan.

    18731. If a member repays the entire distribution, the member’s repayment will be deposited in the member’s Investment Plan account; the member will be returned to the Investment Plan; and all future 1905employee and 1907employer contributions will be deposited in the funds the member has chosen.

    19192. If the employer repays the entire distribution, the repayment will be deposited in the Investment Plan Trust Fund and allocated to the Investment Plan’s forfeiture account to offset plan expenses. The member will be returned to the Investment Plan; and all future 1962employee and 1964employer contributions will be deposited in the funds the member has chosen. 1976The member will not receive contributions for the amount repaid by the employer.

    19893. If the member fails to repay the invalid distribution 1999and terminates employment, 2002the SBA will declare the member a retiree and will not pursue the repayment of the invalid distribution pursuant to paragraph (a), above. As a retiree, the member is subject to the provisions of Section 2037121.122, F.S., 2039if the member is reemployed in the future with an FRS-2050participating 2051employer in a regularly established position.

    2057(b) The following are examples of scenarios that could result in invalid distributions. These are only examples and are not inclusive of all possible situations. Members and employers are encouraged to contact the Investment Plan Administrator to discuss the particular situation.

    20981. Example 1: A member joined the Investment Plan effective September 1, 2002. The member terminated all employment from his FRS-2119participating 2120employer on August 24, 2015. On December 15, 2015, the member takes a partial distribution from the Investment Plan account. However, the member returned to employment with an FRS-participating employer on December 1, 2015. The member took an invalid distribution because the member was working for an FRS-participating employer at the time the member received the distribution.

    21772. Example 2: A member joined the Investment Plan effective April 1, 2004. The member terminates employment 2194with an FRS-participating employer 2198on November 12, 2015. On March 1, 2016, the member takes a total distribution from his Investment Plan account. The member returns to 2221employment as a substitute teacher with a FRS-participating employer 2230on April 15, 2016. The March 1, 2016 distribution is invalid since the member returned to work within six (6) full calendar months of the retirement date.

    22573. Example 3: A member joined the Investment Plan effective May 1, 2005. The member terminates 2273employment with the member’s FRS-participating employer 2279on November 12, 2015. The member has reached the normal retirement date. On January 5, 2016, the member receives the one-time distribution of up to 10 percent from the Investment Plan account. The member returns employment 2315with an FRS-participating employer 2319on May 15, 2016. The January 5, 2016, distribution is invalid since the member returned to work within six (6) calendar months of 2342the member’s 2344retirement date.

    23464. Example 4: A member joined the Investment Plan effective December 1, 2010. The member is terminated by his FRS-participating employer on April 3, 2014, for violating standards of employee conduct. The member files a grievance against the employer and requests to be reinstated with full back pay. On February 15, 2015, the member requests a total distribution from the Investment Plan account. On September 22, 2015, the member’s grievance is granted, the member’s termination is negated and the member is reinstated to employment as of April 3, 2014 with full back pay through September 22, 2015. The member’s employment records are corrected to show the member had an employee/employer relationship from April 3, 2014 through September 22, 2015. The member’s February 15, 2015, distribution is invalid since the member was not terminated from employment with an FRS-participating employer at the time the member received the distribution.

    2493(11) Documentation of a distribution made prior to January 1, 2010.

    2504A member or beneficiary who requests documentation of a distribution made prior to January 1, 2010, will incur a special service charge due to the extensive resources required to retrieve and produce such documentation, if such retrieval is possible. The requestor will be advised of the amount of such charge at the time the request is made. Upon payment of the charge by the requestor, the request will be promptly processed. If the document cannot be retrieved, the payment will be reimbursed to the requestor.

    2589Rulemaking Authority 2591121.4501(8) FS. 2593Law implemented 2595119.07(4)(d), 2596121.021(29), 2597(39), 2598121.091(5)(j), 2599121.4501(20), 2600121.591, 2601121.77, 2602732.802 FS. 2604History-New 3-9-06, Amended 11-26-07, 5-19-09, 1-7-10, 8-7-11, 7-12-12, 12-16-12, 12-30-15, 4-12-17, 2-12-18.

     

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