19-11.008. Forfeitures

(1) Forfeitures after Separation or Retirement from Florida Retirement System (FRS) Investment Plan.

(a) If a member terminates or is no longer working in an FRS-covered position before vesting in the Investment Plan or any transferred Pension Plan service credit, the member will not be entitled to any benefit, other than employee contributions, which are immediately vested. In such case, the unvested account balance will be placed in a suspense account for a period not to exceed five (5) years from the date of the member’s termination or the effective date of non-FRS eligibility. The suspense account shall be invested in the FRS Core Plus Bond Fund, where it will accrue actual investment earnings or losses.

(b) If the member returns to work for an FRS employer in an FRS-covered position within the five (5) years from the date of termination, the member’s unvested account balance will be returned to the member’s account, together with the associated service credit. Any additional service credit earned will be applied towards vesting of the member’s benefit. The balance will reflect any earnings or losses while invested in the FRS Core Plus Bond Fund.

(c) If the member never returns to work for an FRS employer in an FRS-covered position or if the member returns to FRS covered employment five (5) or more years after the date of termination or the effective date of non-FRS eligibility, the member will forfeit the unvested account balance and the associated service credit.

(d) If the member leaves FRS-covered employment after vesting in the Investment Plan, but before the member vests in any transferred Pension Plan service credit, the member will be entitled to receive a distribution of any employee contributions contributed during their FRS employment, plus any vested Investment Plan employer contributions. However, if the member takes any self-initiated distribution from the Investment Plan, the member will be considered retired and the unvested Pension Plan portion of the benefit transferred into the Investment Plan, plus any earnings on those funds will be forfeited along with the associated service credit. This includes a distribution of any employee contributions the member contributed during their FRS employment.

(e) If the member does not take a self-initiated distribution after terminating from all FRS employers or the effective date of non-FRS eligibility, the unvested Pension Plan benefit will be transferred six (6) months following the termination or the effective date of non-FRS eligibility to a suspense account. The suspense account is invested in the FRS Core Plus Bond Fund, where it will accrue actual investment earnings or losses. If the member returns to FRS-covered employment within five (5) years from the date of termination or the effective date of non-FRS eligibility, the member’s unvested Pension Plan service, reflecting any earnings or losses while invested in the FRS Core Plus Bond Fund, will be returned to the member’s account, together with the associated service credit. Any additional service credit earned will be applied towards the vesting of the member’s benefit.

(f) If an Investment Plan Hybrid Option member leaves FRS-covered employment after vesting in the Investment Plan, but before vesting in the Pension Plan, the member will only be entitled to receive a distribution of any employee contributions contributed during their FRS employment, plus any vested Investment Plan employer contributions. However, if the member takes any self-initiated distribution from the Investment Plan, the member will be considered retired, and the unvested Pension Plan service credit will be forfeited. If the member does not take a distribution from the Investment Plan and later returns to work for an FRS employer in an FRS-covered position, the member will be returned to the Investment Plan and enrolled in the Investment Plan Hybrid Option and the service credit for the existing Pension Plan and Investment Plan service, combined with any future service credit, will be applied towards vesting of the member’s account.

(g) If a member is required to receive a required minimum distribution (RMD), any unvested Pension Plan service credit, will not be forfeited.

(h) If a member’s benefit and service credit are forfeited because the member did not return to FRS-covered employment within five (5) years, but the member later returns to FRS-covered employment after the forfeiture has occurred, the member will be returned to the plan in which he or she was participating at the time of the forfeiture. If the member’s benefit and service credit in the Pension Plan are forfeited because the member took a self-initiated distribution from the Investment Plan, the member is considered retired. If the member later returns to FRS-covered employment, the member will be considered a renewed member and will be entitled to renewed membership, if applicable.

(2) Forfeitures of Investment Plan accounts Due to Criminal Activity.

(a) Any member who has been found guilty by a verdict of a jury or by the court trying the case without a jury, or who has entered a plea of guilty or a plea of nolo contendere to certain specified offenses committed prior to retirement; or any member whose employment is terminated because the member admitted committing, aiding, or abetting any such offenses; or any elected official who is convicted by the Senate of an impeachable offense, shall forfeit all rights and benefits under the FRS except for return of any accumulated employee contributions. Specified offenses are the committing, aiding, or abetting any embezzlement or theft from the member’s employer; bribery in connection with employment; any other felony specified in Chapter 838, F.S., except for commercial bribery as provided in Section 838.15 or 838.16, F.S.; committing an impeachable offense; willfully committing any felony with intent to defraud the public or the public agency which employs the member or for which the member acts, of the right to receive the faithful performance of the member’s duties while realizing or attempting to realize a profit, gain or advantage for the member or for someone else through the powers, rights, privileges and duties of the member’s office or position; committing any felony described in Section 800.04, F.S., against a victim younger than 16 years of age, or any felony described in Chapter 794, F.S., against a victim younger than 18 years of age while using or attempting to use the power, rights, privileges, or duties of the member’s office or employment position.

(b) When the State Board of Administration (SBA), becomes aware of any accusation of criminal wrong doing against any member of the Investment Plan, the SBA will place a hold on the member’s account to preclude the member from removing any money from the account, until a determination is made on whether charges have been filed and whether the charges are for a forfeitable offense.

(c) If the charges against the member are not pursued the hold on the member’s account will be released.

(d) If the member is indicted and convicted or pleads guilty, or pleads nolo contendere, the SBA will acquire a certified copy of the judgment and will contact the member to advise the member that the Investment Plan benefit is forfeited and that the member has the right to a hearing to contest the forfeiture. The hold on the member’s account will remain in place until:

1. The time to request a hearing has passed and no request for a hearing is made, or

2. The conclusion of the hearing and any appeal of the final order issued after the conclusion of the hearing.

(e) At the conclusion of either subparagraph (d)1., above, or subparagraph (d)2. above, if the member’s hearing and/or appeal are unsuccessful, the SBA will direct the Investment Plan Administrator to transfer the member’s account balance to the Investment Plan Forfeiture Account. If such member is subsequently reemployed, the member shall be eligible for benefits based on creditable service earned subsequent to the reemployment. The member is not eligible to claim any period of employment which was forfeited.

(f) If a member has requested a self-initiated distribution of all or part of any benefit, the member shall be required to repay the benefit, if it is determined that the member forfeited all rights and benefits under the FRS. Any such member may contest the forfeiture as stated in paragraph (d), above. If the member fails to repay the benefit, the SBA may pursue all legal options.

(g) If a member receives a pardon for any crime applicable to any FRS employment, the member shall have all benefits previously forfeited returned to his or her Investment Plan account reflecting any earnings or losses while invested in the FRS Core Plus Bond Fund.

(3) Forfeiture of Beneficiary’s Rights Due to Criminal Activity.

(a) A beneficiary, whether designated or pursuant to Florida law, of a deceased member who, by a verdict of a jury or by a court trying the case without a jury, is found guilty, or who has entered a plea of nolo contendere, of unlawfully and intentionally killing or procuring the death of such member, shall forfeit all rights to the deceased member’s retirement benefits. Any benefits will be paid as such beneficiary had predeceased the deceased member.

(b) No benefits will be paid until there is a final resolution of such charges against the beneficiary, including any appeals.

(4) Authorized uses of the Investment Plan Trust Fund Forfeiture Account.

(a) The Investment Plan Forfeiture Account is funded with unvested account balances forfeited by members or with account balances forfeited due to criminal activity as described herein.

(b) Section 121.4501(13), F.S., requires that the Investment Plan be administered so as to comply with the requirements of the Internal Revenue Code in order to maintain a tax-qualified status.

(c) Pursuant to a private letter ruling from the Internal Revenue Service, the Forfeiture Account may be used for two purposes:

1. Payment of Investment Plan Administrative expenses, such as fees related to the activities of the Investment Plan Administrator and the custodian, investment and administrative consulting fees, and services rendered for the benefit of members of the Investment Plan where costs can reasonably be allocated to the plan; and,

2. Reduction of future employer contributions to the Investment Plan.

(d) Consistent with Internal Revenue Service Rulings 80-155 and 74-340, unallocated reserves within the Forfeiture Account will be used as quickly and as prudently as possible considering fiduciary duty. The expected withdrawals from the Account should endeavor to reduce the Account to zero each fiscal year end.

Rulemaking Authority 121.4501(8) FS. Law implemented 112.3173, 121.021(29), (39), 121.091(5), 121.4501(6), (13), 121.591, 732.802 FS. History–New 11-26-07, Amended 12-8-08, 7-12-12, 8-18-14, 12-30-15, 4-12-17, 2-12-18, 5-11-22, 7-26-23, 4-22-24.