The purpose and effect is to amend this rule chapter to correspond with statutory changes up through the 2010 Legislative session, delete obsolete language and make any needed technical changes.

 

DEPARTMENT OF MANAGEMENT SERVICES
Division of Retirement

RULE NO.: RULE TITLE:
60S-11.001: Definitions
60S-11.002: Participation
60S-11.004: Benefits

PURPOSE AND EFFECT: The purpose and effect is to amend this rule chapter to correspond with statutory changes up through the 2010 Legislative session, delete obsolete language and make any needed technical changes.

SUMMARY: The amendments to this rule: explain the deferral of Deferred Retirement Option Program (DROP) initial eligibility date for an elected officer; expand the definition of “DROP Participation” period to include those certain K-12 instructional personnel with certain employers who may extend their DROP participation for up to 36 months beyond the 60 month DROP participation period in accordance with statute; delete the definition of “Instructional Personnel” as it is no longer applicable; clarify that a renewed member and an Investment Plan participant may not participate in DROP in accordance with statute; reflect the statutory changes to termination requirements, reemployment limitations and renewed membership resulting from Chapter 2009-209, Laws of Florida and incorporate by reference five revised Division forms and eight Division forms previously adopted under Rule 60S-9.001, F.A.C.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COST:

No State of Estimated Regulatory Cost was prepared. The agency has determined that this rule shall not have an effect on small businesses as defined by Section 288.703, Florida Statutes, nor on small counties or small cities as defined by Section 120.52, Florida statutes.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The repeal of this rule is not expected to require legislative ratification pursuant to Section 120.541(3)(a)1., F.S., as there will be no impact on economic growth, job creation or employment, private-sector investment, or business competitiveness and no increase in regulatory costs.

Any person who wishes to provide information regarding the statement of estimated costs or to provide a proposal for a lower regulatory cost alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 121.031, 121.091(13) FS.
LAW IMPLEMENTED: 121.021, 121.091, 121.131, 1012.01 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE:

DATE AND TIME: November 4, 2011, 10:00 a.m., ET

PLACE: Division of Retirement of the Department of Management Services, Director’s Conference Room, Suite 208, 1317 Winewood Blvd., Bldg 8, Tallahassee, Florida 32399-1560

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULES IS: Garry Green, Operations and Management Consultant Manager, Department of Management Services, Division of Retirement, 1317 Winewood Blvd., Bldg. 8, Tallahassee FL 32399-1560, [phone]

 

THE FULL TEXT OF THE PROPOSED RULES IS:

60S-11.001 Definitions.

The definitions in Rule 60S-6.001, F.A.C., apply to this section unless otherwise expressly stated, and when used in this section, the following words and terms have the meaning indicated:

(1) deferred retirement option program (DROP) – means a program, hereinafter referred to as the DROP, available to certain members who are eligible for retirement under the FRS Pension Plan, under which members effectively retire and have their retirement benefits accumulate, tax deferred, in the FRS Trust Fund while they continue covered employment for a limited time.

(2) DROP eligibility date – means the first day of the month in which a vested member becomes eligible to elect to participate in DROP by virtue of reaching either his or her normal retirement date or a deferred eligibility date, if a deferred eligibility date is applicable and elected by the member. Both the 12-month period during which the member may elect to participate in the DROP (except for instructional personnel as provided in subparagraph 60S-11.001(2)(b)4., F.A.C.) and the 60-month period that a member is allowed to participate in DROP begin on the member’s DROP eligibility date.

(a) The normal retirement date is achieved when the vested member becomes age 62 (or age 55 for a Special Risk member); or when the member completes 30 years of service (or 25 years of Special Risk service). The member may either include or exclude optional service credit in determining the date on which 30 years of any service (or 25 years of Special Risk service) has been attained.

(b) A deferred eligibility date is achieved as follows:

1. For a member who has completed 30 years of service prior to age 57 (or 25 years of Special Risk service prior to age 52), the DROP eligibility date may be deferred to age 57, or age 52 for a Special Risk member.

2. For a member with dual normal retirement dates, the DROP eligibility date may be determined by the member as the first day of the month in which normal retirement is achieved in either class.

3. For an elected officer member who has reached normal retirement date during a term of office, the DROP initial eligibility date may be deferred to later in that term or during the first day of the month after the beginning date of the next succeeding term of office.

4. Effective February 1, 2003, for a member who satisfies the definition of instructional personnel for grades K-12 as adopted in Section 1012.01(2), F.S., (Chapter 2002-387, Laws of Florida), the DROP eligibility date may be deferred to the first of any month after the member first reaches normal retirement date.

(3) No change.

(4) DEFERRED ELIGIBILITY DATE – means the first day of any month to which a vested member is eligible to defer his or her election to participate in DROP by virtue of meeting the election deferral criteria set forth under rule subsection 60S-11.002(2), F.A.C.

(5) No change.

(6) DROP participation period – means the period of time a member participates in DROP, not to exceed 60 months. However, K-12 instructional personnel as defined in Section 1012.01(2)(a)-(d), F.S., who are employed by district school boards and authorized by the district school superintendent or K-12 instructional personnel as defined in Section 1012.01(2)(a)-(d), F.S., who are employed the Florida School for the Deaf and the Blind and authorized by the Board of Trustees of the Florida School for the Deaf and the Blind; or K-12 instructional personnel as defined in Section 1012.01(2)(a), F.S., who are employed by a developmental research school and authorized by the school’s director, or if the school has no director, by the school’s principal, may participate in DROP for up to 36 months beyond the 60-month period with Division approval.

(7) No change.

(8) DROP end date – means the date DROP participation ceases and shall be the date termination of all employment occurs as defined in paragraph subsection 60S-6.001(69)(b)(63), F.A.C., except as provided in subsection 60S-11.004(10) F.A.C., for elected officers. The DROP end date shall be effective as of the date of the participant’s designated deferred resignation, as stated on Form DP-ELE (Rev. 04/09), Florida Retirement System Pension Plan Notice of Election to Participate in the Deferred Retirement Option Program (DROP) and Resignation of Employment, herein adopted by reference; or if applicable on Form DP‑EXT (Rev. 04/09), Florida Retirement System Pension Plan Extension of Deferred Retirement Option Program (DROP) For Specified K-12 Instructional Personnel, herein adopted by reference, or earlier if the participant terminates prior to the designated resignation date. The participant may cease participation in DROP prior to the designated resignation date only by satisfying the definition of termination as provided in paragraph subsection 60S-6.001(69)(b)(63), F.A.C.

(9) through (10) No change.

(11) Instructional Personnel – means a member who is employed by a District School Board in grades K-12, and satisfies the definition of instructional personnel as defined in Section 1012.01, F.S.

Rulemaking Specific Authority 121.031, 121.091(13) FS. Law Implemented 121.021, 121.091(13) FS. History–New 9-16-03, Amended_________.

 

60S-11.002 Participation.

(1) Eligibility – A member of the Florida Retirement System Pension Plan, the Teachers’ Retirement System, or the State and County Officers’ and Employees’ Retirement System shall be eligible to participate in the DROP provided:

(a) The member attains normal retirement date as provided in paragraph 60S-4.003(1)(b) or (c), F.A.C., for Florida Retirement System Pension Plan members, or normal retirement date as specified in Chapter 238, F.S., for Teachers’ Retirement System members or in Chapter 122, F.S., for State and County Officers” and Employees’ Retirement System members;

(b) The member is employed in a regularly established position as defined in Rule 60S-6.001, F.A.C.; and

(c) The member is not a renewed member under Section 121.122, F.S., a member of the State Community College System Optional Retirement Program as provided in Section 121.051, F.S., the Senior Management Service Optional Annuity Program as provided in Rule Chapter 60V, F.A.C., or the State University System Optional Retirement Program as provided in Rule Chapter 60U, F.A.C., or a participant in the Public Employee Optional Retirement Program as provided in Part II of Chapter 121, F.S., more commonly referred to as the FRS Investment plan as defined in Rule 60S-6.001, F.A.C.

(2) Election to Participate – An eligible member must elect to participate in DROP within a 12-month period beginning on the member’s DROP eligibility date as defined in Rule 60S-11.001, F.A.C., subject to one of the following conditions:

(a) A member who reaches his or her initial eligibility date based on years of service before reaching age 57, or age 52 for a Special Risk Class member, and is therefore eligible to defer the DROP election period as defined in subparagraph 60S-11.001(2)(b)1., F.A.C., may defer his or her election to join DROP to anytime during the period from the initial eligibility date through the end of the twelfth month after he or she attains age 57, or age 52 for a Special Risk Class member. The member may participate for up to 60 months following the DROP begin date.

(b) A member may elect to include or exclude any optional service credit from the total service used to establish the DROP begin date when determining the DROP eligibility date.

(c) A member with dual normal retirement dates, due to an employment history in two different classes of membership with different normal retirement date and age requirements, may elect to participate in DROP within 12 months of attaining normal retirement date in either membership class.

(d) An elected officer who reaches his or her DROP eligibility date during a term of office may defer DROP participation until later in that term or during the next term in such office. The officer must elect to participate in DROP within 12 months of the first day of the month following the first month of such succeeding term and may participate for no more than 60 months after such day or until the end of the term, whichever occurs first.

(e) Effective February 1, 2003, a member who is filling a an K-12 instructional personnel position (K-12) as defined in Section 1012.01(2), F.S., subsection 60S-11.001(11), F.A.C., may elect to participate in DROP at any time after reaching the initial eligibility date.

(3) Application to Participate –

(a) Member’s Responsibility – It shall be the responsibility of the eligible member to make proper application to the Division to participate in DROP. To qualify for DROP, the member shall submit to the Division:

1. Form DP-ELE, Florida Retirement System Pension Plan Notice of Election to Participate in the Deferred Retirement Option Program (DROP) and Resignation of Employment, as adopted in subsection 60S‑11.001(8), Chapter 60S-9, F.A.C., which shall specify the DROP begin date and the DROP termination and resignation date, shall be acknowledged by the employer., If the member is simultaneously employed by more than one FRS employer, the member must submit a completed DP-ELE form from each employer. Such form and shall be received by the Division no later than the end of the last month of the member’s 12-month election period described in subsection 60S-11.002(2), F.A.C., or a later date if authorized in subsection 60S-11.002(2), F.A.C. Such termination and resignation date shall constitute a binding letter of resignation with the employer. Failure to complete and submit Form DP-ELE within the limitations of subsection 60S-11.002(2), F.A.C., will result in the member being ineligible for DROP participation.

2. Form DP-11 (Rev. 11/10), Florida Retirement System Pension Plan Application for Service Retirement and the Deferred Retirement Option Program (DROP); or as adopted in Chapter 60S-9, F.A.C., Form DS-11 (Rev. 07/06), State and County Officers’ and Employees’ Retirement System Application for Service Retirement and the Deferred Retirement Option Program (DROP); or Form DT-11 (Rev. 07/06), Teachers’ Retirement System Application for Service Retirement and the Deferred Retirement Option Program (DROP). All such forms are herein adopted by reference., Such application which will be accepted by the Division up to 6 months in advance of the intended DROP begin date, and shall establish the member’s effective date of retirement and DROP begin date. The effective date of retirement and the DROP begin date shall both be the first day of the month that the member indicates on his or her application as the date he or she wishes his or her DROP participation to begin, provided the Division receives the member’s application no later than the close of business on the last day of the month in which the DROP begin date occurs. If a member fails to apply for DROP by the last day of the month in which his or her intended DROP begin date occurs, the effective date of retirement and the DROP begin date shall be the first day of the month in which the Division receives the member’s application, provided the application is received within the 12-month election as provided in subsection 60S-11.002(2), F.A.C.

(b) Division’s Responsibility – When the Division receives a member’s application for DROP the Division will:

1. Acknowledge receipt of the member’s application and advise him or her of any required information or documents that have not yet been received. Such information may include, but is not limited to, birth date verification as required by subsection 60S-4.0035(2), F.A.C., beneficiary designation as required by subsection 60S-11.004(2), F.A.C., option selection as required by Rule 60S-4.010, F.A.C., spousal acknowledgment if option 1 or 2 is selected as required by subsection 60S-4.010(9), F.A.C., any payments due the member’s account for purchase of additional service credit or a written statement from the member that the member does not wish to claim such service credit, and certification of final salary and accumulated annual leave payments as defined in Rule 60S-6.001, F.A.C.

2. Establish the DROP begin date as defined in subsection 60S-11.001(5)(3), F.A.C.

3. Send a follow-up notice, reminding the member of any required information or documents that have not yet been received.

(c) Subject to timely submission of all required documents, the effective date of DROP participation shall be the effective date of retirement as defined in subsection 60S-6.001(25), F.A.C. The DROP participant may not modify or cancel his or her DROP participation retirement benefit after the last day of the month of the DROP begin date as defined in subsection 60S-11.001(5)(3), F.A.C. The DROP benefit shall be deemed cashed or deposited as required in subsection 60S-4.002(4), F.A.C., as of the first last day of the month following the DROP begin date.

(d) Cancellation of DROP Application – If all the required information and documents have not been received by the Division after 3 follow-up notices have been sent to the member, the Division will send the member a certified letter, advising the member that he or she has 21 days to provide such information or documents without loss of his or her DROP begin date. If the Division has not received all of the required information and documents after the 21 days specified in the certified letter, the Division will send a final agency action letter to the member advising the member that his or her application is canceled and that he or she must reapply to join DROP, if eligible, with a new effective DROP begin date to be established upon application.

Rulemaking Specific Authority 121.031, 121.091(13) FS. Law Implemented 121.021, 121.091, 1012.01 FS. History–New 9-16-03, Amended_________.

 

60S-11.004 Benefits.

(1) Calculation of Benefits.

(a) The retirement benefit of a member who has elected to participate in the DROP shall be calculated as provided in Rule 60S-4.004 or 60S-4.006, F.A.C.

(b) A member may choose to receive his or her accumulated annual leave payment, as defined in Rule 60S-6.001, F.A.C., and earned in accordance with agency policy, either upon beginning or terminating DROP.

1. If the member elects to receive this payment at the beginning of DROP, the payment, which must be certified to the Division, will be included in the calculation of the member’s average final compensation. This early annual leave payment will be based on the hourly wage of the member at the time he or she begins participation in DROP. Any additional annual leave payment made at the DROP end date according to the employer’s leave policy cannot be included in the retirement benefit, which was determined and fixed by law when the member elected to participate in DROP.

2. If the member elects to receive the annual leave payment upon termination of DROP and termination of employment with his or her employer, any accumulated annual leave payment made at that time cannot be included in the retirement benefit, which was determined and fixed by law when the member elected to participate in DROP.

(2) Beneficiary Designation – The beneficiary eligible to receive any accrued DROP benefits payable if the DROP participant dies before the completion of the DROP participation period will be the most recent joint annuitant or beneficiary designated to receive retirement benefits upon the death of the participant, as directed by the participant on the Application for Service Retirement and the Deferred Retirement Optional Retirement Program (Form DP-11), for FRS Pension Plan members as adopted in Rule 60S-11.003, F.A.C.; Form DS-11, for State and County Officers’ and Employees’ Retirement System members as adopted in Rule 60S-11.003, F.A.C.; or Form DT-11, for Teachers’ Retirement System members as adopted in Rule 60S-11.003, F.A.C.); or Form FST-12, Florida Retirement System Pension Plan Beneficiary Designation Form (Retired Members Only) as adopted in subsection 60S-4.011(5), F.A.C. However, if the beneficiary or joint annuitant dies during the DROP participation period, the participant may designate a new beneficiary as provided in Rule 60S-4.011, F.A.C., as follows:

(a) If the participant retired under option 1 or 2, he or she may name a new beneficiary on Form FST-12 Beneficiary Designation for Retired Members, adopted in Rule Chapter 60S-9, F.A.C. Such beneficiary will be eligible for both the DROP benefits and any benefits provided by the option selected; or

(b) If the participant retired under option 3 or 4, he or she may name a new qualified joint annuitant or spouse on Form JA-1, Florida Retirement System Pension Plan Change of Joint Annuitant Form, adopted in Rule 60S-4.010 (8) Chapter 60S-9, F.A.C. Such beneficiary will be eligible for both the accrued DROP benefits and any continuing benefits; or

(c) If the participant retired under option 3 or 4, he or she may name, on Form FST-12, Beneficiary Designation for Retired Members, a new beneficiary who will receive only the accrued DROP benefits. Such beneficiary will not replace the joint annuitant or spouse or be eligible for any continuing benefits.

(d) The participant may not name a beneficiary to receive DROP benefits who is different from the beneficiary designated to receive the retirement benefits.

(3) through (4) No change.

(5) Employment During DROP Participation.

(a) A DROP participant is considered a retiree as defined in subsection 60S-6.001(59)(53), F.A.C. However, participation in DROP does not alter the participant’s employment status. Terms and conditions of employment, including, but not limited to, salary, insurance coverage, leave accrual, and seniority status, do not change as a result of DROP participation. However, employment is not guaranteed during the DROP participation period.

(b) Employment continues during participation in DROP through the date the member preselected to stop participation in DROP, except that elected officers may continue in office after the DROP end date as provided in subsection (10) and (11) and certain instructional personnel, with approval of their employer and the Division may extend their DROP participation for up to 36 calendar months beyond the 60-month period as provided in sub-paragraph 5.

1. A DROP participant may change jobs or have more than one FRS employer, as long as the participant does not have a break in service as defined in subsection 60S-11.001(12)(8), F.A.C. If a break in service occurs, DROP participation will cease as of the end of the month in which no compensation is received for covered employment.

2. If the participant is employed by two employers upon beginning participation in DROP, the member and both employers must complete and submit Form DP-ELE, Florida Retirement System Pension Plan Notice of Election to Participate in the Deferred Retirement Option Program (DROP) and Resignation of Employment, as adopted by reference in subsection 60S-11.001(8), F.A.C. Only one employer is required to submit Form DP-11. A change or addition of a new employer after commencement of DROP only requires the employee and new employer to submit Form DP-ELE.

3. All employers are required to acknowledge on Form DP-ELE the participant’s DROP termination date, which may be extended as provided in subparagraph 4., (but not beyond the maximum 60 months) and to acknowledge potential liability for any additional retirement contributions and interest required if the participant fails to timely terminate employment.

4. If a participant continues employment beyond the preselected DROP end date and prior to completion of the maximum 60 months allowed, a new form DP-ELE must be submitted to the Division prior to the initial preselected DROP end date with a new DROP end date acknowledged by both the participant and any affected employer.

5. DROP participants who are instructional personnel employed by the Florida School for the Deaf and the Blind and authorized by the Board of Trustees of the Florida School for the Deaf and the Blind, who are instructional personnel as defined in Section 1012.01(2)(a)-(d), F.S., in grades K-12 and authorized by the district school superintendent, or who are instructional personnel as defined in Section 1012.01(2)(a), F.S., employed by a developmental research school and authorized by the schools director, or if the school has no director, by the school’s principal, may participate in DROP for up to 36 calendar months beyond the 60-month participation period with Division approval. To apply for extended DROP participation, the eligible employee must submit to the division a completed Form DP-EXT, Florida Retirement System Pension Plan Extension of Deferred Retirement Option Program (DROP) for Specified K-12 Instructional Personnel, as adopted in subsection 60S‑11.001(8), F.A.C., prior to the DROP termination date established for his or her initial 60-month DROP participation period, but no earlier than six months prior to such date. The applicant will receive confirmation from the Division when the DP-EXT is received and when the application for extension is approved or denied.

(6) Disability benefits – DROP participants shall not be eligible for disability benefits as described in Rule 60S-4.0073, F.A.C. If a participant continues employment beyond the preselected DROP end date and prior to completion of the maximum 60 months allowed, a new form DP-ELE must be submitted with a new DROP end date acknowledged by both the participant and any affected employer.

(7) DROP benefits shall be subject to the provisions of Rules 60S-4.014 and 60S-4.021, F.A.C., pertaining to assignment, execution, or attachment of benefits, and forfeiture of benefits, respectively. The Alternate Payee of a DROP participant as a result of an approved Qualified Domestic Relations Order may designate a beneficiary on Form DP-12 (Rev. 02/06), Florida Retirement System Pension Plan Beneficiary Designation Form for the Alternate Payee of a DROP Participant, herein adopted by reference, in the even the event the Alternate Payee predeceases the DROP participant during the period of DROP participation.

(8) Death Benefits.

(a) Eligibility to participate in the DROP ends upon the death of the participant.

(b) A DROP participant’s survivors shall not be eligible to receive FRS in-line-of-duty death benefits as described in subsection 60S-4.008(4), F.A.C.

(c) If the participant dies on or after the DROP begin date, but prior to the first monthly benefit being credited to his or her DROP account, benefits shall be paid as follows:

1. According to the option selected by the participant at the time he or she entered DROP; or

2. If the beneficiary qualifies as a joint annuitant and the participant had selected an option other than option 3, the beneficiary may choose to receive a benefit payable under option 3 with no payout of DROP accrual, as though the participant had not applied for DROP and had retired on the date of death; or

3. If no option had been selected by the participant, benefits shall be paid according to subsection 60S-4.008(3), F.A.C.

(d) Upon the death of a DROP participant, the designated beneficiary shall be entitled to apply for and receive the accrued benefits in the DROP as provided in subsection 60S-11.004(12)(11), F.A.C.

(9) Termination of Employment for Participants Other than Elected Officers Not in the Elected Officers’ Class A DROP participant, except for an elected officer participating in any membership class, not in the Elected Officers’ Class must terminate employment on or before the preselected resignation date specified on Form DP-ELE or if applicable on Form DP-EXT and will be required submit to the Division a completed Form DP-TERM (Rev. 04/10), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Termination Notification, herein adopted by reference, upon termination from DROP. If a participant fails to terminate on or before the DROP termination and resignation date:

(a) Retirement and DROP participation are voided.

(b) The DROP accumulation and any monthly retirement benefits received are forfeited.

(c) Membership in the member's retirement plan will be retroactively reestablished to the date the member initiated DROP participation.

(d) Each employer is liable for payment of or eligible for a refund of, as applicable, the difference between the DROP contributions paid and the required FRS retirement contributions for the applicable class of membership during the period of DROP participation. Payment of additional contributions shall include 6.5 percent interest compounded annually. No interest will be paid on refunds to employers.

(e) Should the DROP participant and his or her respective employer rescind the DROP participant’s resignation and employment shall continue beyond the rescinded resignation date, the DROP participant and his or her respective employer shall notify the Division on Form DP-VOID (Rev. 04/03), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Void Form, herein adopted by reference, no earlier than three months prior to, but no later than, the rescinded resignation date.

(10) Termination of Employment for Participants in the Elected Officers’ Class – A member of the Elected Officers’ Class participating in the DROP may continue to serve in elected office upon reaching the DROP end date as follows:

(a) For such officer who began participating in the DROP prior to July 1, 2002:

1. Such officer shall be required to submit to the Division a completed Form DP-TEOC (09/01), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officers’ Termination Notification, herein adopted by reference, upon termination from DROP.

2.1. Payment of the accumulated DROP benefits shall be made as provided in subsection (12)(11).

3.2. Beginning the first month following the DROP end date, monthly retirement benefits shall be paid to the officer in addition to compensation received as an elected officer.

4.3. The officer shall be a renewed member in the Elected Officers’ Class as provided in subsection 60S-1.0055(4), F.A.C., effective the first day of the month following the DROP end date.

(b) For such officer who began participating in the DROP on or after July 1, 2002 through June 1, 2010:

1. Such officer shall be required to submit to the Division a completed Form DP-TEOC-2 (10/07), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officer DROP Termination Notification, herein adopted by reference, upon termination from DROP.

2.1. No additional DROP benefits shall accumulate on behalf of the officer after the officer’s DROP end date, however, cost- of-living adjustments and interest shall continue to accrue as provided in subsection (3) until the officer ceases holding office and satisfies the definition of termination provided in paragraph subsection 60S-6.001(69)(b)(63), F.A.C.

3.2. The officer shall not be a renewed member in the Elected Officers’ Class and the employer shall not make retirement contributions on the officer’s behalf after the officer’s DROP end date, however, the employer shall submit health insurance subsidy contributions until the officer ceases holding elective office.

4.3. Monthly retirement benefit payments shall be paid to the officer beginning the first month after the officer ceases holding office and satisfies the definition of termination provided in paragraph subsection 60S-6.001(69)(b)(63), F.A.C.

5.4. After satisfying the definition of termination, such officer who is reemployed or reelected shall be subject to the reemployment limitations provided in Rule 60S-4.012, F.A.C.

(c) For such officer who began participating in the DROP on or after July 1, 2010:

1. Such officer shall be required to submit to the Division a completed Form DP-TEOC-2, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officer DROP Termination Notification, as adopted by reference in paragraph (b), upon termination from DROP.

2. No additional DROP benefits or interest shall accumulate on behalf of the officer after the officer’s DROP end date, however, cost-of-living adjustments shall continue to accrue as provided in subsection (3) until the officer ceases holding office and satisfies the definition of termination provided in paragraph 60S-6.001(69)(b), F.A.C.

3. The officer shall not be a renewed member in the Elected Officers’ Class and the employer shall not make retirement contributions on the officer’s behalf after the officer’s DROP end date, however, the employer shall submit health insurance subsidy contributions until the officer ceases holding elective office.

4. Monthly retirement benefit payments shall be paid to the officer beginning the first month after the officer ceases holding office and satisfies the definition of termination provided in paragraph 60S-6.001(69)(b), F.A.C.

5. After satisfying the definition of termination, such officer who is reemployed or reelected shall be subject to the reemployment limitations provided in Rule 60S-4.012, F.A.C.

(11) Termination of Employment for Participants who are Elected Officers not in the Elected Officers’ Class – Effective July 1, 2009, a member who is an elected officer participating in the DROP who is not in the Elected Officers’ Class may continue to serve in elected office upon reaching his or her DROP end date as provided in subsection (10).

(12)(11) DROP Distribution – Upon the participant’s termination of all employment as defined in paragraph 60S-6.001(69)(b)(63), F.A.C., the deferred resignation becoming effective, and the conclusion of the DROP participation period, or upon the death of the participant, or for an elected officer as provided in paragraph (10)(a) benefits shall be paid or distributed as follows:

(a) The previously determined normal monthly retirement benefits, plus applicable cost-of-living increases, will commence in accordance with the method of payment chosen by the participant at the time he or she began DROP participation; and

(b) The total accumulated DROP benefits will be distributed to the participant, or, if deceased, to the participant’s joint annuitant or beneficiary as appropriate, provided the Division receives:

1. From the non-elected participant only, the Form DP-TERM, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Termination Notification, adopted in subsection (10) Rule Chapter 60S-9, F.A.C., signed by both the participant and employer or employers, verifying termination of employment., and

2. From the elected officer participant, Form DP-TEOC-3 (10/07), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officer Employment Termination Notification, herein adopted by reference, signed by both the participant and employer or employers, verifying termination of employment.

3. From the participant who chose Option 4, Form DP-Joint (Rev. 09/99), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Joint Annuitant Verification, herein adopted by reference, signed by the participant verifying that his or her joint annuitant is still living and eligible for the full DROP Payout and the unreduced continuing monthly benefit.

4.2. From all participants, Form DP-PAYT (Rev. 05/11), Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Selected Payout Method, herein adopted by reference in Rule Chapter 60S-9, F.A.C., submitted by the participant, or if the participant has died, Form FST-11g, Florida Retirement System Pension Plan Application of Beneficiary for Benefit Payment, as adopted in paragraph 60S-4.008(1)(a), F.A.C., must be completed by his or her beneficiary, notifying the Division as to which of the following methods of payment he or she has chosen:

a. Lump sum (if the participant is deceased, a beneficiary, other than a spouse, must receive the lump sum distribution only),

b. Direct rollover, or

c. Combined partial lump sum and rollover.

A DROP participant or beneficiary who submits all required forms, but fails to elect a method of payment within 60 days of termination of DROP, will automatically receive a lump sum distribution, less applicable withheld taxes.

5.3. If a direct rollover or a partial lump sum and rollover are requested, Form DP-PAYT must be submitted to the Division. A participant who elects a rollover must have the rollover paid directly to the custodian of an eligible retirement plan as defined in s. 402(c)(8)(B) of the Internal Revenue Code. Eligible retirement plans include:

a. An Individual Retirement Account as described in s. 408(a), Internal Revenue Code.

b. An Individual Retirement Annuity as described in s. 408(b), Internal Revenue Code, excluding an endowment contract.

c. A Qualified Plan – a stock bonus, pension, or profit sharing plan of an employer (both defined contribution and defined benefit plans) Trust established in accordance with s. 401(a), or 401(k), Internal Revenue Code, for the sole and exclusive benefit of employees or their beneficiaries, excluding designated 401(k) and 403(b) Roth Individual Retirement Accounts.

d. An Annuity Plan as described in s. 403(a), Internal Revenue Code, excluding a s. 403(b) plan or a s. 457 plan as specified in the Internal Revenue Code.

e. An eligible deferred compensation plan described in s. 457(b), Internal Revenue Code which is maintained by an eligible employer as described in s. 457(e)(1)(A), Internal Revenue Code.

f. An annuity contract as described in s. 403(b) of the Internal Revenue Code.

If the DROP participant dies and the surviving spouse wishes to roll over the DROP account, it can only be rolled over into an arrangement as cited in sub-subparagraphs a. - , b., e., or f. of this subparagraph as described in s. 402(c)(9), Internal Revenue Code. However, if the DROP participant dies and the surviving non-spouse beneficiary wishes to roll over the DROP account, it can only be rolled over into an Inherited Individual Retirement account arrangement as cited in sub-subparagraph a. of this subparagraph as described in s. 402(c)(11), Internal Revenue Code.

(13)(12) Federal Limits – Benefits accumulating in the DROP are not subject to federal benefit limitations specified in s. 415 of the Internal Revenue Code, until DROP participation ends and the participant begins receiving his or her monthly retirement benefits. The amount of the accumulated DROP at the time the member ceases DROP is amortized over the member’s expected lifetime, in the manner required by the Internal Revenue Code, and the annualized value of the DROP account reduces the federal maximum annual benefit the member is entitled to receive.

(14)(13) Reemployment After DROP – Except as otherwise provided in subsection (10):

(a) Upon the conclusion of DROP, the reemployment provisions specified in Rule 60S-4.012, F.A.C., are applicable to DROP participants.

(b)1. For DROP participants with DROP termination dates before July 1, 2010, reemployment Reemployment with an employer during the first calendar month after concluding DROP shall result in cancellation of DROP and retirement. The member’s DROP application shall be void, and he or she shall be required to repay all DROP and monthly retirement benefits received. The employer who reemploys such member is liable for payment of or eligible for a refund of, as applicable, the difference between the DROP contributions paid and the required FRS retirement contributions for the applicable class of membership during the period of DROP participation. Payment of additional contributions shall include 6.5 percent interest compounded annually. No interest will be paid on refunds to employers.

2. For DROP participants with DROP termination dates on or after July 1, 2010, reemployment with an employer during the first six calendar months after concluding DROP shall result in cancellation of DROP and retirement. The member’s DROP application shall be void, and he or she shall be required to repay all DROP and monthly retirement benefits received. The employer who reemploys such member is liable for payment of or eligible for a refund of, as applicable, the difference between the DROP contributions paid and the required FRS retirement contributions for the applicable class of membership during the period of DROP participation. Payment of additional contributions shall include 6.5 percent interest compounded annually. No interest will be paid on refunds to employers.

Rulemaking Specific Authority 121.031, 121.091(13)(k) FS. Law Implemented 121.091, 121.131 FS. History–New 9-16-03, Amended_________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Sarabeth Snuggs, Director, the Division of Retirement

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: John P. Miles, Secretary, Department of Management Services

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: July 20, 2011

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: June 18, 2010, Vol. 36/24