Amending the rules of the Division of Retirement to correspond with statutory changes up through the 2012 Legislative session; deleting obsolete language, correcting a form reference, deleting one obsolete form, incorporating by reference four ...

 

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: Amending the rules of the Division of Retirement to correspond with statutory changes up through the 2012 Legislative session; deleting obsolete language, correcting a form reference, deleting one obsolete form, incorporating by reference four revised division forms and clarifying direct rollover provisions.
SUMMARY: The amendments set forth updates the definition of DROP Eligibility to coincide with statutory changes resulting from chapter 2011-68 and chapter 2012-222, Laws of Florida and corrects a F.A.C., reference within this definition; updates the DROP Participation and DROP benefits provisions of rule to coincide with the statutory changes resulting from chapter 2011-68 and chapter 2012-222, Laws of Florida; updates the division’s website address; incorporates by reference four revised division forms and deletes one obsolete form along with corresponding paragraph of rule where the obsolete form was adopted and renumbers remaining paragraphs accordingly; and expands upon the DROP distribution direct rollover provisions of rule to enhance clarity with respect to after-tax employee contributions.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:
The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.
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: Not required because there are no adverse impacts on economic growth, business competitiveness or regulatory costs of more than $1M in the aggregate within five years of implementation.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
RULEMAKING AUTHORITY: 121.031, 121.091(13), 121.091(13)(k) FS.
LAW IMPLEMENTED: 121.021, 121.091, 121.091(13), 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 SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
DATE AND TIME: January 4, 2013, 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
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Richard Clifford, Senior Benefits Analyst, Division of Retirement, Department of Management Services at [phone] or via e-mail at [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE 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 RULE 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) No change.

(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)54., 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 as follows:

1. For members initially enrolled in the FRS prior to July 1, 2011, normal retirement date is achieved when the 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.

2. For members initially enrolled in the FRS on or after July 1, 2011, normal retirement date is achieved when the member becomes age 65 (or age 60 for a Special Risk member); or when the member completes 33 years of service (or 30 years of Special Risk service). The member may either include or exclude optional service credit in determining the date on which 33 years of any service (or 30 years of Special Risk service) has been attained.

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

1. For members initially enrolled in the FRS prior to July 1, 2011, when 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 members initially enrolled in the FRS on or after July 1, 2011, when a member who has completed 33 years of service prior to age 60 (or 30 years of Special Risk service prior to age 55), the DROP eligibility date may be deferred to age 60, or age 55 for a Special Risk member.

32. 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.

43. 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 next succeeding term of office.

54. 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) - (10) No change.

Rulemaking Authority 121.031, 121.091(13) FS. Law Implemented 121.021, 121.091(13) FS. History–New 9-16-03, Amended 4-5-12,.

 

60S-11.002 Participation.

(1) No change.

(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 as follows:

1. A member initially enrolled in the FRS prior to July 1, 2011, who reaches his or her intial 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.

2. A member initially enrolled in the FRS on or after July 1, 2011, who reaches his or her initial eligibility date based on years of service before reaching age 60, or age 55 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)2., 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 60, or age 55 for a Special Risk Class member.

(b) - (e) No change.

(3) No change.

Rulemaking Authority 121.031, 121.091(13) FS. Law Implemented 121.021, 121.091, 1012.01 FS. History–New 9-16-03, Amended 4-5-12,                            .

 

60S-11.004 Benefits.

(1) - (2) No change.

(3) Accrual of DROP Benefits.

(a) No change.

(b) Interest shall accrue as follows:

1. For members who began their DROP participation prior to July 1, 2011, interest shall accrue at an effective annual rate of 6.5 percent compounded monthly, on the prior month’s accumulated ending balance, up to the month of the DROP participant’s termination or death.

2. For members who began their DROP participation on or after July 1, 2011, interest shall accrue at an effective annual rate of 1.3 percent compounded monthly, on the prior month’s accumulated ending balance, up to the month of the DROP participant’s termination or death.

(c) No change.

(4) - (8) No change.

(9) Termination of Employment for Participants Other than Elected Officers – A DROP participant, except for an elected officer participating in any membership 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 to submit to the Division a completed Form DP-TERM (Rev. 02/1204/10) https://www.flrules.org/Gateway/reference.asp?No=Ref-01977http://www.flrules.org/Gateway/reference.asp?No=Ref-00398, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Termination Notification, herein adopted by reference, upon termination from DROP. Form DP-Term may be obtained by calling the Division’s DROP Termination and Refund Payment Section Toll Free at [phone], if calling from outside the Tallahassee calling area or locally at [phone]. Individuals with a hearing or speech impairment may call the Division via T.D.D. at the Florida Relay System by dialing 711 or [phone]. If a participant fails to terminate on or before the DROP termination and resignation date:

(a) - (f) No change.

(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) http://www.flrules.org/Gateway/reference.asp?No=Ref-00397, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officers’ Termination Notification, herein adopted by reference, upon termination from DROP. Form DP-TEOC may be obtained by calling the Division’s DROP Termination and Refund Payment Section Toll Free at [phone], if calling from outside the Tallahassee calling area or locally at [phone]. Individuals with a hearing or speech impairment may call the Division via T.D.D. at the Florida Relay System by dialing 711 or [phone].

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

3. 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. 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.

(a)(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 (Rev. 06/1210/07) https://www.flrules.org/Gateway/reference.asp?No=Ref-01975http://www.flrules.org/Gateway/reference.asp?No=Ref-00395, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Elected Officer DROP Termination Notification, herein adopted by reference, upon termination from DROP. Form DP-TEOC-2 may be obtained by calling the Division’s DROP Termination and Refund Payment Section Toll Free at [phone], if calling from outside the Tallahassee calling area or locally at [phone]. Individuals with a hearing or speech impairment may call the Division via T.D.D. at the Florida Relay System by dialing 711 or [phone].

2. - 5. No change.

(b)(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 (a)(b), upon termination from DROP.

2. - 5. No Change.

(11) No change.

(12) DROP Distribution – Upon the participant’s termination of all employment as defined in paragraph 60S-6.001(69)(b), 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 subsection 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, the Form DP-TERM, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Termination Notification, adopted in subsection (9)(10), signed by both the participant and employer or employers, verifying termination of employment.

2. From the elected officer participant, Form DP-TEOC-3 (06/12) (10/07)https://www.flrules.org/Gateway/reference.asp?No=Ref-01976http://www.flrules.org/Gateway/reference.asp?No=Ref-00396, 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. This form may be obtained by calling the Division’s DROP Termination and Refund Payment Section Toll Free at [phone], if calling from outside the Tallahassee calling area or locally at [phone]. Individuals with a hearing or speech impairment may call the Division via T.D.D. at the Florida Relay System by dialing 711 or [phone].

3. No change.

4. From all participants, Form DP-PAYT (Rev. 10/12)(Rev. 05/11) https://www.flrules.org/Gateway/reference.asp?No=Ref-01974http://www.flrules.org/Gateway/reference.asp?No=Ref-00394, Florida Retirement System Pension Plan Deferred Retirement Option Program (DROP) Selected Payout Method, herein adopted by reference, submitted by the participant which may be obtained by calling the Division’s DROP Termination and Refund Payment Section Toll Free at [phone], if calling from outside the Tallahassee calling area or locally at [phone], or if hearing or speech impaired by calling the Division via T.D.D. at the Florida Relay System by dialing 711 or [phone], 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,

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. 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) 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.

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.

For purposes of the above direct rollover provisions, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in s. 408(a) or (b) of the Internal Revenue Code, or to a qualified defined contribution plan described in s. 401(a) or 403(a) of the Internal Revenue Code that agrees to separately account for amounts so transferred, 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.

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.-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) - (14) No change.

Rulemaking Authority 121.031, 121.091(13)(k) FS. Law Implemented 121.091, 121.131 FS. History–New 9-16-03, Amended 4-5-12,.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Sarabeth Snuggs, State Retirement Director
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Craig J. Nichols, Secretary, Department of Management Services
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: November 08, 2012
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: October 19, 2012, Vol., 38/54