These rules are promulgated to implement recently adopted policies and to reflect legislative changes.in the FRS Investment Plan.  


  • RULE NO: RULE TITLE
    19-11.002: Beneficiary Designation for FRS Investment Plan
    19-11.003: Distributions from FRS Investment Plan Accounts and Reemployment with an FRS-covered Employer
    19-11.004: Excessive Trading in the FRS Investment Plan
    19-11.005: FRS Investment Plan Complaint Procedures
    19-11.006: Enrollment Procedures for New Hires
    19-11.007: Second Election Enrollment Procedures for the FRS Retirement Programs
    19-11.008: Forfeitures
    19-11.009: Reemployment with an FRS-covered Employer after Retirement
    19-11.010: FRS Investment Plan: Privacy
    PURPOSE AND EFFECT: These rules are promulgated to implement recently adopted policies and to reflect legislative changes.in the FRS Investment Plan.
    SUMMARY: Proposed amended Rule 19-11.002, F.A.C., replaces “participant” with “member” and sets out policies to deal with situations in which the member is married but does not name his spouse as a primary beneficiary or the spouse refuses to sign the acknowledgment, as required by Section 121.4501(20), F.S. Amended Rule 19-11.003, F.A.C., provides procedures if a member dies before retirement; provides procedures for distributions to beneficiaries who are not spouses, discussing the IRS’ “required minimum distribution;” provides procedures for distributions to minors; and for “invalid distributions,” those to members who are not entitled to the payout. All information relating to re-employment after retirement is deleted and moved to new Rule 19-11.009, F.A.C.
    Amended Rule 19-11.004, F.A.C., adds clarifying information about the new United States Securities and Exchange Commission Rule 22c-2, regarding excessive trading for open-end mutual funds. Amended Rule 19-11.005, F.A.C., deletes the first step of the complaint process because of non-use and combines the notice of proceeding with the initial order of proceedings to simplify the process for members, but leaves everything else the same. Amended Rule 19-11.006, F.A.C., makes editorial changes, primarily to point out that the FRS Investment Plan Hybrid Option is part of the FRS Investment Plan. Amended Rule 19-11.007, F.A.C., makes editorial changes similar to Rule 19-11.006, F.A.C., and adopts a revised version of the 2nd Election form. New Rule 19-11.008, F.A.C., establishes procedures for Investment Plan members who have forfeited their retirement benefits. New Rule 19-11.009, F.A.C., clarifies the provisions regarding reemployment after retirement for Investment Plan members. These provisions were originally part of Rule 19-11.003, F.A.C. New Rule 19-11.010, F.A.C. discusses the scope and the limitations on the FRS Investment Plan’s privacy policy and use of a member’s social security number.
    SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The Board has prepared a statement and found the cost to be minimal.
    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.
    SPECIFIC AUTHORITY: 121.4501(3)(c)4., (8)(a), 215.52 FS.
    LAW IMPLEMENTED: 119.071, 120.569, 120.57, 120.573, 121.021(29), (39), 121.051, 121.055, 121.35, 121.091(5), (8), (9)(b)(c), (29),(39), 121.4501(2)(j),(3),(4),(5),(6),(8),(9)(f)3., (13), (14), (15)(b), (19), (20), 121.591(1)(a)4., (3), 121.74, 121.78, 215.44(8)(b), 744.301, 1012.875(3) FS.
    A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
    DATE AND TIME: Tuesday, September 4, 2007, 2:00 p.m. – 4:30 p.m.
    PLACE: Room 116 (Hermitage Conference Room), 1801 Hermitage Blvd., Tallahassee, Florida 32308
    THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Cindy Gokel, Assistant General Counsel, State Board of Administration, P. O. Drawer 13300, Tallahassee, FL 32317-3300; telephone: (850)413-1199

    THE FULL TEXT OF THE PROPOSED RULE IS:

    19-11.002 Beneficiary Designation for FRS Investment Plan

    (1) A FRS Investment Plan member participant may name designate a beneficiary to receive the benefits which may be payable in the event of the member’s participant’s death. If the member does not name a beneficiary(ies) then the member’s beneficiary(ies) will be those as described A participant may designate a beneficiary at any time, both before and after retirement. An FRS Investment Plan participant must make an active beneficiary designation once he becomes an Investment Plan member. the Otherwise, beneficiaries will be described in Section 121.4501(20), F.S., which are: first, the spouse if he or she is still living after the member’s death; second, living children, if the spouse is dead; third, the member’s father or mother, if living; fourth, to the member’s estate. This means that the spouse will receive the member’s account balance if living; but if not, the children will receive the account balance, if living; but if not, the father or mother will receive the account balance, and if none of the people mentioned in this section are still living, the account balance will be paid to the member’s estate.

    (2) A No designation of beneficiary shall only be effective after unless it has been received by filed with the FRS Investment Plan Administrator. The most recent designation of beneficiary filed with the FRS Investment Plan Administrator shall replace any previous designation, whether made before or after the member’s participant’s termination of employment or retirement. The member should determine after the designation has been mailed that the form has arrived in the offices of the FRS Investment Plan Administrator. It is the responsibility of the member to ensure the beneficiary designation has been made. Beneficiary information can be reviewed every quarter on the member’s quarterly statement.

    (3) If the FRS Investment Plan member participant enrolls in the FRS Investment Plan using either the EZ Retirement Plan Enrollment Form for Regular, Special Risk and Special Risk Administrative Support Class Employees, Form ELE-1-EZ, rev. 06-06, 8-05 the General Retirement Plan Enrollment Form for Regular, Special Risk and Special Risk Administrative Support Class Employees, Form ELE-1, rev. 10-06, which are is adopted and incorporated by reference in subsection 19-11.006(4), F.A.C., or the 2nd Election EZ Retirement Plan Enrollment Form, Form ELE-2EZ, rev 12-06, 8-05 or the 2nd Election Retirement Plan Enrollment Form, Form ELE-2, rev 12-06 8-05, which are adopted and incorporated by reference in Rule 19-11.007, F.A.C., the member participant has chosen the beneficiary designation contained in Section 121.4501(20), F.S. (See subsection (1), above.) Note that the statutory section provides that the member’s participant’s spouse at the time of death shall be the member’s participant’s beneficiary unless the deceased member participant had designated a different beneficiary after his or her most recent marriage. Therefore, if the member marries again, he or she must file another beneficiary designation form to ensure that the person he or she wants to be the beneficiary is named. Example: John is married to Betty and has named her as his beneficiary. John divorces Betty and marries Carol. Carol will be John’s beneficiary unless he files another beneficiary form and names, for example, his son, Bob. Pursuant to subsection (1), above, however once the member participant is enrolled in the FRS Investment Plan, the member participant may change his beneficiary designation at any time.

    (4) A member participant may name designate a beneficiary or beneficiaries at any time, as follows:

    (a) A member participant may name designate a beneficiary or beneficiaries to receive the assets of the member’s participant’s FRS Investment Plan account, either sequentially or jointly.

    (b) A member participant may name designate as beneficiary any person, organization, trust, or his estate.

    (c) A primary beneficiary is someone who will receive the member’s funds from the FRS Investment Plan account, if that person is living at the death of the member. If there are more than one primary beneficiary, named with percentages of the funds, they will each receive their member-designated percentages if they are still living at the death of the member. Example: if the member names his four sons, in equal shares (25% each), but two of the four sons die before their father, the other two living sons split the funds two ways, 50% each.

    (d) A contingent beneficiary is one or more persons who are named, in case all primary beneficiaries die before the member. Naming a contingent beneficiary is optional. The member does not have to name anyone as a contingent beneficiary.

    (e)(c) Any such beneficiary designation shall be made on Form IPBEN-1, rev. 09-03, which is hereby adopted and incorporated by reference. This form is available in paper form and may be obtained by calling the toll-free MyFRS Financial Guidance Line at 1(866)446-9377, Monday through Friday, except holidays, 9:00 a.m. to 8:00 p.m. or by accessing the MyFRS.com website The beneficiary designation may be made online by logging onto MyFRS.com and clicking on “Resources” and then “Forms.” The beneficiary designation form must be completed and received by the FRS Investment Plan Administrator before it becomes effective.

    (f)(d) A member participant may change his beneficiary designation at any time by filing a new beneficiary designation form. There is no separate form for changes of beneficiary designation.

    (5) If a member is married and names his spouse as a primary beneficiary, regardless of whether the percentage allocated to the spouse on the form is less than 100%, the member is not required to notify the spouse. However, if If a member participant is married and names a primary beneficiary(ies) and the person(s) named is not the spouse of the member only participant, then the member participant is required to notify the spouse that he or she is not a primary the beneficiary of the member’s participant’s FRS Investment Plan account(s). The spouse must acknowledge that he or she understands that he or she is not a primary the beneficiary of the member’s FRS Investment Plan account(s) by signing the beneficiary designation form, Form IPBEN-1, rev. 09-03, in the appropriate place. Alternatively, the member may provide the FRS Investment Plan Administrator with documentation reflecting the understanding of the member’s spouse that the spouse is not a primary beneficiary of the member’s FRS Investment Plan account(s). The documentation could include a legal document which reasonably reflects the spouse’s acknowledgement, for example, a pre-nuptial agreement. Alternatively, the member may provide a notarized document providing the member’s name, member’s SSN, spouse’s name, spouse’s SSN, address and a statement that the member’s spouse has been notified that the spouse has not been named a primary beneficiary and the spouse has refused to sign the beneficiary designation form.

    No distribution will be made of any FRS Investment Plan account(s) in the absence of a declaration of the spouse of his or her understanding that he or she is not the beneficiary of the participant’s FRS Investment Plan account(s).

    Specific Authority 121.4501(8) FS. Law Implemented 121.091(8), 121.4501(20), 121.591(3) FS. History–New 10-21-04, Amended 3-9-06,________.

     

    19-11.003 Distributions from FRS Investment Plan Accounts and Reemployment with an FRS-covered Employer.

    (1) Purpose. The purpose of this rule is to clarify the provisions regarding distributions from FRS Investment Plan accounts and how that interacts with reemployment provisions for FRS-covered employers. Distributions from FRS Investment Plan accounts are made either after the account-holder terminates employment or at the account-holder’s death.

    (2) Forms. All forms identified in this rule may be obtained by calling the (toll-free) MyFRS Financial Guidance Line at 1(866)446-9377, or by accessing the MyFRS website at www.MyFRS.com, clicking. Click on Resources, and then on Forms.

    (3) Distributions available after when the member participant terminates FRS-covered employment.

    (a) An FRS Investment Plan member participant shall not be entitled to a distribution from his account unless he has been terminated from all FRS-covered employment, including temporary, part-time, Other Personnel Services (OPS) and any regularly established position with an FRS employer, for three calendar months following the month of termination. Example: If a member participant terminates on May 15, the three calendar months are June, July, and August. Therefore, the member cannot request he shall not receive a distribution until September.

    (b) Upon the expiration of the three calendar months after termination, the member participant may request apply for a distribution from the FRS Investment Plan Administrator by calling the toll free MyFRS Financial Guidance Line at 1(866)446-9377, Option 4. either using Form ETF-2, “Employment Termination Form/FRS Investment Plan,” rev. 08-05, which is hereby adopted and incorporated by reference, or an equivalent form. An equivalent form shall mean that all of the information required in the blank spaces on Form ETF-2 for both the participant and the employer shall be on the equivalent form. In addition, the five items in the “Termination Agreement” section shall be reproduced and signed and dated.

    (c) If a member participant has terminated employment from all FRS-covered employment for one calendar month and he has reached his normal retirement date age, in accordance with Section 121.021(29), F.S., he may request apply for a one-time distribution of up to 10 percent of his account balance. For example, if a member terminates on May 15, the one calendar month is June. Therefore, the member can request a one-time distribution of up to 10 percent in August.

    (4) Reemployment by an FRS-covered employer after termination.

    (a) A participant who has terminated FRS-covered employment and taken a distribution is a retiree, in accordance with Section 121.4501(2)(j), F.S. As a retiree, the former participant shall not be reemployed with an FRS-covered employer until he has been retired for three calendar months, pursuant to Section 121.021(39)(c), F.S. Example: A participant who terminates on May 15 cannot receive a distribution until September and cannot return to FRS-covered employment until January.

    (b) Examples: This paragraph contains examples only. This paragraph does not contain an exhaustive list of all possible situations. Participants who are not in exactly the same circumstances as described in these examples should call the toll-free number set out in subsection (2), above, to have their situations properly analyzed.

    1. A participant who has reached normal retirement age, in accordance with Section 121.021(29), F.S., may get up to ten percent of his account after a one month calendar break, and he may get the balance after a total of three calendar months, unless he returns to FRS-covered employment, during any time in that three- month period.

    2. If the participant in subparagraph 1., above, takes a partial distribution and then returns to work, he will not be eligible for any further distributions until terminating work or after the first 12 months of retirement are completed.

    3. Any participant may return to employment with an FRS-covered employer after 12 months of retirement and may take distributions, even while reemployed.

    4. A participant who has reached normal retirement age, in accordance with Section 121.021(29), F.S., can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., after one calendar month off FRS-covered payrolls.

    5. A participant who has not reached normal retirement age, in accordance with Section 121.021(29), F.S., can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., after having been retired for three calendar months.

    (4)(5) Distributions to beneficiaries on the death of a member participant.

    (a) If a member participant dies before his effective date of retirement, the member’s participant’s spouse at the time of his or her death shall be the member’s participant’s beneficiary, unless the member participant has designated another a different beneficiary after the member’s participant’s most recent marriage. If the member did name another beneficiary after his or her most recent marriage, the named beneficiary will receive the member’s account balance.

    (b) A participant’s spouse must acknowledge on Form IPBEN-1, “Beneficiary Designation Form/FRS Investment Plan,” rev. 09-03, which is hereby adopted and incorporated by reference, that he or she is not the beneficiary if the participant chooses another person or an entity.

    (b)(c) Procedures for beneficiary designations are addressed in Rule 19-11.002, F.A.C.

    (c)(d) On the death of a member participant, the beneficiary must file the “Death Benefit Distribution Claim Form,” Form IPDB, rev. 07 10-05, which is hereby adopted and incorporated by reference, with the FRS Investment Plan Administrator, to receive benefits.

    (5) Distributions to beneficiaries who are not spouses.

    (a) In accordance with Internal Revenue Service (IRS) rules, non-spousal beneficiary accounts cannot be held indefinitely in the FRS Investment Plan. The amount of time a non-spousal beneficiary has before benefits must commence are more restrictive than for a spousal beneficiary. The “required minimum distribution” is required by the Internal Revenue Service and spelled out in IRS Code Section 401(a)(9), requiring that if the beneficiary is not a spouse, the Investment Plan can hold the distribution for no more than 5 years.

    (b) For a non-spousal beneficiary, there are two possibilities, depending upon whether payments from the account had commenced to the member before his or her death:

    1. Where distributions have already begun to the member, but the member dies before his or her entire account has been distributed, the remaining portion of the account must be distributed at least as rapidly as under the method of distribution being used as of the date of the member’s death.

    2. If a member dies before the distribution of the member’s account has begun, the entire account of the member must be distributed within 5 years after the death of the member, unless.

    a. The member’s account will be distributed over the life of the designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), and

    b. Such distributions begin not later than 1 year after the date of the member’s death.

    (c) The non-spousal beneficiary must decide within 1 year if he or she wants to take lifetime installment or annuity payouts; otherwise, the entire account balance must be distributed within 5 years.

    (d) If the whole amount is not paid out during the required 5-year period, the remaining funds in the account will be paid in a lump sum to the non-spousal beneficiary.

    (6) Beneficiaries who are minors.

    (a) A minor is a child under the age of 18. Section 744.301, F.S., allows for the natural guardian (surviving parent) to handle benefits to a minor child where that amount does not exceed $15,000, without court appointment, authority or bond.

    (b) In all cases where a minor child or children are the beneficiary(ies) of the member, a copy of the birth certificate of all minor children shall be sent to the FRS Investment Plan Administrator, and shall be received prior to any payout, regardless of the amount. The purpose is to provide proof that the surviving parent is the natural guardian of the children. The FRS Investment Plan Administrator shall confirm that the surviving parent is providing the instructions for any payment arrangements being made.

    (c) In all cases in which a minor is a beneficiary of an account balance which is greater than $15,000, the FRS Investment Plan Administrator shall place a hold on the account and advise the SBA of the situation and the SBA shall send instructions to the FRS Investment Plan Administrator for any additional action.

    (d) If the individual responding to the correspondence sent by the Administrator and providing instructions for payout is not the surviving parent, the Administrator shall request the individual to provide a Court Order wherein a guardian has been appointed for the minor, prior to payout of any balance and the Administrator shall take directions only from the named guardian.

    (e) If no instructions for payout are received, the Administrator shall notify the SBA and the SBA will contact the probate court with jurisdiction over the estate of the member to request direction on the disposition of the minor’s interest in the account. Expenses shall be deducted from the member’s account.

    (7) Invalid distributions.

    (a) An “invalid distribution” is a distribution given to a member to which the member is not entitled.

    (b) If a member or a former member of the FRS Investment Plan receives an invalid distribution, the member or former member shall repay the entire invalid distribution within 90 days of the member’s receipt of a final notification.

    1. If a member repays the entire distribution, the member’s repayment will be deposited in his FRS Investment Plan account; he will be returned to the Investment Plan; and all future employer contributions will be deposited in the funds he has chosen.

    2. 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 employer contributions will be deposited in the funds the member has chosen.

    3. If the member fails to repay the invalid distribution, the SBA has the option to declare the member a “retiree” or pursue the repayment of the invalid distribution. As a “retiree,” the member is subject to the restrictions of Section 121.122, F.S., which means that if the member is reemployed in the future with an FRS-covered employer, the member is not eligible for Special Risk membership, or for the Deferred Retirement Option Program, nor for disability benefits. Section 121.122, F.S., has other restrictions and should be read by the member with his or her particular situation in mind.

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

    1. Example 1: A member joined the FRS Investment Plan effective September 1, 2002. He terminated all employment from his FRS-covered employer on August 24, 2006. On December 15, 2006, he took a partial distribution from his Investment Plan account. However, he returned to FRS-covered employment on December 1, 2006. The member took an invalid distribution because he was working for an FRS-covered employer at the time he received the distribution. His payroll record reflected the August 24, 2006, termination date but did not yet reflect his rehire date. Therefore, because the payroll report is not required from the employer to the Division of Retirement until the 5th business day of the month following the end of the work-month, the FRS Investment Plan Administrator, which receives its information from the Division of Retirement, had no knowledge of his return to work in the middle of December, since the information would not have arrived until at least January 6. The member is asked at the time of the distribution whether he is employed or pending employment with an FRS covered employer. If it is determined that the member knew or reasonably knew the answer to this question was yes, the member has taken an invalid distribution.

    2. Example 2: A member joined the FRS Investment Plan effective April 1, 2004. He terminated all FRS-covered employment on November 12, 2006. The member has not reached his normal retirement date. On March 1, 2007, the member took a total distribution from his Investment Plan account. The member returned to FRS-covered employment on April 15, 2007. The March 1, 2007 distribution is invalid since the member returned to work within 3 calendar months of his retirement date.

    3. Example 3: A member joined the FRS Investment Plan effective May 1, 2005. He terminated all FRS-covered employment on November 12, 2006. The member has reached his normal retirement date. On January 5, 2007, the member received his one-time distribution of up to 10 percent from his Investment Plan account. The member returned to FRS-covered employment on February 15, 2007. The January 5, 2007 distribution is invalid since the member returned to work within 1 calendar month of his retirement date.

    Specific Authority 121.4501(8)(a) FS. Law Implemented 121.021(29), (39), 121.4501(20), 121.591 FS. History–New 3-9-06, Amended ________.

     

    19-11.004 Excessive Trading in the FRS Investment Plan.

    (1) Purpose.

    (a) The purpose of this rule is to mitigate the negative impact on members participants in the FRS Investment Plan from excessive trading and to establish limitations on such excessive trading. The Trustees of the State Board of Administration of Florida (SBA) have a fiduciary duty to make decisions about the FRS Investment Plan in the best interests of all members participants and beneficiaries.

    (b) Excessive trading by just a few of a fund’s investors can disrupt fund operations, increase expenses and harm fund performance for all investors. In particular, some members participants have shown a high proclivity to make numerous short-term trades in foreign stock funds in an attempt to exploit funds’ pricing conventions and other technical factors. Therefore, this rule establishes limitations so that excessive trading between approved investment funds shall be prevented, without materially inhibiting all members’ participants’ opportunities to direct contributions and account balances between investment funds with a frequency that is appropriate in light of the market volatility of the funds.

    (c) The Executive Director of the SBA is directed to establish a policy on excessive trading in Section V of the Investment Policy Statement, adopted and incorporated by reference in Rule 19-9.001, Florida Administrative Code. This rule establishes that policy.

    (d) The United States Securities and Exchange Commission has adopted Rule 22c-2.(17CFR270.22c-2.) regarding excessive trading for open-end mutual funds. This rule does not apply to institutional funds nor to mutual funds for which the FRS has received exemptions. This rule gives mutual funds the right to ask the FRS Investment Plan Administrator for information about members and their trading. If the mutual funds determine that the member has engaged in excessive trading under the mutual funds’ standards, the mutual funds are entitled to impose redemption fees or block trading. The fees will be deducted from the members’ accounts. All approved mutual funds in the FRS Investment Plan have agreed to let the SBA continue with its excessive trading policy as outlined in this rule except the following four funds: Fidelity Growth Company, T. Rowe Price Small Cap Stock, PIMCO High Yield, and PIMCO Total Return. This investigation is scheduled to begin on October 16, 2007. When this list changes, members will be notified. Note that the restrictions in the SEC Rule 22C-2 are in addition to the restrictions in this Rule 19-11.004, F.A.C.

    (2) Definitions.

    (a) A “member” “participant” is a person who has an account established in the FRS Investment Plan as a result of current or previous employment with an FRS-covered employer, or being designated as an alternate payee due to a qualified domestic relations order (“QDRO”) or being a designated beneficiary when a member participant is deceased.

    (b) A “Roundtrip Trade” occurs when a member participant 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.

    (c) An “exempt transaction” is any transaction that is initiated for purposes of: depositing employer payroll contributions; processing a distribution; processing a QDRO; or mapping funds from terminated products. Exempt transactions are not included in any calculations for the purposes of this rule.

    (d) “Excessive trading” involves multiple occurrences of Market Timing Trades by a participant over time.

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

    1. One Roundtrip Trade within a 30-day period, and

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

    (f) “Aggregate amount of $75,000 or more” means the total of the amounts transferred out of a fund 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.

    (3) Limitations.

    (a) Regarding authorized foreign or global stock funds: After making a non-exempt transaction by transferring any portion of their account balance into an authorized foreign or global or stock fund, members participants are prohibited from completing a Roundtrip Trade in that fund for a minimum of 7 calendar days, using the convention of last-dollar-in and first-dollar-out for the roundtrip calculation.

    (b) Regarding all authorized funds, except for money market funds:

    1. Members Participants who engage in Market Timing Trades in authorized funds will receive a warning letter sent by U.S. mail, certified/return receipt requested. The warning letter shall notify the member participant that excessive trades have been identified in his/her accounts and any additional violations will result in a direction letter.

    2. Members Participants who engage in Market Timing Trades in authorized funds and who have previously received a warning letter described in subparagraph 1., above, will be sent a certified/return-receipt direction letter. The direction letter shall require that the member participant shall not have access to automated online or telephonic trade instructions for at least one full calendar month following the date of the direction letter.

    a. A member who receives a warning letter and then has another Market Timing Trade more than twelve full calendar months from the date of the original warning letter will receive another warning letter.

    b. Participants engaging in Market Timing Trades who receive more than two warning letters will be sent a certified, return-receipt direction letter, as described in this subparagraph 2.

    3. Members Participants who engage in Market Timing Trades and who have previously received a direction letter, as described in subparagraph 2., above, will be sent another certified/return-receipt direction letter. This direction letter shall require that the member participant shall not have access to automated or telephonic trade instructions for at least three full calendar months following the date of the direction letter.

    4. Members Participants who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraph 3., above, will be sent another certified/return-receipt direction letter. The direction letter shall require that the member participant shall be required to conduct trades via paper trading forms for at least three full calendar months following the date of the direction letter.

    5. Members Participants who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraph 4., above, will be sent another certified/return-receipt direction letter. The direction letter shall require that the member participant shall be required to conduct trades via paper trading forms for at least twelve full calendar months following the date of the direction letter.

    6. Members Participants who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraphs 5., above, will be sent another certified/return-receipt direction letter. The direction letter shall require that the member participant shall be required to conduct trades via paper trading forms for the remainder of any time that any balance exists in the participant’s Investment Plan account following the date of the direction letter.

    (c) If Member Participant A receives a direction letter as described in subparagraph (3)(b)2., above, on November 15, Member Participant A’s access to automated online or telephonic trade instructions shall be denied until January 1. “One full calendar month,” in this context, means the full calendar month following the month in which the direction letter is received. The direction letter, in this example, was received in November. The “one full calendar month” is December. Therefore, access will not be resumed until January.

    (4) Examples. (a) This subsection contains examples only. This subsection does not contain an exhaustive list of all possible transactions. Members Participants avoiding these examples will not necessarily avoid the impact of this rule since other transactions will meet the definitions of Market Timing Trades or Excessive Trading.

    (a)(b) If Member Participant A transfers $50,000 out of Fund A and into Fund B on Monday and then transfers $20,000 out of Fund B on Tuesday, the transaction is a Roundtrip Trade but is not a Market Timing Trade because the aggregate amount of $75,000 specified in subsection (2)(e)2., above, has not been met.

    (b)(c) If Member Participant A transfers $50,000 out of Fund A and into Fund B on Monday and then transfers $55,000 out of Fund B on the following Monday, the transaction is a Roundtrip Trade and a Market Timing Trade because the aggregate amount of all trades in and out of Fund B has exceeded $75,000 ($50,000 + $55,000 = $105,000) within a 30 day period.

    (c)(d) If Member Participant A transfers $5,000 out of Fund A and into Fund B on November 1 and then transfers $25,000 out of Fund A and into Fund B on November 3 and then transfers $10,000 out of Fund A and into Fund B on November 5 and then transfers $40,000 out of Fund B and into Fund A on November 15, the entire series of transactions constitutes a Roundtrip Trade and is a Market Timing Trade because the aggregate amount of all trades into and out of Funds A and B each exceeded $75,000 within a 30 day period.

    (d)(e) If Member Participant A transfers $5,000 out of Fund A and puts $2,500 into Fund B and $2,500 into Fund C on December 1 and then transfers $25,000 out of Fund A and puts $20,000 into Fund B and $5,000 into Fund C on December 5, and then transfers $10,000 out of Fund A and puts $10,000 into Fund C on December 6 and then transfers $23,000 out of Fund B into Fund A and $20,000 out of Fund C into Fund A on December 16, the entire series of transactions constitutes a Roundtrip Trade and is a Market Timing Trade because the aggregate amount of all trades into and out of Fund A exceeded $75,000 within a 30 day period. It is irrelevant that money has come out of one fund and been transferred into two funds because the money has been returned to the original fund.

    (e)(f) Member Participant A transfers $50,000 out of Fund A and into a foreign stock fund, which already contains $100,000, on October 1, so that on October 1, the foreign stock fund contains $150,000. Member Participant A must wait until October 9 to transfer any or all of the $150,000 in funds out of the foreign stock fund.

    (f)(g) A Member Participant has $250,000 in his FRS Investment Plan account and is the subject of a QDRO with the result that the Member’s Participant’s spouse becomes entitled to half of the Member’s Participant’s FRS Investment Plan account. A total of $125,000 is transferred from the Member’s Participant’s account to a newly-established account for the Member’s Participant’s spouse and the funds are put into a foreign stock fund on December 1. On December 5, the Member’s Participant’s spouse rolls over the entire $125,000 into an IRA. This is neither a Roundtrip Trade nor a Market Timing Trade because the transfer is an exempt transaction, as described in paragraph (2)(c), above.

    (g)(h) A member participant transfers $32,000 into Fund A on August 5 and then transfers $32,000 out of Fund A on August 11 and then transfers $31,000 into Fund A on August 17 and finally transfers $31,000 out of Fund A on August 18. The entire series of trades are Round Trip trades and the trades are also a Market Timing Trade because the aggregate amount of all trades exceeded $75,000 within a 30 day period.

    (5) For all members participants, Roundtrip and Market Timing Trades are calculated using a rolling 30-calendar day time period. If a trade occurs on May 15 and the following 30-calendar day period, from May 15 through June 13, includes a sufficient number of trades to fit the definition of a Market Timing Trade, this rule shall apply.

    Specific Authority 121.4501(8) FS. Law Implemented 121.4501(13), (14), (15) FS. History–New 10-21-04, Amended 3-9-06, ________.

     

    19-11.005 FRS Investment Plan Complaint Procedures.

    (1) Purpose. Section 121.4501(9)(f)3., F.S., requires that the State Board of Administration “. . . develop procedures to receive and resolve participant complaints against a provider or approved provider personnel, and, when appropriate, refer such complaints to the appropriate agency.” The following procedures outline the SBA’s policy in handling complaints filed against Investment Plan providers, including the third party administrator, education providers, and investment providers.

    (2) Definitions.

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

    (b) “Investment Plan” shall mean the Public Employee Optional Retirement Program as defined in Section 121.4501(2)(g), F.S.

    (c) “Investment Plan providers” are:

    1. Third Party Administrator, the FRS Investment Plan Administrator;

    2. Companies providing Investment Plan education;

    3. Investment managers providing investment services supporting mutual funds or institutional funds offered in the FRS Investment Plan;

    4. Marketing companies providing marketing and educational support for their investment products or providing individual counseling; and

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

    (d) “Member” “participant” means an employee who elects to participate in the FRS Investment Plan and enrolls in such program as provided in Section 121.4501(4), F.S. For purposes of this rule, “member” “participant” also includes FRS employees who have not elected the FRS Investment Plan but who claim that they intended to join but were prevented for various reasons.

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

    (3) Procedures.

    (a) First Step: Intervention: by the FRS Investment Plan Administrator.

    1. Any Participant with a complaint regarding an Investment Plan provider shall communicate his complaint to the Third Party Administrator [i.e., the FRS Investment Plan Administrator] within 2 business days.

    2. Both parties shall attempt to reach a satisfactory resolution of the problem.

    3. If a solution cannot be reached timely, the FRS Investment Plan Administrator will provide the Participant with a written or verbal update on the status of his complaint and the anticipated timeline for resolution.

    (b) Second Step: Intervention by the SBA.

    1. If an acceptable resolution is not reached in the first step, Tthe Member Participant may send a written Request for Intervention to the SBA for intervention and resolution. The written Request for Intervention shall may be sent:

    a. By regular US mail service to:

    Investment Plan Complaint Resolution

    Office of Defined Contribution Programs

    Florida State Board of Administration

    P. O. Box 13300

    Tallahassee, FL 32317-3300

    b. By e-mail: DefinedContributionPrograms@sbafla.com DefinedContributionPrograms@fsba.state.fl.us; or

    c. By fax: (850)413-1489

    2. The Member Participant shall use “FRS Investment Plan Request for Intervention,” Form SBA-RFI 08/2006 RF06/04, which is hereby adopted and incorporated by reference. The form may be obtained by using the toll free number at (866)446-9377 and requesting that it be mailed to the Member Participant or by accessing the MyFRS.com website, clicking on Resources, and then clicking on Forms. By using this form, the Member Participant grants permission to the SBA to obtain any personally identifiable information shared with or generated by any service provider to the FRS, including the MyFRS Financial Guidance Program.

    3. The Member Participant must provide all information. If all information is not provided, the form shall be returned to the Member Participant so that the missing information can be added.

    4. Upon receipt of the complete Request for Intervention, an acknowledgment will be sent by regular US mail or emailed to the Member Participant.

    5. The SBA will conduct an investigation and prepare and send to the Member Participant an agency action letter detailing the SBA’s findings; any proposed resolution; and information on the next steps in the dispute resolution process.

    (b)(c) Second Third Step: Hearing Request.

    1. If the Member Participant is not satisfied with the proposed resolution as set out in the agency action letter, the Member Participant may file a Petition for Hearing, “FRS Investment Plan Petition for Hearing,” Form SBA-PFH08/2006 06/04, which is hereby adopted and incorporated by reference, with the SBA. The Petition for Hearing is routinely attached to the agency action letter and may also be obtained by calling the toll free number at 1(866)446-9377 and requesting that it be sent to the Member Participant or by accessing the MyFRS.com website, and clicking on Resources and then clicking on Forms. The Petition for Hearing must be received within 21 days of the Member’s Participant’s receipt of the agency action letter or it will be rejected as untimely and the Member Participant will have waived his right to a hearing.

    2. The Member Participant shall use “FRS Investment Plan Petition for Hearing,” Form SBA-PFH 08/2006 06/04. By using this form, the Member Participant grants permission to the SBA to obtain any personally identifiable information shared with or generated by any services provider to the FRS, including the MyFRS Financial Guidance Program.

    3. Upon receipt of the Petition for Hearing, the SBA has 15 days to respond to the petition, in accordance with Section 120.569(2)(a), F.S.

    4. If the hearing request contains a disputed issue of material fact, the SBA shall, within the required 15 days, forward the hearing request to the Division of Administrative Hearings, requesting that an administrative law judge be assigned to conduct the hearing and so notify the Participant.

    5. If there is no disputed issue of material fact, then the SBA shall assign the matter to a presiding officer, who will send out a “Notice of Proceeding and Initial Order of Instructions” to the Petitioner and to Respondent’s counsel. send a Notice of Proceeding in conformance with Rule 28-106.302, F.A.C., and include a decision with regard to mediation under Section 120.573, F.S., and Part IV of Rule Chapter 28-106, F.A.C. The Participant has 14 days from the date of the Notice of Proceeding to submit written evidence or to ask to submit oral evidence. If the Participant asks to submit oral evidence, the SBA will schedule a hearing no sooner than 14 days from the date of the request. A Notice of Proceeding will include a reference to Rule 28-109.006, F.A.C., regarding communications media technology and the responsibility of the Participant to provide someone to swear him in if he decides to use a conference telephone.

    6. The balance of the hearing process shall conform to the requirements of Chapter 120, F.S.

    Specific Authority 121.4501(8)(a) FS. Law Implemented 120.569, 120.57, 120.573, 121.4501(9)(f)3. FS. History–New 10-21-04, Amended 3-9-06,________.

     

    19-11.006 Enrollment Procedures for New Hires.

    (1) Purpose. This rule adopts procedures and forms for enrollment in the Florida Retirement System Investment Plan for employees who become employed in a regularly established position with a state employer commencing after April 1, 2002; or with a district school board employer commencing after July 1, 2002; or with a local employer commencing after October 1, 2002.

    (2) Definitions.

    (a) “ABO,” which is the acronym for the “accumulated benefit obligation,” means the present value of a member's benefit in the FRS Pension Plan, which is the defined benefit program of the Florida Retirement System, to which the member would be entitled if the member retired from the FRS Pension Plan. This present value shall be calculated in accordance with the formula set out in Section 121.4501(3)(c)2., F.S. by the Division of Retirement within the Department of Management Services. The ABO changes on a monthly basis based on the monthly basis based on the following factors: age, service, salary level, and membership class.

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

    (c) “Administrator” means the entity hired by the SBA, pursuant to Section 121.4501(8)(b)1., F.S., to provide administrative services to the FRS Investment Plan and is responsible for processing enrollment forms received from employees making a retirement plan choice either by form, by telephone, or on the MyFRS.com website.

    (d)(c) “Effective date of enrollment or effective enrollment in the FRS Investment Plan” means that the employee has completed enrollment by filing the enrollment form for his membership class or by filing a separate document for his membership class with the Administrator; that the Administrator TPA has entered the employee into its recordkeeping system; and that the Administrator TPA has informed the Ddivision and the employee's employer of the employee's effective date of enrollment in either the FRS Pension Plan or in the FRS Investment Plan. For purposes of this rule, the term “enrollment form” or “form” shall also refer to the separate document described in paragraph 19-11.006(4)(b), F.A.C., below.

    (d) “Effective enrollment in the FRS Investment Plan” means that the employee has completed enrollment; that the TPA has entered the employee into its recordkeeping system; and that the TPA has informed the division and the employee's employer of the employee's effective date of enrollment in the FRS Investment Plan.

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

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

    (g) “FRS 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 established in Parts II and III, certain parts of Part I of Chapter 121 also apply to the FRS Investment Plan. The FRS Investment Plan has two parts: the FRS Investment Plan and the FRS Investment Plan Hybrid Option, also known as the FRS Hybrid Option.

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

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

    (j) “Grace Period” means that procedure described in subsection (6), below, which permits, under certain circumstances, the voiding of a retirement plan election.

    (k) “Member” “Participant” means an employee who elects to join the FRS Investment Plan or the FRS Investment Plan Hybrid Option.

    (l) “Public Employee Optional Retirement Program” or "PEORP” means the defined contribution retirement program of the Florida Retirement System established by Section 121.4501, F.S., more commonly known as the FRS Investment Plan.

    (m) “SBA” means the State Board of Administration of Florida.

    (n) “TPA” means the third-party administrator hired by the SBA, pursuant to Section 121.4501(8)(b)1., Florida Statutes, to provide administrative services to the FRS Investment Plan.

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

    (3) General Enrollment Procedures.

    (a) All newly-hired employees are initially enrolled in the FRS Pension Plan. If a newly-hired employee chooses, within the statutory election period, to enroll in the FRS Investment Plan or the FRS Investment Plan Hybrid Option, the effective date of enrollment in the FRS Investment Plan or the FRS Investment Plan Hybrid Option is the date of hire of the employee. However, the employer contributions received by an employee prior to effective enrollment in the FRS Investment Plan or the FRS Investment Plan Hybrid Option will be transferred into the employee’s FRS Investment Plan or FRS Investment Plan Hybrid Option account at the rate the employer was required to contribute for that employee. Only after effective enrollment in the FRS Investment Plan or the FRS Investment Plan Hybrid Option will the employee receive the employer contribution at the FRS Investment Plan or FRS Investment Plan Hybrid Option rate appropriate to that employee’s class of membership service, as specified in Section 121.4501(4)(a)2.b; (b)2.b., and (c)2.b., F.S.

    (b) Enrollment forms are available in the enrollment package which is sent to an employee’s address of record or by accessing may be accessed online at: www.MyFRS.com, and clicking on Resources and then on Forms; or by calling toll-free 1(866)446-9377 or for the hearing impaired 1(888)429-2160, which is a toll-free line.

    (4) Specific Enrollment Procedures.

    (a) All newly-hired employees may enroll in the FRS Investment Plan no later than the last business day of the 5th month following the employee's month of hire or may elect to remain in the FRS Pension Plan. Example: If an employee is hired on January 15, he must elect the FRS Investment Plan no later than the last business day of June.

    (b) The SBA has designed the following forms for ease of use for employees in the several membership classes of the Florida Retirement System. As an alternative, an employee not wishing to use the forms may provide the information outlined in this Rule 19-11.006, F.A.C., for his membership class in a separate document. Employees may determine their membership class by inquiry of their human resources office at their agency. The forms available are: an EZ Retirement Plan Enrollment form which is only for regular, special risk, and special risk administrative support class employees; a General Retirement Plan Enrollment form for regular, special risk, and special risk administrative support class employees; an Elected Officers’ Class Retirement Plan form; a Community College Optional Retirement Program Retirement Plan Choice form; a State University System ORP-Eligible Employee Retirement Plan form; a State Senior Management Service Employees Retirement Plan form; and a Local Senior Management Service Employees Retirement Plan form.

    1. All enrollment forms can be obtained at the sources listed in paragraph (3)(b), above.

    2. Only members of the regular, special risk, and special risk administrative support classes of employees may use the EZ form, “EZ Retirement Plan Enrollment Form for Regular, Special Risk and Special Risk Administrative Support Class Employees,” Form ELE-1-EZ, rev. 05-07 02-04, which is hereby adopted and incorporated by reference. If an employee chooses to use the EZ form, only limited information is required and the FRS Select Moderate Balanced Fund is the initial investment option (although that investment option may be changed by the Member Participant once the account is funded) and no beneficiary identifying information is required. However, beneficiary designations must be made on forms for that purpose or funds will be distributed, at the Member’s Participant’s death, in accordance with Florida law and Rule 19-11-002, F.A.C. Beneficiary designation forms may be obtained from the same sources listed in paragraph (3)(b), above.

    (c) If one of the other forms is used, consistent with the employee’s membership class, or if the employee chooses to submit a separate document, consistent with the employee’s membership class, the employee shall provide the following information:

    1. Employee’s name and social security number;

    2.a. For an employee who is not a member of any of the retirement plan options detailed in sub-subparagraphs b. through f., below, a selection as to whether the employee decides to stay in the FRS Pension Plan, or transfer his ABO, if any, to the FRS Investment Plan, or transfer to the FRS Investment Plan Hybrid Option and leave his ABO, if any, in the FRS Pension Plan; or

    b. For a state employee who is eligible for membership in the State Senior Management Service Class, a selection as to whether the employee wishes to elect:

    i. The FRS Pension Plan; or

    ii. The FRS Investment Plan and have future employer contributions sent to the FRS Investment Plan account; or

    iii. To retain any accrued benefit in the FRS Pension Plan benefit and switch prospectively into the FRS Investment Plan Hybrid Option, which requires that the employee must have at least 5 years of previous Pension Plan service to select this option iii; or

    iv. To switch prospectively to the Senior Management Service Optional Annuity Program (SMSOAP) and retain any accrued benefit in the FRS Pension Plan, which requires that the choice form must be received no later than 4 PM Eastern Time on the 90th day from the employee's date of hire, in accordance with Section 121.055(6)(c)2., F.S.;

    c. For a local employee who is eligible for the Senior Management Service Class, a selection as to whether the employee wishes to elect:

    i. The FRS Pension Plan; or

    ii. The FRS Investment Plan and have all future employer contributions sent to the FRS Investment Plan account; or

    iii. To retain any FRS Pension Plan benefit and switch prospectively into the FRS Investment Plan Hybrid Option, which requires that the employee must have at least 5 years of previous Pension Plan service to select this option iii; or

    iv. To withdraw from the Florida Retirement System, which requires contacting the employee's employer and submitting the appropriate form to that employer;

    d. For an employee who is eligible for the State University System Optional Retirement Program (SUSORP), a selection as to whether the employee wishes to elect:

    i. To join SUSORP and retain any accrued benefit in the FRS Pension Plan, which requires making such election no later than the 90th day after the date of hire by executing a contract with a SUSORP provider company and which also requires that eligible clinical faculty members employed at a state university with a faculty practice plan J. Hillis Miller Center at the University of Florida or the Medical Center at the University of South Florida shall elect this option, which requires the selection to be made no later than 4 PM Eastern Time on the 90th day from the employee's date of hire, in accordance with Section 121.35(3), F.S.; or

    ii. To join the FRS Pension Plan which must be completed no later than the last business day of the 5th month after the month of hire; or

    iii. To join the FRS Investment Plan and to transfer the present value, if any, of the FRS Pension Plan benefit to the FRS Investment Plan and to have future contributions sent to the FRS Investment Plan account; or

    iv. To switch prospectively to the FRS Investment Plan Hybrid Option and retain any accrued benefit in the FRS Pension Plan, which requires that the eligible employee must have 5 years of previous Pension Plan service to select this option iv;

    e. For an employee who is eligible for the Community College Optional Retirement Program, a selection as to whether the employee wishes to elect:

    i. To join the FRS Pension Plan; or

    ii. To join the FRS Investment Plan and to transfer any accrued benefit from the FRS Pension Plan to the FRS Investment Plan and to have future employer contributions sent to the FRS Investment Plan account; or

    iii. To join the FRS Investment Plan Hybrid Option and to retain any accrued benefit in the FRS Pension Plan which requires that the eligible employee must have 5 years of previous Pension Plan service to select this option iii; or

    iv. To withdraw from the Florida Retirement System and participate in the Community College Optional Retirement Program (CCORP) which requires that the selection must be completed within 90 days of commencing CCORP qualifying employment, in accordance with Section 1012.875(3), Florida Statutes;

    f. For an employee who is eligible for the Elected Officers' Class, a selection as to whether the employee wishes to elect:

    i. To join the FRS Pension Plan; or

    ii. To join the FRS Investment Plan and to transfer any accrued benefit from the FRS Pension Plan to the FRS Investment Plan and to have future employer contributions sent to the FRS Investment Plan account; or

    iii. To join the FRS Investment Plan Hybrid Option and to retain any accrued benefit in the FRS Pension Plan which requires that the eligible employee must have 5 years of previous Pension Plan service to select this option iii; or

    iv. To join the Senior Management Service Class of the FRS Pension Plan and retain any accrued benefit in the FRS Investment Plan, which requires the eligible employee to make the choice no later than the last day of the 6th month after assuming his elected office, in accordance with Section 121.052(3)(a), Florida Statutes; or

    v. To switch prospectively to the State Senior Management Service Optional Annuity Program and retain any accrued benefit in the FRS Pension Plan, which selection must be made no later than the last business day of the 6th month after assuming elected office and that the employee must be a state elected officer to select this option v; or

    vi. To withdraw from the Florida Retirement System and participate in a local government Optional Annuity Program, which decision is irrevocable so long as the employee holds a position which is eligible for the Senior Management Service Class and which election must be made no later than the last business day of the 6th month after assuming elected office and that the employee must be a local elected officer to select this option vi; or

    vii. To withdraw from the Florida Retirement System altogether, which means that the employee will not participate in the Florida Retirement System or any retirement plan offered by his employer; that the effective date of the election will be the date he assumed elected office; that the employee can rejoin the Elected Officers Class upon written request; that the employee's decision must be made no later than the last business day of the 6th month after assuming elected office; and that this option vii is not available to any member who has already retired from a State of Florida administered retirement plan.

    3. understand that benefits will be distributed in accordance with Section 121.091(8), Florida Statutes, in the absence of the member’s participant’s filing a beneficiary designation form, which is available from the sources listed in subsection (3)(b), above;

    4. Select any combination of investment funds from among any of the balanced funds and other investment funds shown, provided, however, that the percentage of the employee's contributions for all of the funds selected must equal 100 percent. Any member participant who does not select investment options will be defaulted into the FRS Select Moderate Balanced Fund. Any member participant so defaulted retains the option at any time once the account is activated to make other investment selections. Both the accumulated benefit obligation and all future contributions will be invested in the FRS Select Moderate Balanced Fund unless and until the member participant chooses other investment options;

    5. [I understand section] sign and date a section indicating that, depending on which options were selected as described in Section 1 of the form and in subparagraph 2., above:

    a. the employee understands that he can obtain a description of his rights and responsibilities under the FRS Pension Plan and the FRS Investment Plan by calling a toll-free number or accessing an internet website;

    b. The employee understands the elections he has made by choosing among the various options available to him as described in Section 1 of the form and in subparagraph 2., above;

    c. The employee understands that if he has elected the FRS Investment Plan, the initial ABO is an estimate which will be reconciled within 60 days and that if the employee is a member of the FRS Investment Plan Hybrid Option, he cannot make this choice unless he has at least 5 years of previous Pension Plan service and that if he is currently a member of the FRS Pension Plan, the election may constitute his second choice as provided under Section 121.4501(4)(e), Florida Statutes;

    d. The employee understands that he should review the fund profiles and the Investment Fund Summary before choosing investment funds and that information will be available electronically unless the employee requests hard copies and that if the employee does not choose specific funds, his assets will be invested in the FRS Select Moderate Balanced Fund;

    e. The employee understands that investment management fees may change and that funds may be added or terminated and that if funds are terminated, the employee has the choice of moving his assets into other investment options or, if the employee does not make an affirmative decision, his assets will be moved to the FRS Select fund with the most similar risk characteristics or into a replacement fund designated by the Plan's Trustees;

    f. The Florida Statutes incorporate federal law concepts of participant control so that if the employee exercises control over his assets in accordance with section 404(c) of the federal Employee Retirement Income Security Act of 1974, no program fiduciary shall be liable for any loss to his account which results from the employee's control;

    g. The employee understands that he has a one time opportunity to switch plans and that to switch to the Pension Plan there will be a buy-in cost for doing so;

    h. the employee understands that he can change his fund allocations at any time after the account is activated;

    i. The employee understands that his account will be available by the last business day end of the month following the date of his election;

    j. The employee understands that by not selecting any investment options, he is authorizing that his assets be invested in the FRS Select Moderate Balanced Fund;

    k. The employee understands that the FRS Investment Plan is not designed to facilitate short-term excessive trading; that foreign and international funds are subject to a 7-day holding period and that the excessive trading policy in Rule 19-11.004, F.A.C., applies to all members participants;

    l. The employee understands that he cannot file a second election using the initial enrollment form;

    m. The employee understands that if he has chosen the Senior Management Service Optional Annuity Program, he must contact the plan marketing companies to receive information about investment funds; that his participation in any other state-administered retirement plan is inactivated once enrolled in SMSOAP; that he is not eligible for disability benefits; that his SMSOAP election is irrevocable so long as he is employed in a SMSOAP position; that the State of Florida does not guarantee or insure SMSOAP benefits; and that any employee contributions to SMSOAP are after-tax deductions that are not tax-deferred;

    n. The employee understands that if he has chosen to withdraw from the Florida Retirement System, that his participation in any other state-administered retirement plan is inactivated once the withdrawal is complete; that he is not eligible for disability benefits; that his withdrawal decision is irrevocable so long as he is employed in a position eligible for participation in the Senior Management Service Class;

    o. The employee understands that if he has chosen the State University System Optional Retirement Program (SUSORP), he must contact the plan marketing companies to receive information about investment funds; that his participation in any other state-administered retirement plan is inactivated once enrolled in SUSORP; that he cannot participate in SUSORP if he is a retiree or receiving an annuity payment from the SUSORP; that he is not eligible for disability benefits; that his SUSORP election is irrevocable so long as he is employed in a SUSORP position; that the State of Florida does not guarantee or insure SUSORP benefits; and that any employee can contribute up to the statutory amount of his gross salary as an employee contribution and that these contributions to SUSORP shall be tax-deferred;

    p. The employee understands that if he has chosen to withdraw from the Florida Retirement System and participate in the Community College Optional Retirement Program (CCORP), he must contract with the individual provider company(ies) for CCORP within 90 days of his employment; that failure to join CCORP will make him a compulsory member of the FRS Pension Plan; that by electing to withdraw from the Florida Retirement System, he must become a program participant in the CCORP's lifetime monthly annuity program; that his participation in any other state-administered retirement plan is inactivated once enrolled in CCORP; that he is not eligible for disability benefits; and that he has one opportunity to join either the FRS Pension Plan or the FRS Investment Plan;

    q. The elected employee understands that if he has chosen to join the SMSOAP, he must be an elected officer; and that he must contact the marketing company(ies) to receive information about the plan; that his participation in any other state-administered retirement plan is inactivated; that the State of Florida does not guarantee or insure any benefits paid under the program; and that any employee contributions he makes are not tax-deferred;

    r. The elected employee understands that if he has chosen to withdraw from the Florida Retirement System and participate in a local government annuity program, his effective date will be the first day of the month following the receipt of his written election to the FRS Plan Choice Administrator; and

    s. The elected employee understands that if he has chosen to withdraw from the Florida Retirement System altogether, he may rejoin upon written request and that this option is not available to members who have already retired from a State of Florida administered retirement plan.

    6. For employees who have chosen to participate in the Senior Management Service Optional Annuity Program, fill out a section designating marketing companies and contribution amounts for that option and check a statement that the employee has reviewed the investment fund options offered by the marketing companies and has signed the necessary contract(s) with the company(ies) for the deposit of the employees contributions as authorized in the section.

    7. For employees who have chosen to participate in the State University System Optional Retirement Program, fill out a section designating marketing companies and contribution amounts for that option and check a statement that the employee has reviewed the investment fund options offered by the marketing companies and has signed the necessary contract(s) with the company(ies) for the deposit of the employees contributions as authorized in the section.

    (d)1. The enrollment form shall be complete and the election shall be final if all the required information is clearly indicated and if the enrollment form is received by the Administrator TPA by 4 PM Eastern Time. The form shall be transmitted via the U.S. mail or shall be submitted online in accordance with instructions accompanying the form.

    2. The Administrator TPA shall determine that the employee’s enrollment in the FRS Investment Plan is within the prescribed time period, the form in toto is complete, and the employee’s election is clearly indicated. If the Administrator TPA determines that the form is incomplete, the form shall be returned to the employee and resubmitted when complete. An incomplete form is a form which is missing the name and address and form numbers of the member participant, social security numbers, plan selection, signatures, or dates. If the form is incomplete only because the member participant has made no investment selection, the form will be processed and the member participant will be defaulted into the FRS Select Moderate Balanced Fund for investing his accumulated benefit obligation and all future contributions. Note that this default selection may be changed by the member participant at any time once the transfer has been made.

    (e) Upon receipt of the completed enrollment form by the Administrator TPA, the Administrator TPA shall enroll the employee in the FRS Investment Plan. Upon completion of the enrollment, but no later than two working days after enrollment, the Administrator TPA shall send confirmation of the effective enrollment to the employee at the employee's home address, to the employee's employer, and to the division to inform the division that the employee is no longer in the FRS Pension Plan.

    (f) Employers shall pay retirement contributions monthly for their FRS Investment Plan employees or the FRS Investment Plan Hybrid Option and those contributions are due to the division by the 5th working day of the month following the month for which the contributions are made. The employer shall change its employee records to reflect that the contribution rates effective on the effective date of enrollment are applicable to those of its employees who have elected to enroll in the FRS Investment Plan or the FRS Investment Plan Hybrid Option.

    (5) Asset Transfer and True-Up Procedures for Newly-hired Employees with Previous FRS Service.

    (a) For employees with previous FRS service who elect to enroll in the FRS Investment Plan with a transfer of his or her ABO, the division shall determine the amount of the employee’s ABO. This amount shall be transferred to the employee’s FRS Investment Plan account and shall be allocated to each investment product selected by the participant on his or her enrollment form.

    (b) 1.The Ddivision shall determine the employee’s ABO as of the last day of the month prior to the employee’s effective date of enrollment in the FRS Investment Plan.

    2. Example: If the Ddivision receives the enrollment during the month of June, the effective date of enrollment for the employee in the FRS Investment Plan is July 1. The Ddivision shall determine the employee’s ABO, if any, through June 30.

    (c) By the 15th day of the month, the Ddivision shall notify the Administrator TPA of the ABO for each employee whose effective date of enrollment is the first day of the month and the Administrator TPA shall notify the SBA of the aggregate ABO of employees whose effective date of enrollment is the first day of the month.

    (d) On the last business day of the effective month of enrollment in the FRS Investment Plan, the SBA shall transfer the aggregate ABO amount to the FRS Investment Plan custodian for distribution to the FRS Investment Plan participant accounts. Such distribution shall be directed by the Administrator TPA and shall be based on the percentage of the total investment allocated to each investment option designated by the participant on the enrollment form.

    (e) The total amount initially credited to each FRS Investment Plan member’s participant’s account who chooses to move his or her ABO out of the FRS Pension Plan is an estimate of the participant's ABO as calculated by the Ddivision. Thereafter, pursuant to Section 121.4501(3)(c)3., F.S., the Ddivision shall recompute the ABO not later than 60 days after the initial transfer of funds and, if the recomputed amount differs from the transferred ABO amount by $10 or more, the Ddivision shall cause an adjustment of the transfer of assets between FRS Investment Plan account(s) of the affected member(s) participant(s) through a true-up transfer in accordance with that statutory section.

    (f) If the recomputed ABO is greater than the initial amount transferred by $10 or more, the amount to be transferred to the member’s participant’s FRS Investment Plan account from the FRS Trust Fund will equal the excess of the recomputed ABO over the amount initially transferred plus interest. The amount transferred to each investment product shall be based on the percentage of the total investment allocated to each investment product by the member participant on his or her enrollment form.

    (g) If the recomputed ABO is less than the original amount transferred by $10 or more, the Administrator TPA shall cause to be transferred from the member’s participant’s FRS Investment Plan account to the FRSTF an amount equal to the excess of the initial amount transferred over the recomputed ABO plus interest. The amount transferred from each investment product shall be based on the percentage of the total investment allocated to each investment product by the member participant on his or her enrollment form.

    (h) The Ddivision shall notify the SBA of the aggregate true-up amount plus interest within 45 days of the initial transfer. The Ddivision shall notify the Administrator TPA of the true-up amounts plus interest by member participant account within 45 days of the initial transfer. The true-up transfer shall include the true-up amount determined by the Ddivision plus interest at the rates specified in Section 121.4501(3)(c)3., F.S., from the date of the initial transfer to the date of the true-up transfer. The transfer of the true-up amount plus interest shall occur on the 60th day following the initial transfer. In the event the 60th day following the initial transfer falls on a Saturday, Sunday, or a legal holiday, the true-up transfer shall occur on the last business day of the month preceding the Saturday, Sunday, or legal holiday.

    (i) The Ddivision shall calculate the interest owed on true-up amounts. If the recomputed ABO is greater than the original amount transferred by $10 or more, the member participant will be owed a true-up amount plus interest. Interest will be calculated using the rate of 8% effective annual interest, compounded annually, and the number of days from the date of the initial transfer to the date of the true-up transfer, as specified in paragraph (h), above. If the recomputed ABO is less than the original amount transferred by $10 or more, the member participant will owe a true-up amount plus interest. Interest will be calculated on the amount owed based upon 6% effective annual interest, compounded annually, and the number of days from the date of the initial transfer to the date of the true-up transfer.

    (6) Grace Period.

    (a) If an employee files an election with the Administrator TPA and the employee realizes that the election was made in error, the SBA will consider, on a case-by-case basis, whether the election will be voided, subject to the following requirements:

    1. Member Elects the FRS Investment Plan. The employee must notify the SBA, by a telephone call to the toll free number: 1(866)446-9377, or by e-mail, or by written correspondence directly to the SBA, to the Administrator TPA, or to the Division of Retirement, before assets are transferred from the FRS Pension Plan to the member’s FRS Investment Plan account. This transfer occurs no later than the last business day of the month following the election month.

    2. Member Actively Elects the FRS Pension Plan. The employee must notify the SBA no later than the last business day of the month following the election month.

    (b) If the request to void the election is made timely and the SBA agrees the election will be voided, the member will be required to sign a release and return it to the SBA prior to the election’s being officially voided. The member will acknowledge that failure to make a new election within one calendar month will result in the original election’s being reinstated, and that once the revised election is made it cannot be changed (unless the member uses his second election, if available).

    (c) Upon receipt of the release, the Division of Retirement and the Administrator TPA will be directed to do the following:

    1. the Division of Retirement will revise its database to reflect the member’s plan change and extend the member’s election period by one calendar month.

    2. the Administrator TPA will contact the member via telephone or email and tell him or her that the election has been voided.

    3. the member will make a new election via telephone, or using the website at MyFRS.com or using a form prior to the newly-established deadline.

    (d) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(9)(f)3., F.S.

    (7) Costs associated with the liquidation or transfer of assets from the FRS Trust Fund to the FRS Investment Plan will be deducted from the FRS Trust Fund. The FRS Trust Fund will not be responsible for any transaction costs associated with the purchase of FRS Investment Plan assets. Those costs will be deducted from FRS Investment Plan accounts or otherwise charged to FRS Investment Plan members participants.

    (8) The amount transferred to each investment product shall be based on the percentage of the total investment allocated to each fund by the member participant on his or her enrollment form as described in subsection (3)(b), above. However, pursuant to Section 121.4501(4)(d), F.S., amounts not specified will be invested in the default option designated in the Investment Policy Statement, as approved by the Trustees and adopted and incorporated by reference in Rule 19-9.001, F.A.C.

    (9) In order to effectively and efficiently administer the investment programs of the SBA and in accordance with Section 215.44(8)(b), F.S., the records and other information relating to investments made by the SBA will be confidential and exempt from Chapter 119, F.S., until 30 days after completion of each investment transaction.

    Specific Authority 121.4501(3)(c)4, (8)(a) FS. Law Implemented 121.051, 121.055, 121.35, 121.4501(2),(3),(4),(5),(6),(8),(15), 121.73, 121.74, 121.78, 215.44(8)(b), 1012.875(3) FS. History–New 10-21-04, Amended 3-9-06,________.

     

    19-11.007 Second Election Enrollment Procedures for the FRS Retirement Programs.

    (1) Purpose. The purpose of this rule is to establish procedures for making the second election permitted by Section 121.4501(4)(e), Florida Statutes. This rule includes procedures for members participants who initially chose the FRS Investment Plan or the FRS Investment Plan Hybrid Option to use their 2nd election to transfer to the FRS Pension Plan; for members participants who chose or defaulted into the FRS Pension Plan to use their 2nd election to transfer to the FRS Investment Plan or the FRS Investment Plan Hybrid Option; and for participants who chose or defaulted into the FRS Pension Plan to use their 2nd election to transfer to the FRS Investment Plan Hybrid Option.

    (2) Definitions.

    (a) “FRS Investment Plan” means the optional defined contribution retirement plan within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a participant chooses to transfer his accrued service benefit in the FRS Pension Plan, if any, to the FRS Investment Plan or the FRS Investment Plan Hybrid Option and further chooses that all future employer contributions be deposited in his FRS Investment Plan account. Although established in Parts II and III, certain parts of Part I of Chapter 121, F.S., also apply to the FRS Investment Plan.

    (b) “FRS Investment Plan Hybrid Option” or “FRS Hybrid Option” means the optional defined contribution retirement plan within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a member participant chooses to retain his accrued service benefit in the FRS Pension Plan, in accordance with Section 121.4501(3)(c)1., Florida Statutes, and further chooses that all future employer contributions be deposited in his FRS Investment Plan Hybrid Option account. Although established in Parts II and III, certain parts of Part I of Chapter 121, F.S., also apply to the FRS Investment Plan Hybrid Option.

    (c) “FRS Pension Plan” means the defined benefit retirement plan within the Florida Retirement System, established in Part I of Chapter 121, Florida Statutes.

    (d) “I,” “you,” or “your:” these references are to the member participant in the context of relevant parts of the two enrollment forms described in this rule.

    (e) “ABO”, “Accrued service benefit” or “accumulated benefit obligation” means the present value amount already earned by a member participant in the FRS Pension Plan which, if the participant uses the 2nd election, will be transferred to his or her account in the FRS Investment Plan.

    (3) General Procedures.

    (a) All members participants who wish to change their FRS retirement plan using their second election must use a 2nd election enrollment form. There are two types of forms. The “2nd Election Retirement Plan Enrollment Form” requires the member participant to choose the investment options he wishes to use if he is choosing to move to either the FRS Investment Plan or the FRS Investment Plan Hybrid Option. Alternatively, by using the “2nd Election EZ Retirement Plan Enrollment Form,” the member participant is choosing to have his employer contributions and any transfers from the FRS Pension Plan invested in the FRS Select Moderate Balanced Fund. The member participant may change his investment selection at any time after he is transferred to the FRS Investment Plan or the FRS Investment Plan Hybrid Option.

    (b) Both forms are available by calling the toll-free number for the MyFRS Financial Guidance Line: 1(866)446-9377, or for the hearing-impaired: 1(888)429-2160; or by using the MyFRS.com website and clicking on Resources and then on Forms.

    (c) The form must be mailed to the FRS Plan Choice Administrator, CitiStreet, FRS Investment Plan Administrator, P. O. Box 56290, Jacksonville, Florida 32241-6290.

    (d) The form must be received by the FRS Plan Choice Administrator before 4 PM Eastern Time on the last day of the month in which the participant wishes to make the change from one retirement plan to the other. The member participant may elect to move between the Florida Retirement System retirement programs only if the member participant is earning service credit in an employer-employee relationship consistent with the requirements under Section 121.021(17)(b), F.S., excluding unpaid leaves of absence. The form must be received and processed by the FRS Plan Choice Administrator before employment is terminated. If the last day of the month is a Saturday, Sunday, or legal holiday, the deadline is the last business day of the month.

    1. Example: if a member participant submits the 2nd Election Retirement Plan Enrollment Form in the month of November, the effective date of the plan change will be December.

    2. Example: if a member participant intends to terminate his FRS-covered employment, he must ensure that the form is received by the FRS Plan Choice Administrator before he terminates his employment. Therefore, if a member participant wishes to terminate on November 27, he must ensure that the form is received and processed by the FRS Plan Choice Administrator before that date.

    3. Example: the last day of February, 2004, was Sunday, February 29. Therefore, the last business day was the preceding Friday, February 27. For a 2nd Election to have been effective as of March 1, 2004, the form must have been received by the FRS Plan Choice Administrator before 4 PM Eastern Time on Friday, February 27.

    (4) Specific Procedures for the “2nd Election Retirement Plan Enrollment Form.”

    (a) All members participants are required to fill out Section 1 of the form by providing the member’s participant’s name and Social Security number and checking only one of three boxes, indicating which choice the member participant is making. These boxes contain the following information:

    1. Change from the FRS Investment Plan or FRS Investment Plan Hybrid Option to the FRS Pension Plan (Please complete Section 4, as described in paragraph (d) below.) I understand I am using my existing FRS Investment Plan account balance to “buy” into the FRS Pension Plan. I understand that if my account balance is not sufficient to cover the cost of the “buy in”, I must pay the balance due from my personal funds before being allowed into the FRS Pension Plan. The Division of Retirement is responsible for calculating the buyback amount for those wishing to use their second elections to transfer to the FRS Pension Plan. The actuarial calculation is a forward-looking projection based on the employee’s salary and service and increases as additional creditable service and salary are earned. I understand that I may move my FRS Investment Plan account balance into more conservative, less risky investment options within the FRS Investment Plan in order to potentially reduce the volatility of my account balance prior to liquidation and movement to the FRS Pension Plan.

    2. Change from the FRS Pension Plan to the FRS Investment Plan, (Please complete Sections 3 and 4, as described in paragraphs (c) and (d), below.) I understand I am transferring the present value, if any, of my FRS Pension Plan benefit to the FRS Investment Plan. I understand that I will have future employer contributions deposited in my Investment Plan account.

    3. Change from the FRS Pension Plan to the FRS Investment Plan Hybrid Option, (Please complete Sections 3 and 4, as described in paragraphs (c) and (d) below.) I am retaining any accrued benefit in the FRS Pension Plan with future employer contributions deposited in my FRS Investment Plan Hybrid Option account. I understand that I must have 5 years of Pension Plan service to select this option.

    (b) The second section on the form discusses the beneficiary designation. The designation cannot be made on the enrollment form. This section contains the following information:

    1. A beneficiary designation can be completed after you qualify for a retirement benefit (i.e., become “vested”). If you do not designate a beneficiary after you are vested, your benefit will be distributed in accordance with Section 121.091(8) or 121.4501(20), Florida Statutes, as applicable.

    2. You may designate a beneficiary by completing a Beneficiary Designation Form (BEN-001 Pension Plan or IPBEN-1Investment Plan). Both forms are available online at MyFRS.com or by calling the MyFRS Financial Guidance Line.

    (c)1. The third section on the form discusses and describes the FRS Investment Plan Fund Selections. A member participant who has checked the first box in the first section of the form, indicating a change to the FRS Pension Plan, must not complete this section. Members Participants who have checked either the second or the third boxes in the first section of the form must complete this section by choosing their investment fund options.

    2. The investment fund selection must be indicated by:

    a. Writing the percentage you wish to allocate to each investment option. Use whole percentages only.

    b. Choosing your investment funds from the balanced funds, the other investment funds OR from a combination of the two.

    c. Ensuring that the total of all your selections equals 100%.

    d. Any member participant who does not select any investment options will be defaulted into the FRS Select Moderate Balanced Fund. Any member participant so defaulted retains the option at any time to make other investment selections. Both the accumulated benefit obligation and all future contributions will be invested in the FRS Select Moderate Balanced Fund unless and until the member participant chooses other investment options.

    (d) The fourth section on the form is an authorization section which will ensure that all members participants understand the information described. All members participants must read the information in the fourth section before signing the form. The information which follows is applicable as indicated depending on the choice the member participant has made.

    1. For all members participants: I understand that I can find a description of my rights and responsibilities under the FRS Pension Plan and the FRS Investment Plan in the respective Summary Plan Descriptions, Florida Statutes, and Administrative Rules available through the MyFRS Financial Guidance Line at 1(866)44-MyFRS 1(866)446-9377; or TTY: 1(888)429-2160) or at MyFRS.com.

    2. For members participants choosing to transfer to the FRS Pension Plan:

    a. I understand that I have elected to change retirement plans to the FRS Pension Plan.

    b. I understand that this election will constitute my one-time second election as provided under the FRS and that I must remain in this retirement plan until my retirement.

    c. I understand that there may be a cost to change to the FRS Pension Plan, which I can get by calling the MyFRS Financial Guidance Line and connecting to the Division of Retirement, and that such cost may require that I pay some amount greater than my current FRS Investment Plan account balance. Such payment, if necessary, must be received by the date determined by the Division of Retirement. If the required amount if not received by the Division of Retirement by the due date, the election will be voided. The member participant will receive notification and proper instructions from the Division of Retirement detailing where and in what form to send personal payments. The Division of Retirement is responsible for calculating the amount for those wishing to use their second elections to transfer to the FRS Pension Plan. The actuarial calculation is a forward-looking projection based on the employee’s salary and service and increases as additional creditable service and salary are earned.

    d. I understand that I have the ability to move my FRS Investment Plan account balance into conservative investment options within the FRS Investment Plan in order to potentially reduce the volatility of my account balance prior to liquidation and movement to the FRS Pension Plan.

    e. I understand that my one-time second election is irrevocable.

    3. For members participants choosing to transfer to the FRS Investment Plan:

    a. I understand that I have elected to change retirement plans to the FRS Investment Plan, and that any accrued value I may have in the FRS Pension Plan will be transferred to the FRS Investment Plan.

    b. I understand that this election will constitute my one-time second election as provided under the FRS and that I must remain in this retirement plan until my retirement.

    c. I understand the initial transfer amount (the accrued benefit value or the accumulated benefit obligation) is an estimate and that within 60 days of that transfer, there will be a reconciliation pursuant to Florida law, which will use my actual FRS membership record. The amount could be more or less than the estimate I received.

    d. I understand that I can get the amount of my accrued benefit value by calling the MyFRS Financial Guidance Line and connecting to the Division of Retirement.

    e. I understand that if I am currently a member of the FRS Investment Plan Hybrid Option, I cannot make this election.

    f. I understand my one-time second election is irrevocable and I understand that I must remain in this plan until my retirement.

    4. For members participants choosing to transfer to the FRS Investment Plan Hybrid Option:

    I understand that I have elected to change retirement plans to the FRS Investment Plan Hybrid Option and that my FRS Pension Plan benefit already accrued will remain with the FRS Pension Plan and that a FRS Investment Plan Hybrid Option account will be established to receive all future employer contributions.

    5. For participants choosing to transfer either to the FRS Investment Plan or to the FRS Investment Plan Hybrid Option:

    a. I understand that I should review the Fund Profiles and the Investment Fund Summary at MyFRS.com before making any changes to my investment fund selections. I understand that information on investment funds will be provided in electronic format, unless I request hard copies. I understand that I can change my fund allocations at any time after my account is activated by accessing MyFRS.com or by calling the toll-free MyFRS Financial Guidance Line. I understand that my account will be available by the end of the month following the effective date of this election. If I do not choose specific investment funds, I authorize the FRS Plan Choice Administrator to invest my accumulated benefit obligation and future contributions in the FRS Select Moderate Balanced Fund. I understand that the FRS Investment Plan is not designed to facilitate short-term excessive fund trading. Foreign and global investment funds are subject to a minimum holding period of 7-calendar days following any non-exempt transfers into such funds and I may be subject to trading controls on other funds in the event I trade excessively or an equity wash is in effect for a stable value fund.

    b. I understand that investment management fees will be deducted from my FRS Investment Plan account or the FRS Investment Plan Hybrid Option account. I also understand that these fees may change in the future and that funds may be added or terminated. I understand that if any of the funds I select in the FRS Investment Plan or the FRS Investment Plan Hybrid Option account are terminated in the future, I will be able to move my assets into other investment funds prior to termination. Otherwise, my assets in the terminated fund(s) will be automatically moved into a replacement fund designated at that time.

    c. I understand that Sections 121.4501(8)(b)4. and 121.4501(15)(b) of Florida law incorporate the federal law concept of participant control, established by regulations of the U.S. Department of Labor under section 404(c) of the Employee Retirement Income Security Act of 1974. If I exercise control over the assets in my FRS Investment Plan account, pursuant to section 404(c) regulations and all applicable laws governing the operation of the FRS Investment Plan, no program fiduciary shall be liable for any loss to my account which results from my exercise of control.

    (e) The form must be signed and dated by the member participant and must include a daytime telephone number. Inclusion of an e-mail address or the name of the member’s participant’s employing agency is optional on the member’s participant’s part.

    (f) The form must be mailed to the address set out in subsection (2)(c), above.

    (g) The member participant must put his Social Security number at the bottom of each page of the form so that if the pages become separated, they can be properly reassembled.

    (h) For members participants transferring to the FRS Pension Plan, the election may require a personal payment if the member’s participant’s account balance was less than the calculated amount required to buy back into the FRS Pension Plan. Such payment, if necessary, must be received by the date determined by the Division of Retirement. If the required amount is not received by the Division of Retirement by the date due, the election will be voided. The member participant will receive notification and proper instructions from the Division of Retirement detailing where and in what form to send any personal payments.

    (i) A confirmation statement will be mailed to the member’s participant’s address of record once the completed form is received and processed.

    (j) The member participant should carefully review the form and be sure that it is signed and dated. The member participant should keep a copy for his records.

    (k) If the member participant submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name and address and phone numbers of the member participant, social security numbers, plan selection, signatures, or dates. The incomplete form will be returned to the member participant to add any missing information. If the form is incomplete only because the member participant has made no investment selection, the form will be processed and the member participant will be defaulted into the FRS Select Moderate Balanced Fund for investing his accumulated benefit obligation and all future contributions. Note that this default selection may be changed by the member participant at any time once the transfer has been made.

    (5) Specific Procedures for the “2nd Election EZ Retirement Plan Enrollment Form.”

    (a) Form ELE-2, “2nd Election EZ Retirement Plan Enrollment Form,” Rev. 05-07 v. 08-05, is hereby adopted and incorporated by reference.

    (b) All members participants choosing to use this form are required to fill out Section 1 of the form by providing the member’s participant’s name and Social Security number and checking only one of three boxes, indicating which choice the member participant is making.

    (c) The form must be signed and dated by the member participant and must include a daytime telephone number. Inclusion of an e-mail address or the name of the member’s participant’s employing agency is optional on the member’s participant’s part.

    (d) The form must be mailed to the address set out in subsection (3)(c), above.

    (e) The member participant must put his Social Security number at the bottom of each page of the form so that if the pages become separated, they can be properly reassembled.

    (f) For members participants transferring to the FRS Pension Plan, the election may require a personal payment if the member’s participant’s account balance was less than the calculated amount required to buy back into the FRS Pension Plan. Such payment, if necessary, must be received by the date determined by the Division of Retirement. If the required amount is not received by the Division of Retirement by the date due, the election will be voided. The member participant will receive notification and proper instructions from the Division of Retirement detailing where and in what form to send any personal payments. The Division of Retirement is responsible for calculating the amount for those wishing to use their second elections to transfer to the FRS Pension Plan. The actuarial calculation is a forward-looking projection based on the employee’s salary and service and increases as additional creditable service and salary are earned.

    (g) A confirmation statement will be mailed to the member’s participant’s address of record once the completed form is received and processed.

    (h) The member participant should carefully review the form and be sure that it is signed and dated. The member participant should keep a copy for his records.

    (i) If the member participant submits a form that is incomplete, it will not be processed. The incomplete form will be returned to the member participant to add any missing information. An incomplete form is a form which is missing the name and address and phone numbers of the member participant, social security numbers, plan selection, signatures, or dates.

    (a) If a member files an election with the Administrator TPA and the employee realizes that the election was made in error, the SBA will consider, on a case-by-case basis, whether the election will be voided, subject to the following requirements:

    1. Member Elects the FRS Investment Plan. The SBA must be notified, by a telephone call to the toll free number: (866)446-9377, or by e-mail, or by written correspondence directly to the SBA, to the Administrator TPA, or to the Division of Retirement, before assets are transferred from the FRS Pension Plan to the member’s FRS Investment Plan account. This transfer occurs no later than the last business day of the month following the election month.

    2. Member Elects the FRS Pension Plan. The SBA must be notified no later than the last business day of the month following the election month.

     (b) If the request to void the election is made timely and the SBA agrees the election will be voided, the Division of Retirement and the Administrator TPA will be directed to do the following:

    1. The Division of Retirement will revise its database to reflect the election has been voided member’s plan change and extend the member’s election period by one calendar month.

    2. The Administrator TPA will contact the member via telephone or email and tell him or her that the election has been voided.

    3. The member will make a new election via telephone, or using the website at MyFRS.com or using a form consistent with subsection (4), above, prior to the newly-established deadline.

    (c) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(9)(f)3., Florida Statutes.

    Specific Authority 121.4501(8)(a) FS. Law Implemented 121.4501(3), (4), (8)(b)4, (15)(b) FS. History–New 10-21-04, Amended 3-9-06,_________.

     

    19-11.008 Forfeitures.

    (1) Purpose. The purpose of this rule is to clarify the provisions regarding forfeitures of account balances.

    (2) Forfeitures after Separation or Retirement from FRS Employment.

    (a) If a member terminates FRS-covered employment before vesting in his Investment Plan benefit, he will not be entitled to any benefit. The account balance will be placed in a suspense account. The suspense account is invested in the FRS Select U.S. Treasury Inflation-Protected Securities (TIPS) Fund, where it will accrue actual investment earnings. If the member returns to work for an FRS employer within five (5) years from the date of termination, the member’s account balance, plus any earnings while invested in the TIPS Fund, will be returned to the member’s account. The service credit for the restored service, combined with any future service credit, will be applied towards vesting of the member’s account. If the member never returns to work for an FRS employer or if the member returns to FRS covered employment 5 years after the date of termination, the member will forfeit the unvested account balance and the associated service.

    (b) If the member leaves FRS-covered employment after vesting in his Investment Plan account, but before the member vests in any transferred Pension Plan benefit, the member shall only receive the vested Investment Plan benefit. However, if the member takes any distribution from his vested Investment Plan account, the unvested Pension Plan benefit transferred into the Investment Plan will be forfeited. If the member does not take a distribution from his Investment Plan account, the unvested Pension Plan benefit will be transferred to a suspense account. The suspense account is invested in the FRS Select U.S. Treasury Inflation-Protected Securities (TIPS) Fund, where it will accrue actual investment earnings. If the member returns to work for an FRS employer within five (5) years from the date of termination, the member’s account balance, plus any earnings while invested in the TIPS Fund, will be returned to the member’s account. The service credit for the restored service, combined with any future service credit, will be applied towards vesting of the member’s account.

    (c) If a member’s benefit and service are forfeited, but the member 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.

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

    (a) The Florida Constitution (Section 8, Article II) and Florida statutes provide that any member of the Florida Retirement System who commits certain crimes and is found guilty by a jury or by the court hearing the case without a jury shall forfeit all rights and benefits under Chapter 121, F.S. These crimes include embezzlement or theft from his or her employer, bribery in connection with the employment, engaging in strikes as a public employee, or killing the member to receive the member’s benefits. Please see Sections 112.3173 and 121.091(5), F.S., and the other statutory sections mentioned therein, since these may be changed by the Legislature.

    (b) When the SBA, on behalf of the FRS Investment Plan, becomes aware of any accusation against any employee who is a member of the FRS Investment Plan, the SBA will put a hold on the member’s account to preclude the member from removing his or her money from the account.

    (c) If the charges against the member are not pursued and are dropped by law enforcement officials, the hold on the member’s account will be released.

    (d) If the member is indicted and convicted or pleads guilty, the SBA will acquire a certified copy of the judgment and will contact the member to advise the member that his account is forfeited and, if he wants to contest the forfeiture, he has the right to a hearing. 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 (d)2. above, if the member's hearing and/or appeal is unsuccessful, the SBA will direct the Investment Plan Administrator to transfer the member’s account balance to the Investment Plan Forfeiture Account.

    Specific Authority 121.4501(8)(a) FS. Law implemented 121.021(29), (39), 121.091(5), 121.4501(20), 121.591, 744.301 FS. History–New________.

     

    19-11.009 Reemployment With an FRS-covered Employer After Retirement.

    (1) Purpose: The purpose of this rule is to clarify the provisions regarding reemployment after retirement for FRS Investment Plan members.

    (2)(a) A member who has terminated FRS-covered employment and has taken a distribution from his Investment Plan account is a retiree, as of the date of the distribution, in accordance with Section 121.4501(2)(j), F.S. As a retiree, the former member shall not be reemployed with an FRS-covered employer until he has been retired for 12 months. Any member may return to employment with an FRS-covered employer after 12 months of retirement and may take distributions from prior career benefits, even while reemployed.

    (b) There are exceptions to paragaph (2)(a) above. This paragraph does not contain an exhaustive list of all possible situations. Members who are not in exactly the same circumstances as described in this paragraph should call the toll-free MyFRS Financial Guidance Line at 1(866)446-9377, Option 1, to have their situations properly analyzed.

    1. A member who has reached his normal retirement date, in accordance with Section 121.021(29), F.S., may get up to ten percent of his account balance one calendar month following his month of termination, and he may get the balance after a total of three calendar months following his month of termination, unless he returns to FRS-covered employment, during this three-calendar-month period.

    2. If the member in subparagraph 1, above, takes a partial distribution and then returns to work, the member will not be eligible for any further distributions until the member terminates employment from all FRS covered employers, or suspends further benefits for the reminder of the 12 months, or the first 12 months of retirement are completed.

    3. A member who has reached his normal retirement date, in accordance with Section 121.021(29), F.S., can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., one calendar month after taking a distribution.

    4. A member who has not reached his normal retirement date, in accordance with Section 121.021(29), F.S., can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., three calendar months after taking a distribution.

    Specific Authority 121.4501(8)(a) FS. Law Implemented 121.021(29), (39), 121.091(9)(b),(c), 121.4501(2)(j), 121.591(1)(a)4. FS. History–New________.

     

    19-11.010 FRS Investment Plan: Privacy.

    (1) The State Board of Administration (SBA), as the Plan Sponsor of the FRS Investment Plan, provides for the collection of personal identifying information from each of its members and beneficiaries, including the federally-issued social security number. This information is collected by the Investment Plan’s Recordkeeper and Plan Choice Administrator. This information is collected so that each member can be properly and definitively identified to ensure that he or she is correctly identified for the day-to-day administration of the FRS Investment Plan and that he or she is the actual person who is in fact a member of the FRS Investment Plan and so that unauthorized persons are prevented from having personal, familial, medical, and financial information. Each of the vendors under contract with the SBA has its own privacy policy which the SBA has approved.

    (2) Section 121.4501(19), F.S., prevents the SBA from sharing “[a]ll personal identifying information” under Chapter 119, the Public Records Law. The section does permit the SBA to use this information in an administrative or legal proceeding.

    (3) A member of the FRS Investment Plan is allowed to authorize a particular person to receive personal identifying information. Such a person is often the member’s spouse or financial advisor. To allow the FRS Investment Plan Administrator or Plan Choice Administrator to reveal personal identifying information, the member must provide authorization in advance of any discussion, naming the person and identifying that person in a way that can be verified.

    (4) When an Investment Plan member submits a beneficiary designation form and then dies, the person or persons named as beneficiaries must provide personal identifying information to the SBA before any information regarding the member may be released by the SBA. This information is letters of administration issued by the relevant probate court; certified copies of the death certificate; copies of marriage certificates; the member’s social security number; and any other requested information that can be verified with a governmental agency.

    Specific Authority 121.4501(8)(a) FS. Law Implemented 119.071, 121.4501(19) FS. History–New________.


    NAME OF PERSON ORIGINATING PROPOSED RULE: Ron Poppell, Senior Investment Officer-Office of Defined Contribution Programs, State Board of Administration
    NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Trustees of the State Board of Administration
    DATE PROPOSED RULE APPROVED BY AGENCY HEAD: July 31, 2007
    DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: June 22, 2007

Document Information

Comments Open:
8/10/2007
Summary:
Proposed amended Rule 19-11.002, F.A.C., replaces “participant” with “member” and sets out policies to deal with situations in which the member is married but does not name his spouse as a primary beneficiary or the spouse refuses to sign the acknowledgment, as required by Section 121.4501(20), F.S. Amended Rule 19-11.003, F.A.C., provides procedures if a member dies before retirement; provides procedures for distributions to beneficiaries who are not spouses, discussing the IRS’ “required ...
Purpose:
These rules are promulgated to implement recently adopted policies and to reflect legislative changes.in the FRS Investment Plan.
Rulemaking Authority:
121.4501(3)(c)4., (8)(a), 215.52 FS.
Law:
119.071, 120.569, 120.57, 120.573, 121.021(29), (39), 121.051, 121.055, 121.35,121.091(5), (8), (9)(b)(c), (29),(39), 121.4501(2)(j),(3),(4),(5),(6),(8),(9)(f)3., (13), (14), (15)(b), (19), (20), 121.591(1)(a)4., (3), 121.74, 121.78, 215.44(8)(b), 744.301, 1012.875(3) FS.
Contact:
Cindy Gokel, Assistant General Counsel, State Board of Administration, P. O. Drawer 13300, Tallahassee, FL 32317-3300; telephone: (850)413-1199
Related Rules: (9)
19-11.002. Beneficiary Designation for FRS Investment Plan
19-11.003. Distributions from FRS Investment Plan Accounts and Reemployment with an FRS-covered Employer
19-11.004. Excessive Trading in the FRS Investment Plan
19-11.005. FRS Investment Plan Complaint Procedures
19-11.006. Enrollment Procedures for New Hires
More ...