To set forth proposed amendments to Rule 19-11.002, F.A.C. which serve to adopt the latest version of the beneficiary designation form. Further, the rule is being amended to indicate that if a Special Risk Class Investment Plan member is killed in ...

 

STATE BOARD OF ADMINISTRATION

RULE NOS.:RULE TITLES:

19-11.002Beneficiary Designations and Distributions for FRS Investment Plan

19-11.014Benefits Payable for Investment Plan Member Disability and In-Line-Of-Duty Death Benefits

PURPOSE AND EFFECT: To set forth proposed amendments to Rule 19-11.002, F.A.C. which serve to adopt the latest version of the beneficiary designation form. Further, the rule is being amended to indicate that if a Special Risk Class Investment Plan member is killed in the line of duty, such member’s family will be entitled to a monthly survivor benefit as outlined in detail by new Rule 19-11.014, F.A.C. The rule also is being amended to make reference to the latest versions of the applicable enrollment forms. The rule amendments further indicate that an incomplete beneficiary designation form will not be processed. Finally, the rule amendments state that if a member designates the same person/entity as both a primary and a contingent beneficiary, the person or entity designated will be deemed to be only a primary beneficiary. Rule 19-11.014, F.A.C. is being created to provide information to Investment Plan members regarding two potential benefit options. First, information is set forth in the new rule regarding the fact that an Investment Plan member is entitled, if eligible, to apply for disability benefits which are in lieu of benefits otherwise payable to the member under Section 121.591(1) Florida Statutes. If the member’s disability benefit application is approved, the member becomes a member of the FRS Pension Plan and the member’s entire Investment Plan balance is transferred to the Pension Plan. Second, special “In Line of Duty” death benefits may be paid to the families of those Special Risk Class Investment Plan members who are killed in the line of duty. In lieu of receiving the member’s vested Investment Plan account balance, the spouse and unmarried children of each such Special Risk class member may receive monthly survivor benefits equal to 100% of the member’s salary at the time of death. Monthly benefits payable will be paid to the surviving spouse for his or her lifetime, and upon his or her death, to any surviving children where each such child is either under age 18 or under age 25 if each such child is a full-time student and unmarried. This Special Risk Class In Line of Duty Death Benefit was recently enacted during the 2016 Legislative Session.

SUMMARY: To describe the new In-Line of Duty death benefit that may be available to survivors of Special Risk Class Investment Plan members who are killed in the line of duty; to clarify certain information regarding what happens if a member files an incomplete beneficiary designation form; to specify that the same person/entity cannot be both a primary and a contingent beneficiary; to adopt the latest version of the beneficiary designation form. There are no other rules incorporating these proposed amended rules. The proposed amendments do not have an impact on any other rules. Legislative ratification of the rule amendments is not required.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Based on its analysis of the rule amendments and incorporated materials, as well as the fact that it is not a regulatory agency, the State Board of Administration has determined that the rules do not meet the statutory threshold for ratification by the legislature. There will be no impact on economic growth, job creation or employment, private-sector investment, or business competitiveness, and no increase in regulatory costs resulting from the proposed rule amendments. 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.

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

RULEMAKING AUTHORITY: 121.4501(8), 121.5912 F.S.

LAW IMPLEMENTED: 121.091(5)(j), (7), (8), 121.4501(20), 121.571, 121.591(3), (4), 121.5912, 121.735, 121.71, 121.74, F.S.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Friday, December 30, 2016, 9:00 a.m. - 11:00 a.m.

PLACE: Hermitage Room, The Hermitage Centre, 1801 Hermitage Blvd., Tallahassee, Florida 32308

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Tina Joanos, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, FL 32801, [phone], [e-mail].. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Ruth A. Smith, Assistant General Counsel, Office of the General Counsel, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, FL 32308, [phone], [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

19-11.002 Beneficiary Designations and Distributions for FRS Investment Plan.

(1)(a) An FRS Investment Plan member may designate a beneficiary to receive the benefits which may be payable in the event of the member’s death. If the member does not designate a beneficiary(ies), or if no designated beneficiary survives the member, then the member’s beneficiary(ies) will be those specified by Section 121.4501(20), F.S. which are: the deceased member’s spouse; or if there is no surviving spouse, then the deceased member’s children, or their legal guardian, on their behalf if under 18 years of age; or if no children survive, the deceased member’s father or mother, if living; otherwise the deceased member’s estate.

(b) An Investment Plan member enrolled in the Special Risk Class who dies in the line of duty shall have survivor benefits paid in accordance with Section 121.591(4), F.S. and Rule 19-11.014, F.A.C.

(c) Monthly survivor benefits for the spouse and child(ren) of members provided by Section 121.591(4), F.S. are payable in lieu of benefits otherwise payable under Section 121.591(1) or survivor benefits payable under Section 121.591(3), F.S. and shall supersede any other distribution that may have been provided by the member’s designation of beneficiary.

(2) Any such beneficiary designation may be made on Form IPBEN-1, FRS Investment Plan Beneficiary Designation, rev. 04-16 01-15, http://www.flrules.org/Gateway/reference.asp?No=Ref-07364 http://www.flrules.org/Gateway/reference.asp?No=Ref-05797, 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, Option 4 (TRS 711), Monday through Friday, except holidays, 9:00 a.m. to 8:00 p.m. or by accessing the MyFRS.com website 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. Alternatively, a beneficiary may be designated electronically by logging on to MyFRS.com, clicking on “manage investments,” and then clicking on “personal info,” or by calling the Investment Plan Administrator at 1(866)446-9377, Option 4 (TRS 711).

(3) A beneficiary designation shall only be effective once it is received by the FRS Investment Plan Administrator. The most recent beneficiary designation filed with the FRS Investment Plan Administrator shall replace any previous designation whether made before or after the member’s termination of employment or retirement. After submitting the designation, the member is responsible for confirming whether the designation has been received by the FRS Investment Plan Administrator. The beneficiary designation is printed every quarter on the member’s quarterly statement.

(4)(a) If the FRS Investment Plan member enrolls in the FRS Investment Plan using the EZ Retirement Plan Enrollment Form for Regular, Special Risk and Special Risk Administrative Support Class Employees, Form ELE-1-EZ, rev. 08/16 06/14, the General Retirement Plan Enrollment Form for Regular Special Risk and Special Risk Administrative Support Class Employees, Form ELE-1, rev. 10-16 07/15, which are adopted and incorporated by reference in subsection 19-11.006(2), F.A.C., or the 2nd Election EZ Retirement Plan Enrollment Form, Form ELE-2-EZ, rev. 08-16 07/15, or the 2nd Election Retirement Plan Enrollment Form, Form ELE-2, rev 10-16 07/15, which are adopted and incorporated by reference in subsection 19-11.007(3), F.A.C., the member agrees to the beneficiary designation contained in Section 121.4501(20), F.S., unless the member submits a beneficiary designation as provided in subsection (2) herein.

(b) If the member dies prior to his or her effective date of retirement, the member’s spouse at the time of death shall be the member’s beneficiary unless the deceased member had designated a different beneficiary after his or her most recent marriage.

(b)(c) If the member marries after designating a beneficiary, the member must file an updated beneficiary designation if the member wishes to name someone else other than the spouse as a beneficiary. If the member does not file an updated beneficiary designation, the member’s spouse will be the beneficiary of the member’s account. The spouse must provide a copy of he marriage certificate verifying that the marriage occurred after the most recent beneficiary designation. 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.

(c)(d) Once a member is enrolled in the FRS Investment Plan, the member may designate a beneficiary at any time, as follows:

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

2. A member may name as beneficiary any person, organization, trust, or the member’s estate.

(d)(e) 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 more than one primary beneficiary is designated with specified percentages of the funds, each will receive their member-specified 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. If joint primary beneficiaries are named but the member does not specify any percentages of the funds, the beneficiaries will receive equal portions of the remaining funds.

(e)(f) A contingent beneficiary is one or more person(s) who are named, in case all primary beneficiaries die before the member. Contingent beneficiaries may receive benefits jointly or sequentially. Naming a contingent beneficiary is optional and the person designated cannot .also be a named primary beneficiary.  If a member submits a beneficiary designation listing the same person(s) or entity as both primary and contingent beneficiaries, the person(s) or entity will only be accepted as the primary beneficiary designation.  All other persons or entities will be accepted as contingent beneficiaries.

(f)(g) If a member inadvertently uses an incorrect beneficiary designation form, the FRS Investment Plan Administrator will notify the member and request that the member complete and submit the correct form, Beneficiary Designation Form IPBEN-1, rev. 04-16 01/15. If the member should die prior to completing and submitting the IPBEN-1 form, the FRS Investment Plan Administrator will consider the beneficiary set forth on the incorrect form as being the member’s intended beneficiary for the purpose of paying benefits.

(g) If the member submits a beneficiary form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name of the member, the last four numbers of the member’s social security number, or the member’s signature, or a form indicating that the shares assigned to joint primary or contingent beneficiaries are greater to, or less than, 100%.

(5)(a) If a member is married and the spouse is designated 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.

(b) If a member is married and names a primary beneficiary(ies) and the person(s) named is not the spouse of the member, then the member is required to notify the spouse that the spouse is not a primary beneficiary of the proceeds of the member’s FRS Investment Plan account(s). The spouse must acknowledge that the spouse understands that the spouse is not a primary beneficiary of the member’s FRS Investment Plan account(s) by signing the beneficiary designation form, Form IPBEN-1, rev. 04-16 01/15, in the appropriate place.

(c) If a married member fails to obtain the spouse’s acknowledgment on the beneficiary designation form, then the Investment Plan Administrator will send to the member an Acknowledgement of Beneficiary Designation, reminding the member of the necessity of obtaining spousal acknowledgement. The member can return this Acknowledgement of Beneficiary Designation with the spouse’s signature which will provide acknowledgement that the spouse is not the primary beneficiary of the member’s FRS Investment Plan account(s). Alternatively, the member may provide the FRS Investment Plan Administrator with a notarized statement reflecting the spouse’s understanding that the spouse is not the beneficiary of the member’s FRS Investment Plan account(s).

(d) If the member fails to obtain the spouse’s acknowledgement that a beneficiary, other than the spouse, has been designated as the primary beneficiary of the member’s Investment Plan benefit, the beneficiary designation on file with the FRS Investment Plan Administrator at the time of the member’s death will be honored only if the spouse’s rights as a beneficiary are not compromised under Florida law.

(6)(a) An Alternate Payee may name a beneficiary to receive the benefits which may be payable in the event of the Alternate Payee’s death at any time, as outlined in subsection (2) and paragraphs (5)(a) through (f) above, once the Alternate Payee’s account has been established by the FRS Investment Plan Administrator.

(b) If the Alternate Payee does not name a beneficiary(ies), then the Alternate Payee’s beneficiary(ies) will be those as described in subsection (1).

(7) Per Florida Law Beneficiary Designation.

(a) If a member fails to designate a beneficiary as outlined in subsection (2) above, the member’s designation of beneficiary will automatically be assigned a designation of “Per Florida Law” as outlined in Section 121.4501(20), F.S. To establish entitlement to the member’s account, the benficary(ies) may be required to provide the following, as applicable: a copy of the marriage certificate, copy of the member’s birth certificate, copy of the birth certificate(s) of the beneficiary(ies), legal guardianship documents issued by a court of competent jurisdiction, a notarized written statement confirming the identity of all surviving family members, tax identification number of the member’s estate, or a notarized written document stating that the deceased is not survived by a spouse, child(ren) or parent(s).

(b) If, upon the death of a member, a beneficiary(ies) can be identified in accordance with Florida statute, but no social security number or address of the beneficiary or beneficiaries is available, the FRS Investment Plan Administrator will, with the assistance of the SBA, make a reasonable effort to obtain each beneficiary’s Social Security Number or Taxpayer Identification Number, using available search tools, including the internet, LexisNexis Accurint, or another third party vendor providing such services. If a beneficiary can be identified and the social security number is provided, the transfer of benefits will be executed by the Investment Plan Administrator.

(c) If, upon the death of a member, a beneficiary cannot be identified, the provisions of paragraph (d) below will be followed.

(d) After one year from the date of the member’s death, if the beneficiary cannot be located or if a beneficiary cannot be identified, the account will be transferred to the Suspense Account. By calendar year-end of each year following the transfer to the Suspense Account, the FRS Investment Plan Administrator will attempt to locate and obtain the Social Security Number or the Taxpayer Identification Number of the beneficiary. The transferred funds shall be invested in the FIAM Pyramis Intermediate Duration Pool Fund. The amount will be held in the FRS Investment Plan Suspense Account until (1) the beneficiary contacts the FRS Investment Plan; or (2) another beneficiary requests consideration as the deceased’s proper beneficiary; or, (3) at the end of 10 years in the Suspense Account, the amount is transferred to the FRS Investment Plan Forfeiture Account, where it is held indicating the name of the deceased member and the name of the beneficiary, if known.

(e) Should the beneficiary be located who then is willing to provide a social security number, a check will be issued to that beneficiary. The check will include actual earnings that have accrued on the funds from the date of transfer from the member’s account to the Suspense Account and/or Forfeiture Account. Such payment will be subject to applicable income tax withholding, which shall be paid to the tax authorities at the time of the issuance of the check to the beneficiary.

(8) Distributions to beneficiaries on the death of a member.

(a) If a member dies before his or her effective date of retirement, the member’s spouse at the time of his or her death shall be the member’s beneficiary, unless the member has designated a different beneficiary after the member’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) Upon notification of the member’s death, the FRS Investment Plan Administrator will contact the designated beneficiary or the family of the deceased member and provide instructions on how to claim any benefits.

(9) Distributions to designated or per Florida law spousal beneficiaries.

(a) The member’s surviving spouse, must provide a certified copy of the member’s death certificate and, if the spouse is not designated by the member, but is the beneficiary according to Florida law, the surviving spouse must provide a copy of the marriage certificate before benefits will be paid.

(b) Spousal beneficiaries may request the following distributions:

1. Full distribution, in which the entire account balance is paid in one lump sum. If this option is selected, the spouse no longer will be a member of the FRS Investment Plan.

2. Partial Distribution, which provides for a partial lump sum payment of the account balance. The remainder may be paid out through regular periodic payments that the spouse selects, such as monthly, quarterly, semi-annually or annually. The spouse also may defer payment of the remainder of the account balance and take additional partial lump sum payments as needed.

3. Periodic Payments, which allows for the establishment of a regular payment schedule of benefits, such as monthly, quarterly, semi-annually or annually. The amount of each benefit payment will be calculated by dividing the account balance on the date of the benefit payment by the remaining number of payments. As such, the amount of the benefit payment may change with each payment. If the account has multiple funds and sources, the periodic withdrawal amount will be prorated among all funds and sources in the account. The number of years over which the payments are made cannot exceed the spouse’s life expectancy, which is determined by an actuarial table prepared by the U.S. Department of the Treasury.

4. Deferrals until a certain age, which allows the spouse to defer the receipt of benefits until a later date. However, the spouse must begin receiving the benefit payout no later than April 1 in the calendar year after the member would have attained age 70 1/2. The spouse may elect a full distribution, partial distribution or periodic payment. However, the total annual benefit payment must equal or exceed the federal Required Minimum Distribution (RMD). An additional benefit payment will be sent to the spouse in December of any year in which the total periodic payments for that year do not equal or exceed the spouse’s RMD.

5. Roll over the account assets to another 401(a), 401(k) or a 403(b) plan, or to an Individual Retirement Account or Roth IRA.

6. Annuity, using entire or partial account balance.

(10) Distributions to designated non-spousal individual beneficiaries and look-through trusts or beneficiaries determined by Florida law.

(a) In accordance with Internal Revenue Service (IRS) rules, non-spousal beneficiary accounts cannot be held indefinitely in the FRS Investment Plan. The “required minimum distribution” is required by the Internal Revenue Service and spelled out in IRS Code s. 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 from the date of the member’s death.

(b) For a non-spousal beneficiary or a look-through trust beneficiary, there are two possibilities, depending upon whether payments from the account had commenced before the member’s death:

1. Where distributions have already begun to the member, but the member dies before the 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 the beneficiary of the look-through trust (or over a period not extending beyond the life expectancy of such beneficiary), and

b. Such distributions begin no later than 1 year after the member’s death.

(c) The non-spousal beneficiary must decide within 1 year of the date of death to take lifetime installment or annuity payouts.

(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.

(e) Non-spousal individual beneficiaries and look-through trusts may request the following distributions:

1. Full distribution, in which the entire account balance is paid in one lump sum. If this option is selected, the beneficiary no longer will be a member of the FRS Investment Plan.

2. Partial Distribution, which provides for a partial lump sum payment of the account balance. The remainder may be paid out through regular periodic payments that the spouse selects, such as monthly, quarterly, semi-annually or annually. The beneficiary also may defer payment of the remainder of the account balance and take additional partial lump sum payments as needed.

3. Periodic Payments, which allows for the establishment of a regular payment schedule of benefits, such as monthly, quarterly, semi-annually or annually. The amount of each benefit payment will be calculated by dividing the account balance on the date of the benefit payment by the remaining number of payments. As such, the amount of the benefit payment may change with each payment. If the account has multiple funds and sources, the periodic withdrawal amount will be prorated among all funds and sources in the account. The number of years over which the payments are made cannot exceed the life expectancy of the non-spousal beneficiary or of the beneficiary of the look-through trust, which is determined by an actuarial table prepared by the U.S. Department of the Treasury. If the beneficiary stops the payment for any reason, then the payout of the benefits will be governed by the time limitations set forth in paragraph (b).

4. Deferrals of up to 5 years, however the benefit must be distributed within 5 years after the death of the member, if the conditions in subparagraph (b)2. above have not been met.

5. Annuity, using entire or partial account balance.

(11) Distributions to the member’s designated estate or to a designated non look-through trust.

(a) A beneficiary which is either the member’s estate or a non look-through trust is considered as a non-person. Pursuant to Code s. 401(a)(9), the entire interest of the member must be distributed to such beneficiary within 5 years after the death of the member.

(b) The estate or non look-through trust beneficiary has two options for receiving the benefit payment:

1. Full distribution, in which the entire account balance is paid in one lump sum. If this option is selected, the beneficiary no longer will be a member of FRS Investment Plan.

2. Deferrals of up to 5 years, however the benefit must be distributed within 5 years after the death of the member.

(12) Distributions to beneficiaries who are minors.

(a) A minor is a child under the age of 18.

(b) When a minor child or children are the designated beneficiaries of the member, whether the member is the minor’s or minors’ parent, grandparent, sibling, other relative or any other person, a copy of the birth certificate of each minor child and the social security number for each minor child must be provided to the FRS Investment Plan Administrator, and must be received prior to any payout, regardless of the amount. The birth certificate provides proof as to identity of the natural guardian(s) of the children, so that appropriate payment arrangements may be made.

(c) Section 744.301, F.S., allows for the natural guardian (surviving parent(s)) to handle benefits to a minor child where that amount does not exceed $15,000, without court appointment, authority or bond. The birth certificate provides proof as to identity of the natural guardian(s) of the children, so that appropriate payment arrangements may be made.

(d) In all cases in which a minor is a beneficiary of an account balance which is greater than $15,000, the surviving parent(s), or other relative or other interested party, must apply for a formal guardianship. A court order or court appointment and Letters of Guardianship will be required prior to payout of any benefits to the minor. The FRS Investment Plan Administrator shall place a hold on any account where the minor beneficiary is to receive an amount in excess of $15,000 and advise the SBA.

(e) If the individual responding to the correspondence sent by the Administrator and providing instructions for payout is not the surviving parent(s), 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 benefit and the Administrator shall take directions only from the named guardian.

(f) 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.

(13) A beneficiary, whether designated or pursuant to Florida law, of a deceased member who, by a verdict of a jury or by a court trying the case without a jury, is found guilty, or who has entered a plea of guilty or nolo contendere, of unlawfully and intentionally killing or procuring the death of such member shall forfeit all rights to the deceased member’s retirement benefits. Any benefits will be paid as if such beneficiary had predeceased the deceased member. No benefits will be paid until there is a final resolution of such charges against the beneficiary.

(14)(a) If the deceased member has designated a beneficiary but has not provided the designated beneficiary’s social security number or address, or has provided an incorrect social security number, then, after at least three unsuccessful attempts by the SBA or the FRS Investment Plan Administrator to locate the beneficiary, the FRS Investment Plan Administrator will advise the SBA accordingly and the account will not be distributed.

(b) The FRS Investment Plan Administrator will, with the assistance of the SBA, at the time of notification of death, make a reasonable effort to obtain the beneficiary’s Social Security Number or Taxpayer Identification Number, using available search tools, including the internet, LexisNexis Accurint, the Social Security Administration, or another third party vendor providing such services.

(c) After one year from the date of the member’s death, if the beneficiary cannot be located, the account will be transferred to the Suspense Account. No later than By calendar year-end, of each year following the transfer to the Suspense Account, the FRS Investment Plan Administrator will attempt to locate and obtain the Social Security Number or the Taxpayer Identification Number of the beneficiary. The transferred funds shall be invested in the FIAM Pyramis Intermediate Duration Pool Fund. The amount will be held in the FRS Investment Plan Suspense Account until (1) the beneficiary contacts the FRS Investment Plan; or (2) another beneficiary requests consideration as the deceased’s proper beneficiary; or, (3) at the end of 10 years in the Suspense Account, the amount is transferred to the FRS Investment Plan Forfeiture Account, and the Administrator will maintain a record of where it is held indicating the name of the deceased member and the name of the beneficiary, if known.

(d) Should the beneficiary be located and provides a social security number, a check will be issued to the beneficiary, with actual earnings, from the date of transfer from the member’s account to the Suspense Account and/or Forfeiture Account subject to applicable income tax withholding, which shall be paid to the tax authorities at the time of such payment to the beneficiary.

(15)(a) Pursuant to Federal guidelines, if the deceased member’s account is to be paid to the member’s estate but no Estate Identification Number is provided, the account will not be paid to the Estate until the Estate Identification Number is received. In the event that no Estate Identification Number is provided within one year from the date of notification to the FRS Investment Plan Administrator of the member’s death, the FRS Investment Plan Administrator will transfer the deceased member’s account to the Suspense Account indicating the name of the deceased member. If after 10 years after the date of death, the FRS Investment Plan Administrator has not received an Estate Identification Number, the deceased member’s account will be transferred to the FRS Investment Plan Forfeiture Account and the Administrator will maintain a record of where it will be held indicating the name of the deceased member. The transferred funds shall be invested in the FIAM Pyramis Intermediate Duration Pool Fund.

(b) The FRS Investment Plan Administrator will, at the time of the transfer to the Suspense Account, make a reasonable effort to obtain the Estate Identification Number. Additionally, by calendar year-end of each year following the transfer to the Suspense Account, the FRS Investment Plan Administrator will attempt to locate and obtain the Estate Identification Number.

(c) The amount will be held in the FRS Investment Plan Suspense Account until (1) the member’s estate representative contacts the FRS Investment Plan; or (2) a beneficiary requests consideration as the deceased’s proper beneficiary; or, (3) at the end of 10 years in the Suspense Account, the amount is transferred to the FRS Investment Plan Forfeiture Account, and the Administrator will maintain a record of where it is held indicating the name of the deceased member.

(d) Should the estate’s representative subsequently provide an Estate Identification Number, a check will be issued to the estate, with actual earnings while invested in the FIAM Pyramis Intermediate Duration Pool Fund, from the date of transfer from the member’s account to the Suspense Account and/or Forfeiture Account. Any applicable income tax withholding shall be paid to the appropriate tax authorities at the time of the benefit payment to the estate.

(16) If the social security number and date of birth of a beneficiary are known, an account will be established in the beneficiary’s name and funds will be transferred thereto. If any other beneficiaries are named, accounts also will be established in their names, provided their social security numbers and dates of birth are made known to the Investment Plan Administrator. However, no distribution will be made to any beneficiary until a certified copy of the member’s death certificate has been received. In the meantime, the beneficiary will have control over any investment elections/allocations for the account. The beneficiary will be notified of the establishment of the account and will receive a PIN to access information pertaining to the account.

(17)(a) A designated beneficiary may disclaim any monetary interest as provided in Chapter 739, F.S., and Internal Revenue Code s. 2518. A beneficiary can make a partial disclaimer or disclaim the entire interest. When a beneficiary makes a disclaimer, the beneficiary is considered to have predeceased the member, and the other beneficiaries designated by the member may then accept or disclaim any interest to which they are entitled.

(b) The general requirements for a valid disclaimer are that:

1. The beneficiary must provide an irrevocable and unqualified refusal to accept the assets.

2. The refusal must be in writing.

3. The written disclaimer must be submitted to the FRS Investment Plan Administrator at the later of the following times:

a. Nine months after the retirement account owner dies.

b. Nine months after the beneficiary attains age 21, or if the beneficiary is 21 when the retirement account owner dies.

c. The beneficiary must not have accepted any of the inherited assets prior to the disclaimer.

d. The assets must pass to the successor beneficiary without any direction on the part of the person making the disclaimer.

(c) There is no special form or document that an individual must complete to disclaim inherited assets. A letter, duly notarized, is sufficient as long as it meets the requirements set forth in paragraph (b).

Rulemaking Authority 121.4501(8), 121.5912 FS. Law Implemented 121.091(5)(j), (8), 121.4501(20), 121.591(3),  732.802 FS. History–New 10-21-04, Amended 3-9-06, 11-26-07, 12-8-08, 1-7-10, 8-7-11, 7-12-12, 12-16-12, 10-15-13, 1-28-14, 12-30-15,_________.

 

19-11.014 Benefits Payable for Investment Plan Disability and In-Line-Of-Duty Death Benefits.

(1) An Investment Plan member shall be eligible to apply for a disability benefit in accordance with Section 121.591(2), F.S., and in Rule 60S-4.007, F.A.C.

(a) Disability benefits are payable in lieu of benefits otherwise payable under Section 121.591(1), F.S.

(b) Upon approval for Investment Plan disability retirement, the member’s entire Investment Plan account balance, consisting of vested and non-vested monies, plus earnings, shall be transferred to the Division of Retirement (Division) for deposit in the disability account of the Florida Retirement System (FRS) Trust Fund.

1. The Investment Plan member will become a member of the Pension Plan effective upon his or her disability retirement effective date.  If the member has a second election remaining, this transfer shall not constitute a second election as provided in Section 121.4501(4)(g).

2. The member shall receive a monthly benefit that is payable on the last day of the month for his or her lifetime and continued disability.

(c) An Investment Plan member approved for disability retirement may cancel the application by submitting a cancellation request to the Division before a disability warrant has been deposited, cashed or received by direct deposit.

1. Upon cancellation, the member shall be transferred back to the Investment Plan. 

2. All monies transferred to the disability account of the FRS Trust Fund will be transferred back to the members Investment Plan account.

3. The member may elect to receive benefits as provided under Section 121.591(1), F.S., in lieu of the disability benefits.

(d) If a member recovers sufficiently to return to employment from disability, the member shall be returned as an active member to the Investment Plan.

1. The member’s total disability benefits paid shall be subtracted from the amount transferred in paragraph (1)(b) above.  Any remaining account balance shall be transferred to the Investment Plan Administrator for deposit into the member’s Investment Plan account.  The monies will be deposited based on the member’s last investment elections.

2. Vested and non-vested amounts shall be accounted for separately as provided in Section 121.4501(6).

3. If the member does not return to employment with an FRS-participating employer, he or she may elect to receive the remaining account balance as provided under Section 121.591(1), F.S.  Any non-vested amounts will be forfeited.

4. If the member does not return to employment with an FRS-participating employer and elects not to receive benefits as provided in Section 121.591(1), F.S., any non-vested amount shall be transferred to the suspense account.  Such amount shall be forfeited if the member does not returned to FRS-covered employment within five (5) years  of the termination date or request benefits as provided under Section 121.591(1), F.S.

(2) In Line of Duty death benefits are only available for Special Risk Class members enrolled in the Investment Plan:

(a) In lieu of receiving the member’s vested account balance as provided in Section 121.591(3), F.S., the spouse and/or unmarried child(ren) of Investment Plan members in the Special Risk Class killed in the line of duty on or after July 1, 2013, may receive monthly survivor benefits equal to 100% of the member’s monthly salary at the time of death, if the Division determines that the member’s death occurred in the line of duty, in accordance with Section 121.591(4), F.S.

(b) Monthly survivor benefits provided by this subsection shall supersede any other distribution or beneficiary that may have been provided by the member’s designation of beneficiary.

(c) A hold will be placed on the member’s Investment Plan account if notification is received that the member may have been killed in the line of duty or died due to a a specified disease that occurred in the line of duty.  If it is determined that the member’s death was not in the line of duty, the hold will be removed.

(d) The SBA, Division or Investment Plan Administrator will send a letter to the surviving spouse or unmarried children.  The letter will include the member’s current Investment Plan account balance, estimated monthly salary at time of death, Florida Retirement System Application of Investment Plan Beneficiary for Special Risk In-Line-of-Duty Death Benefits, Form FST-11B-IP, incorporated by reference in Rule 60S-4.008, F.A.C., and items to submit with the completed application.

(e) The surviving spouse or unmarried children may cancel the application by submitting a notarized statement to the Division affirmatively declining the in line of duty death benefits.  Once the statement is received, the hold placed pursuant to (2)(c) above will be removed.  The benefits will be distributed according to the member’s beneficiary designation.  If the member did not designate a beneficiary(ies), then the member’s beneficiary(ies) will be those specified by Section 121.4501(20), F.S.

(f) Upon approval for in line of duty death benefits, the member’s entire Investment Plan account balance, including the balance of monies that may have been transferred to an account in the name of the surviving spouse or child(ren), will be transferred to the Division for deposit in the survivor benefit account of the FRS Trust Fund before monthly benefits can begin.

1. The monthly benefit payment will be actuarially reduced if the surviving spouse or child(ren) has taken any payments from the Investment Plan as a beneficiary of the member.  

2.  Monthly benefits will be paid to the surviving spouse for his or her lifetime or upon his or her death, to the surviving children who are under age 18 or age 25, if a full time student and unmarried.

Rulemaking Authority 121.4501(8), (5)(e), 121.5912 FS. Law Implemented 121.4501(8), (9), (10), (11), (12), (13), (14), (15), 121.591(4) FS. History–New ___________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Joan Haseman, Chief, Defined Contribution Programs

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Trustees of the State Board of Administration

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 6, 2016

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: November 21, 2016