To amend Rule 19-11.001, F.A.C., to provide that a “distributee” may include a non-spouse beneficiary; that an eligible retirement plan may include a Roth IRA or annuity; and that distributions consisting of after-tax employee contributions not ...

 

STATE BOARD OF ADMINISTRATION

RULE NO.: RULE TITLE:
19-11.001: Definitions
19-11.002: Beneficiary Designations and Distributions for FRS Investment Plan
19-11.003: Distributions from FRS Investment Plan Accounts
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
19-11.011: Employer and Employee Contributions and ABO or Present Value Transfer Procedures
19-11.012: Acceptance of Rollovers by the FRS Investment Plan
PURPOSE AND EFFECT: To amend Rule 19-11.001, F.A.C., to provide that a “distributee” may include a non-spouse beneficiary; that an eligible retirement plan may include a Roth IRA or annuity; and that distributions consisting of after-tax employee contributions not includible in gross income may be transferred only to certain specified accounts or annuities. The definitions are being updated in response to a recently-issued Internal Revenue Service determination letter for the FRS Investment Plan. The rule also is being revised to include updated statutory citations. To amend Rule 19-11.002, F.A.C., to indicate the latest revisions of the enrollment and second election forms, and to make some minor technical revisions. To amend Rule 19-11.003, F.A.C., to provide that a distributee may elect to have any portion of an eligible rollover distribution directly paid to an eligible retirement plan. The rule as is being amended to update the dates set forth in the examples regarding invalid distributions and to indicate that documentation of a distribution made prior to August 30, 2007 will be produced for a special service charge where retrieval is possible. To amend Rule 19-11.005, F.A.C. to make a minor technical revision. To amend Rules 19-11.006, F.A.C., to provide that eligible State and Local Senior Managers that are eligible to enroll in the Senior Manager Service Annuity Program may enroll in the FRS Investment Plan by submitting an enrollment form; and to adopt the latest versions of the enrollment forms. To amend Rule 19-11.007, F.A.C., to adopt the latest versions of the second election enrollment forms. To amend Rule 19-11.011, F.A.C., to make some technical revisions for clarification. To amend Rule 19-11.012, F.A.C., to adopt the latest versions of the rollover forms; and to make some minor technical revisions.
SUMMARY: To update and clarify information pertaining to rollovers as required by a recently-issued Internal Revenue Service determination letter; to make minor technical revisions; and to adopt updated forms. There are no other rules incorporating any of these proposed rules. Legislative ratification of these 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: Upon review of the proposed changes to the rules as well as all incorporated materials, 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.
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: 121.78; 121.4501(8) FS.
LAW IMPLEMENTED: 119.071, 120.569, 121.055, 121.021, 121.055, 121.091, 121.35, 121.4501(2), (3), (4), (5), (6), (8), (9), (10), (13),(14), (15), (20), 121.591, 121.71, 121.72, 121.74, 121.77, 121.78, 732.802, 1012.875(3) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE,TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
DATE AND TIME: Thursday, November 15, 2012, 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, Agency Clerk, Office of the General Counsel, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, Florida 32308, [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, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, Florida 32308, [phone], [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

19-11.001 Definitions.

The following words and terms shall have the following meanings for purposes of Chapters 19-11 and 19-13, F.A.C.:

(1) through (12) No change.

(13) “Distributee” means a member or former member who has taken a distribution from the FRS Investment Plan. In addition, the member’s or former member’s surviving spouse and the member’s or former member’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code s. 414(p), are distributees with regard to the interest of the spouse or former spouse.  Effective January 1, 2010, a non-spouse beneficiary is also a “distributee,” but the term “eligible retirement plan” for such individual is limited to an individual retirement account described in Code s. 408(a), an individual retirement annuity described in Code s. 408(b) , or a Roth individual retirement account or annuity described in Code s. 408A that is treated as an inherited individual retirement account or annuity pursuant to Code s. 402(c)(11).

(14) through (17) No change.

(18) “Eligible retirement plan” means an individual retirement account described in Code s. 408(a), an individual retirement annuity described in Code s. 408(b), an annuity plan described in Code s. 403(a), an annuity contract described in Code s. 403(b), a Roth individual retirement account or annuity described in Code s. 408A, an eligible deferred compensation plan described in Code s. 457(b) which is maintained by an eligible employer described in Code s. 457(e)(1)(A) or a qualified trust described in Code s. 401(a), that accepts the distributee’s eligible rollover distribution.

(19) “Eligible rollover distribution” means any distribution of all or any portion of the balance of the member’s account(s) in the FRS Investment Plan to the credit of the distributee. An eligible rollover distribution does not include any distribution which is made upon hardship of the employee; any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code s. 401(a)(9); the portion of any distribution that is not includible in gross income, unless transferred in accordance with the provisions of Code s. 402(c)(2) to a qualified trust which is part of a plan which is a defined contribution plan, or to an individual retirement account described in Code s. 408(a) or an individual retirement annuity described in Code s. 408(b); or a deemed distribution of a loan under Code s. 72(p).  Any portion of a distribution that consists of after-tax employee contributions which are not includible in gross income may be transferred only to (1)(a) a traditional individual retirement account or annuity described in Code s. 408(a) (a “traditional IRA”) or (b) a Roth individual retirement account or annuity described in Code s. 408A (a “Roth IRA”); or (2) to a qualified plan or an annuity contract described in Code s. 401(a) and 403(b), respectively, that agrees to separate accounting for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

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

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

(22) through (24)  No change.

(25) “FRS Investment Plan Hybrid Option” or “FRS Hybrid Option” means the plan choice option within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a member chooses to retain his or her accrued service benefit in the FRS Pension Plan, in accordance with Section 121.4501(3)(a)(b)1., F.S., and further chooses that all future employer and employee contributions be deposited in his or her FRS Investment Plan account.

(26) through (40) No change.

(41) “Third Party Administrator” or “TPA” shall mean the Investment Plan Administrator hired by the Florida State Board of Administration of Florida pursuant to Section 121.4501(8), F.S.

(42) through (43) No change.

Rulemaking Authority 121.78(3)(c), 121.4501(8) FS. Law Implemented 121.78, 121.4501 FS. History–New 12-8-02, Amended 3-9-06, 7-12-12,_________.

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

(1) through (3) No change. 

(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. 07/12 11/11, the General Retirement Plan Enrollment Form for Regular Special Risk and Special Risk Administrative Support Class Employees, Form ELE-1, rev. 10/12 01/12, 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. 07-12 07/11, or the 2nd Election Retirement Plan Enrollment Form, Form ELE-2, rev 10-12 01/12, 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) through (g) No Change.

(5) No change.

(6)(a) An Alternate Payee may name a beneficiy to receive the benefits which may be payable in the event of the Alternate Payee’s death at any time, as outlined in paragraphs (2) and (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 paragraph (1).

(7) through (12) No change.

(13)(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 set for the 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 Internal Revenue Service, and the Social Security Administration, or another third party vendor provding such services.

(c) through (d) No change.

(14)(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 where it will be held indicating the name of the deceased member. The transferrred funds shall be invested in the FRS Select U.S. Treasury Inflation-Protected Securities Index 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, 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 FRS Select U.S. Treasury Inflation-Protected Securities Index Fund, from the date of transfer from the member’s account to the Suspense Account while invested in the FRS Select U.S. Treasury Inflation-Protected Securities Index Fund. Any subject to applicable income tax withholding, which shall be paid to the appropriate tax authorities at the time of the benefit payment to the estate.

(15) through (16) No change.

Rulemaking Authority 121.4501(8) 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, ,_________.

19-11.003 Distributions from FRS Investment Plan Accounts.

(1) through (2) No change. 

(3) All distributions of benefits from a member’s account(s) in the Investment Plan shall begin and be made no later than as prescribed by Code s. 401(a)(9) and the regulations issued thereunder, including any proposed regulations, and shall be subject to the incidental death benefit rules of Code s. 401(a)(9)(G). A copy of the Code section can be obtained by accessing the IRS website at irs.gov and clicking on the Tax Professionals section, and then clicking on the Code, Regs. & Guidance section.

(a) Distribution of benefits to a member shall be made or commence not later than April 1 following the close of the later of the calendar year during which the member attains age 70 1/2 or retires.

(b) Any benefits payable to a beneficiary designated by the Member Participant shall be distributed as set forth in Rule 19-11.002, F.A.C.

(4) A member may request benefits to be distributed as a periodic or installment distribution, a partial lump-sum payment, a roll-over to another qualified plan, various annuity options, or a lump-sum distribution.  A distributee may elect to have any portion of the eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee as a direct rollover. Any distribution, if applicable, will be subject to the withholding of taxes which are remitted to the Internal Revenue Service.

(5) through (8) No change.

(9) Invalid distributions.

(a) If a member or a former member of the FRS Investment Plan receives an invalid distribution, the member or former member is required to repay the entire invalid distribution within 90 days of the member’s receipt of a final notification from the SBA, or in lieu of repayment, the member must terminate employment from all participating employers. If the member fails to repay the invalid distribution, or terminate employment, the employer is liable for the repayment of the invalid distribution even if the member signed a statement at the time the member was hired that no benefit had been received from the Plan.

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

3. If the member fails to repay the invalid distribution and terminates employment, the SBA will declare the member a retiree and will not pursue the repayment of the invalid distribution pursuant to paragraph (b) above. As a retiree, the member is subject to the provisions of Section 121.122, F.S., if the member is reemployed in the future with an FRS-covered employer in a regularly established position.

(b) 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. The member terminated all employment from his FRS-covered employer on August 24, 2012 2009. On December 15, 2012 2009, the member takes a partial distribution from the Investment Plan account. However, the member returned to employment with a participating employer on December 1, 2012 2009. The member took an invalid distribution because the member was working for participating employer at the time the member received the distribution.

2. Example 2: A member joined the FRS Investment Plan effective April 1, 2004. The member terminates all FRS-covered employment on November 12, 2012 2009. On March 1, 2013 2009, the member takes a total distribution from his Investment Plan account. The member returns to FRS-covered employment on April 15, 2013 2010. The March 1, 2013 2010 distribution is invalid since the member returned to work within 6 calendar months of the retirement date.

3. Example 3: A member joined the FRS Investment Plan effective May 1, 2005. The member terminates all FRS-covered employment on November 12, 2012 2009. The member has reached the normal retirement date. On January 5, 2013 2010, the member receives the one-time distribution of up to 10 percent from the Investment Plan account. The member returns to FRS-covered employment on May 15, 2013 2010. The January 5, 2013 2010 distribution is invalid since the member returned to work within 6 calendar months of his retirement date.

(10) Documentation of a distribution made prior to August 30, 2007.

A member or beneficiary who requests documentation of a distribution made prior to August 30, 2007 will incur a special service charge due to the extensive resources required to retrieve and produce such documentation, if such retrieval is possible. The requestor will be advised of the amount of such charge at the time request is made. Upon payment of the charge by the requestor, the request will be promptly processed.  If the document cannot be retrieved, the payment will be reimbursed to the requestor.

Rulemaking Authority 121.4501(8) FS. Law implemented 119.07(4)(d), 121.021(29), (39), 121.091(5)(j), 121.4501(20), 121.591, 121.77, 732.802 FS. History-New 3-9-06, Amended 11-26-07, 5-19-09, 1-7-10, 8-7-11, 7-12-12,_________.

19-11.005 FRS Investment Plan Complaint Procedures.

(1) Request for Intervention.

(a) through (e) No change.

(2)(b) Request for Hearing.

(a) through (g) No change.

Rulemaking Authority 121.4501(8) FS. Law Implemented 120.569, 120.57, 120.573, 121.4501(8)(g) FS. History–New 10-21-04, Amended 3-9-06, 11-26-07, 5-19-09, 7-12-12,_________.

19-11.006 Enrollment Procedures for New Hires.

(1) 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.

(b) Eligible newly-hired employees enrolled in the regular, special risk, and special risk administrative support classes may choose to enroll in the FRS Investment Plan by submitting an enrollment form or by electronic means.

(c) Eligible newly-hired employees may enroll in the FRS Investment Hybrid Option if they have at least 5 years of FRS Pension Plan service, if enrolled in the FRS prior to July 1, 2011, or at least 8 years of FRS Pension Plan service, if initially enrolled in the FRS on or after July 1, 2011.

(d) Eligible newly-hired employees enrolled in the Elected Officers’ Class or Senior Management Service Class may only enroll in the FRS Investment Plan by submitting an enrollment form.

(e) Eligible newly-hired employees eligible to enroll in the Community College Optional Retirement Program or State University System Optional Retirement Program may only enroll in the FRS Investment Plan by submitting an enrollment form.

(f) Eligible State Senior Managers and Local Senior Managers eligible to enroll in the Senior Manager Service Annuity Program may enroll in the FRS Investment Plan by submitting an enrollment form.

(g)(f) Enrollment forms are available in the enrollment package which is sent to an employee’s address of record or by accessing 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 TRS 711.

(2) Specific Enrollment Procedures.

(a) through (b) No change.

(c) The SBA has designed the forms set forth below 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 same information requested by the forms available for use for the appropriate membership class in a separate document. Employees may determine their membership class by contacting the agency’s human resources office. The forms available are: an EZ Retirement Plan Enrollment Form, Form ELE-1-EZ, rev. 07-12 11-11, http://www.flrules.org/Gateway/reference.asp?No=Ref-01829, which is only for regular, special risk, and special risk administrative support class employees; a General Retirement Plan Enrollment Form, Form ELE-1, rev. 10-12 01-12 http://www.flrules.org/Gateway/reference.asp?No=Ref-01817 for regular, special risk, and special risk administrative support class employees; an Elected Officers’ Class Retirement Plan Form, Form EOC-1, rev. 10/12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01819; a Community College Optional Retirement Program (CCORP) Enrollment Form, Form OCC-1, rev. 10-12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01820; a State University System Optional Retirement Program (SUSORP) Retirement Plan Enrollment Form, Form ORP-16, rev. 10-12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01822 ; a State Senior Management Service Employees Retirement Plan Enrollment Form, Form SMS-1, Rev. 10-12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01823; and a Local Senior Management Service Employees Retirement Plan Enrollment Form, Form SMS-3, rev. 10-12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01824. All of the preceding forms are hereby adopted and incorporated by this reference.

1. All enrollment forms can be obtained at the sources listed in paragraph (1)(f), 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. If an employee chooses to use the EZ form, only limited information (i.e., name, plan choice, social security number and signature) is required. The FRS Select Moderate Balanced Fund is the only initial investment option (although that investment option may be changed by the member once the account is funded). Beneficiary designations may be made as set forth in Rule 19-11.002, F.A.C.

(d) No change.

(e) Upon receipt of the completed enrollment form by the FRS Plan Choice Administrator, the FRS Plan Choice Administrator shall enroll the employee in the indicated FRS retirement plan. Upon completion of the enrollment, but no later than two working days after enrollment, the FRS Plan Choice Administrator shall send confirmation of the effective enrollment to the employee at the employee’s address of record and to the Division to inform the Division of the employee’s retirement plan choice. The employer shall change its employee records to reflect the employee’s plan choice, if applicable.

(f) No change.

(3) No change.

Rulemaking 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, 10-25-07, 12-8-08, 5-19-09, 2-4-10, 7-12-12,_________.

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

(1) through (2) No change.

(3) General Procedures.

(a) All members who wish to change their FRS retirement plan using their 2nd election must use a 2nd election enrollment form or, if moving from the FRS Pension Plan to the FRS Investment Plan or FRS Investment Plan Hybrid Option, may do so online by accessing the Second Choice Service at MyFRS.com. There are two types of enrollment forms. The “2nd Election Retirement Plan Enrollment Form” Form ELE-2, rev. 10-12 01-12, http://www.flrules.org/Gateway/reference.asp?No=Ref-01818, which is hereby adopted and incorporated by reference. This form allows the member to select different investment fund options if the member is changing from the FRS Pension Plan to either the FRS Investment Plan or the FRS Investment Plan Hybrid Option. Alternatively, the member can complete the “2nd Election EZ Retirement Plan Enrollment Form,” Form ELE-2EZ, rev. 07-12 07/11, http://www.flrules.org/Gateway/reference.asp?No=Ref-01830, which is hereby adopted and incorporated by reference. By completing this form, the member is choosing to have the employer and employee contributions and any transfers from the FRS Pension Plan invested in the FRS Select Moderate Balanced Fund. The member may change the investment selection at any time after the FRS Investment Plan or the FRS Investment Plan Hybrid Option account is activated. Activation occurs when contributions are deposited to the member’s FRS Investment Plan account.

(b) through (h) No change.

(4) No change. 

Rulemaking Authority 121.4501(8) FS. Law Implemented 121.4501(3), (4), (8), (15)(b), (20) FS. History–New 10-21-04, Amended 3-9-06, 10-25-07, 12-8-08, 5-19-09, 1-7-10, 7-12-12,_________.

19-11.011 Employer and Employee Contributions and ABO or Present Value Transfer Procedures.

(1) Employer and Employee contributions.

(a) All state, school district, and local employers (employers) who participate in the Florida Retirement System (FRS) (employers) and each employee are responsible for making the contributions required by Chapter 121, F.S.

(b) No change.

(2) One Percent Penalty for Late Payroll Reporting.

(a) A one percent penalty will be applied to contributions that are late pursuant to Section 121.78(3).  The portion of the one percent penalty assessed on late contributions and accompanying payroll data attributable to contributions for the FRS Investment Plan members shall be proportionally divided and deposited into affected member accounts, using the members’ FRS Investment Plan investment allocation in effect at the time of the deposit.

(b) Any employer requesting a waiver of the delinquency fee in accordance with Section 121.78(3)(c)(e), F.S., shall make a written request, setting forth a full description of the facts and circumstances, to the Office of Defined Contribution Programs, State Board of Administration of Florida, 1801 Hermitage Blvd., Suite 100, Tallahassee, Florida 32308. Waiver of the fee is at the discretion of the SBA. A waiver may be granted only once for an employer in any one fiscal year. Once a delinquency fee has been paid to a member’s account, it cannot be waived.

(3) Market loss calculation for late payroll reporting.

(a) Market loss calculations will be applied to contributions and benefit transfers that are late pursuant to Section 121.78(3).  A market loss occurs when an employer fails to timely remit the monthly payroll file and accompanying employer and employee contributions to the Division by the 5th business day of the next month the payroll file and associated employer and employee contributions are due as described in subsection (1) above and the receipt of monthly payroll file and/or the employer and employee contributions are received in the month following the due date or after.

(b) The Division will notify the Administrator administrator of the late filing by the employer. Upon notification, the Administrator will determine market losses using the affected member’s investment allocation on record with the Administrator at the time of calculation.

(c) – (e) No change. 

(4) Prior Period Adjustments.

(a) Employer and employee contributions paid for a prior period shall be subject to a delinquent fee of one 1.0 percent for each calendar month or part thereof that said contributions should have been paid. This includes prior period contributions due to incorrect wages and contributions for an earlier report or wages and contributions that should have been reported, but were not. If the delinquent assessment is not remitted within 30 days following the Division’s invoice date, an additional delinquent assessment of one 1.0 percent on the invoiced amount shall be assessed for each calendar month or part thereof there of that said invoice is delinquent. This delinquent assessment cannot be waived.

(b) No change.

(5) through (7) No change.

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

(a) through (f) No change.

(g) The Division shall calculate the interest owed on true-up amounts. If the re-computed ABO is greater than the original amount transferred by plus or minus $10 or more, the member will be owed a true-up amount plus interest. Interest will be calculated pursuant to Section 121.4501(3)(b)2., F.S. If the re-computed ABO is less than the original amount transferred by plus or minus $10 or more, the member will owe a true-up amount plus interest and the amount will be deducted from the member’s Investment Plan account. Interest will be calculated pursuant to Section 121.4501(3)(b)2., F.S.

(h) No change.

Rulemaking Authority 121.78(3)(c), 121.4501(8) FS. Law Implemented 121.71, 121.72, 121.78, 121.4501 FS. History–New 7-12-12, Amended_________.

19-11.012 Acceptance of Rollovers by the FRS Investment Plan.

(1) through (6) No change. 

(7) Payment to the Investment Plan must be in the form of a check made payable to the “FRS Investment Plan – FBO (the member participant’s name).”

(8)(a) Instructions regarding check delivery and other information relating to the processing of rollovers, including all applicable forms, may be obtained by calling the MyFRS Financial Guidance Line, which is a toll free line: 1(866)446-9377, Option 4, or, for members who are deaf, hard of hearing, or speech impaired, TRS 711, or by accessing the website at www.MyFRS.com.

(b) Current members shall use Form IPRO-1, rev. 10-12 12-09, “Employee Rollover Deposit Instructions and Form,” http://www.flrules.org/Gateway/reference.asp?No=Ref-01827, which is hereby adopted and incorporated by reference, to effect rollovers described in this rule.

(c) Current DROP members planning to roll over their DROP accumulation shall use Form IP-DROP-AD-1, “DROP Accumulation Direct Rollover Form for Current DROP Members,” rev. 10/12 03-11, http://www.flrules.org/Gateway/reference.asp?No=Ref-01825, which hereby is adopted and incorporated by reference, to effect rollovers described in this rule.

(d) Former DROP members shall use Form IP-DROP-RO-1, “DROP Direct Rollover Form for Former DROP Members,” rev. 10/12 03-11, http://www.flrules.org/Gateway/reference.asp?No=Ref-01826, which hereby is adopted and incorporated by reference, to effect rollovers described in this rule.

(9) – (11) No change.

(12) An Investment Plan member electing to transfer to the Pension Plan and that has an excess balance remaining in the Investment Plan account after satisfying any required Pension Plan buy-in amounts, may elect to use all or part of that remaining balance to purchase service credit in the Pension Plan. The member will need to complete Form PRO-2, “Pre-tax Direct Rollover Rolloever/Transfer Form,” rev. 10-10, http://www.flrules.org/Gateway/reference.asp?No=Ref-01184, which hereby is adopted and incorporated by reference, to effect this purchase. The completed form is to be sent to the Investment Plan Administrator.

Rulemaking Authority 121.4501(8), (5)(e) FS. Law Implemented 121.4501(4)(g)5., (5)(e), (21), 121.591 FS. History–New 7-12-12, Amended_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Ron Poppell, Senior Officer, Defined Contributions Programs
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Trustees of the State Board of Administration
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: October 23, 2012
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: October 5, 2012