To amend Rule 19-11.001, F.A.C., to include all pertinent definitions contained in Rule Chapters 19-11, 19-12 and 19-13, F.A.C.; to adopt the latest versions of an enrollment form in view of new legislation (Senate Bill 2100, Chapter 2011-68, Laws ...

STATE BOARD OF ADMINISTRATION

RULE NO.: RULE TITLE:
19-11.001: Procedures Regarding Employer Contributions
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
PURPOSE AND EFFECT: To amend Rule 19-11.001, F.A.C., to include all pertinent definitions contained in Rule Chapters 19-11, 19-12 and 19-13, F.A.C.; to adopt the latest versions of an enrollment form in view of new legislation (Senate Bill 2100, Chapter 2011-68, Laws of Florida) requiring employee contributions to the Florida Retirement System; to remove unnecessary provisions in Rules 19-11.006 and 19-11.007, F.A.C., as such information is fully set forth in the applicable forms; to create new Rule 19-11.011, F.A.C. to consolidate contributions provisions currently in Rules 19-11.001, 19-12.003 and 19-12.004, F.A.C., and add new information pertaining to employee contributions pursuant to Senate Bill 2100, Chapter 2011-68, Laws of Florida.
SUMMARY: To update information concerning enrollment procedures and to reflect recent legislation pertaining to employer and employee contributions; to consolidate definitional provisions currently scattered in several rules contained in several different rule chapters; to remove unnecessary and redundant rule provisions; and to adopt an updated form. There are no other rules incorporating any of these proposed rules.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The SBA has determined that the proposed rule(s) 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 or $1 million in the aggregate within 5 years. Therefore, an SERC has not been prepared. It has also been determined that this/these rule(s) do/does not meet the statutory threshold for ratification by the Legislature.
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)(a) FS.
LAW IMPLEMENTED: 121.051, 121.055, 121.35, 121.4501(2), (3), (4), (5), (6), (8), (10), (13), (15), (20), 121.71, 121.72, 121.74, 212.77, 121.78, 215.44(8)(b), 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: Monday, August 8, 2011, 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 Procedures Regarding Employer Contributions.

(1) Purpose. This rule implements Section 121.78, F.S., and establishes procedures regarding employer contributions, late payrolls, assessments, and market losses.

(2) Definitions.

The following words and terms shall have the following meanings for purposes of Chapters 19-11, 19-12 and 19-13, F.A.C.:

(1) “ABO,” “Accrued service benefit,” or “accumulated benefit obligation” 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)(b)1., F.S., by the Division of Retirement within the Department of Management Services. The ABO changes on a monthly basis based on the following factors: age, service, salary level, and membership class.

(2) “Administrator” or “Investment Plan Administrator” means the entity hired by the SBA, pursuant to Section 121.4501(8)(a)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.

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

(4) “Annual addition” means the sum for any limitation year of all employer and employee contributions which are treated as annual additions to a defined contribution plan for purposes of s. 415(c) of the Code and forfeitures. Examples of such contributions to a defined contribution plan include the following: employer and employee contributions to the FRS Investment Plan; contributions to the Senior Management Service Optional Annuity Program described in Section 121.055(6), F.S.; contributions to a Code s. 401(k) plan; employer contributions to an individual retirement account; voluntary employee contributions to accounts in a defined benefit plan [but not including contributions to a qualified cost-of-living arrangement in accordance with Code s. 415(k)]; amounts allocated to the separate account of a key employee for post-retirement medical benefits described in Code s. 419A(d)(2); and contributions to an individual medical benefit account, as described in Code s. 415(l). Examples of contributions which are not annual additions for purposes of s. 415(c) of the Code as applied to the FRS Investment Plan include the following: rollover contributions or transfers from another eligible retirement plan to the FRS Investment Plan; contributions to a Code s. 403(b) annuity plan; contributions to a Code s. 457 deferred compensation plan; and contributions which are additional elective deferrals under Code s. 414(v).

(5) “Benefits” is used in the same sense, and has the same meaning, as used in Section 121.4501(7), F.S.

(6) “Code” means the U.S. Internal Revenue Code, as amended. The Code is available free on the Internet at the following web site: uscode.house.gov.

(7) “Compensation” means the monthly salary paid to a member by his or her employer for work performed arising from that employment.

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

(9) “Defined contribution plan” means a plan, such as the FRS Investment Plan, which provides for an individual account for each member and for benefits based solely on the amount contributed to the member’s account, and any income, expenses, gains and losses, and any forfeitures of accounts of other members which may be allocated to such member’s account.

(10) “Direct rollover” means a payment by the FRS Investment Plan to the eligible retirement plan specified by the distributee.

(11) “Distributee” means a member or former member. 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.

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

(13) “Effective date of enrollment” means that the Employee has completed enrollment by filing an election for his or her membership class with the Administrator; that the Administrator has entered the Employee into its recordkeeping system; and that the Administrator has informed the Division of the Employee’s effective date of enrollment in either the FRS Pension Plan or the FRS Investment Plan.

(14) “Electronic Means” shall mean an enrollment made on the MyFRS.com website, by telephone or other technology as specified by the SBA.

(15) “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), 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.

(16) “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).

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

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

(19) “Excessive trading” means multiple occurrences of Market Timing Trades by a member over time.

(20) An “exempt transaction” is any transaction that is initiated for purposes of: depositing employer and employee 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 19-11.004, F.A.C.

(21) “FRS Investment Plan”, “Florida Retirement System Investment Plan,” or “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, F.S., 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.

(22) “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 chooses to retain his accrued service benefit in the FRS Pension Plan, in accordance with Section 121.4501(3)(b)1., F.S., and further chooses that all future employer and employee 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.

(23) “FRS Investment Plan providers” are:

1. 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).

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

(25) “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.

(26) “Grace Period” means that procedure described in subsection 19-11.006(4), F.A.C., which permits, under certain circumstances, the voiding of a retirement plan election.

(27) “I,” “you,” or “your:” these references are to the member in the context of relevant parts of the enrollment forms set forth in this rule Chapter.

(28) “Limitation year” is the consecutive 12 month period of time to which Code limitations with respect to contributions and forfeitures are applied. For the FRS Investment Plan, the limitation year is the calendar year.

(29) “Market losses” shall be defined, for purposes of Section 121.78(3)(b), F.S., which states that employers shall reimburse FRS Investment Plan members for market losses resulting from late contributions, or from contribution adjustments as a result of employer errors or corrections the value of a member’s account that otherwise would have been realized had the employer and employee contributions and accompanying payroll data been submitted on a timely basis. “Market losses” applies only to the monthly contribution that is late, not to the member’s aggregate value in his or her Investment Plan account.

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

1. At least 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.

(31) “Member” means an employee who elected to participate, and has an account established, in the FRS Investment Plan or the FRS Investment Plan Hybrid Option as a result of current or previous employment with an FRS-covered employer; a person who has been designated as an alternate payee due to a qualified domestic relations order (“QDRO”); or a designated beneficiary when a member is deceased. For purposes of the complaint procedures set forth in Rule 19-11.005, F.A.C., the term also includes FRS employees who have not elected the FRS Investment Plan but who claim that they intended to join the Plan but were prevented from doing so for various reasons.

(a) “Public Employee Optional Retirement Program” or “PEORP” shall mean the optional defined contribution plan within the Florida Retirement System, established in Part II of Chapter 121, F.S.

(32)(b) “PEORP Participant” or “FRS Investment Plan Member,” or “Investment Plan Member,” “participant,” or “member,” shall mean an active member of the Florida Retirement System who has elected to join the FRS Investment Plan PEORP .

(33)(c) “PEORP Participant’s “Member’s accounts” or “PEORP accounts” shall mean investment accounts for an individual member PEORP Participant in which employer and employee contributions are invested for a FRS Investment Plan member PEORP Participant.

(d) For purposes of Section 121.78(3)(b), F.S., which states that employers shall reimburse PEORP Participants for market losses resulting from late contributions, or from contribution adjustments as a result of employer errors or corrections, the term “market losses” shall be defined as the value of a Participant’s account that otherwise would have been realized had the employer contribution and accompanying payroll data been submitted on a timely basis. “Market losses” applies only to the monthly contribution that is late, not to the Participant’s aggregate value in his PEORP account.

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

(36)(e) “PEORP” “Tthird party administrator” or “TPA” shall mean the Investment Plan third party Aadministrator hired by the Florida State Board of Administration pursuant to Section 121.4501(8), F.S.

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

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

(3) One percent penalty.

(a) The portion of the one percent penalty assessed on late contributions and accompanying payroll data attributable to contributions for the PEORP shall be deposited into the Participant’s account, using the PEORP Participant’s investment allocation in effect at the time of the deposit of the assessment in the Florida Retirement System Trust Fund.

(b) Any employer requesting a waiver of the delinquency fee in accordance with Section 121.78(3)(c), F.S., shall fully explain and certify such waiver request in writing to the Office of Defined Contribution Programs, State Board of Administration of Florida, 1801 Hermitage Blvd., Suite 100, Tallahassee, Florida 32308.

(4) Market loss calculation.

(a) The TPA will determine market losses using a PEORP Participant’s investment allocation in effect at the time of calculation. The TPA will perform the market value calculation using a period certain which is the 15th of the month in which the payroll is due, or the next succeeding business day if the day falls on a weekend or TPA-or Division of Retirement-observed legal holiday, in which contributions would have been processed, and ending on the date the payroll is received by the TPA.

(b) If contributions and accompanying payroll data are not received within the calendar month they are due, but that lateness does not result in market losses to participants, only the one percent late assessment will apply to the employer.

(c) The TPA will not perform the market loss calculation until a covered payroll and accompanying payroll data is received and processed by the TPA.

Rulemaking Specific Authority 121.4501(8) 121.78(3)(c) FS. Law Implemented 121.021, 121.4501 121.78 FS. History–New 12-8-02, 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 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) “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 has entered the employee into its recordkeeping system; and that the Administrator has informed the Division of the employee’s effective date of enrollment in either the FRS Pension Plan or 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.

(e) “Electronic Means” shall mean an enrollment on the MyFRS.com website, by telephone or other technology as specified by the SBA in a subsequent amended rule.

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

(g) “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.

(h) “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, F.S., 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.

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

(j) “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.

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

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

(m) “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.

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

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

(2)(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, as specified in Section 121.4501(4)(a)2.b., (b)2.b., and (c)2.b., F.S.

(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 enrolled in the Elected Officers’ Class or Senior Management Service Class may only enroll in the FRS Investment Plan by submitting an enrollment form.

(d) 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.

(e) 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 1(888)429-2160.

(3)(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 or she must complete his or her plan choice elect the FRS Investment Plan no later than the last business day of June. If no plan choice is filed, the employee will default to the FRS Pension Plan.

(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 same information requested by the forms available for use outlined in this Rule 19-11.006, F.A.C., for his or her 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 (2)(3)(c)(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. 017/101, which is hereby adopted and incorporated by reference http://www.flrules.org/Gateway/reference.asp?No=Ref-00420. 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). No beneficiary identifying information is required on the EZ form. However, beneficiary designations must be made either on forms prescribed for that purpose or electronically by logging onto MyFRS.com, clicking on “manage benefits,” then clicking on “manage investments,” and then clicking on “personal info.” If no beneficiary designation is made, the Plan funds will be distributed, at the Member’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 4:00 p.m. 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 employed at a state university with a faculty practice plan shall elect this option, which requires the selection to be made no later than 4:00 p.m. 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), F.S.;

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), F.S.; 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), F.S., in the absence of the member’s filing a beneficiary designation form, which is available from the sources listed in paragraph (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 who does not select investment options will be defaulted into the FRS Select Moderate Balanced Fund. Any member 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 chooses other investment options;

5. 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), F.S.;

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; [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 rises when additional creditable service or salary is earned.]

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 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;

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.

(c)(d)1. The enrollment by form or electronic means shall be complete and the election shall be final if all the required information is clearly indicated and if the enrollment is received by the FRS Plan Choice Administrator by 4:00 p.m. Eastern Time. The form shall be transmitted via the U.S. mail, courier, or by fax to 1(888)310-5559.

2. The FRS Plan Choice Administrator shall determine that the employee’s enrollment in the FRS Investment Plan is within the prescribed time period, is complete, and the employee’s election is clearly indicated. If the Administrator determines that the enrollment is incomplete, the employee will be required to resubmit a completed enrollment. An incomplete enrollment by form is a form which is missing the name of the member, social security number, plan selection, or signatures, or dates. If the form is incomplete only because the member has made no investment selection, the form will be processed and the member 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 at any time once the transfer has been made. An incomplete enrollment by electronic means is one in which the FRS Plan Choice Administrator has no record of receipt and processing of the electronic enrollment.

(d)(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 FRS Investment 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 home address of record, to the employee’s employer, and to the Ddivision to inform the Ddivision of the employees retirement plan choice that the employee is no longer in the FRS Pension Plan.

(e)(f) Employers shall remit pay retirement contributions monthly for their FRS Investment Plan employees or the FRS Investment Plan Hybrid Option and those contributions are due to the Ddivision 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 employee’s plan choice, if applicable 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.

(f) If the member submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name of the member, social security number, plan selection, or signature. The member will be required to resubmit a completed enrollment form. If the form is incomplete only because the member has made no investment selection, the form will be processed and the member 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 at any time once the transfer has been made.

(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 Division 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 Division 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 Division shall determine the employee’s ABO, if any, through June 30.

(c) By the 15th day of the month, the Division shall notify the Administrator of the ABO for each employee whose effective date of enrollment is the first day of the month and the Administrator 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 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 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 Division. Thereafter, pursuant to Section 121.4501(3)(c)3., F.S., the Division 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 Division shall cause an adjustment of the transfer of assets between FRS Investment Plan account(s) of the affected member(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 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 on his or her enrollment form.

(g) If the recomputed ABO is less than the original amount transferred by $10 or more, the Administrator shall cause to be transferred from the member’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 on his or her enrollment form.

(h) The Division shall notify the SBA of the aggregate true-up amount plus interest within 45 days of the initial transfer. The Division shall notify the Administrator of the true-up amounts plus interest by member account within 45 days of the initial transfer. The true-up transfer shall include the true-up amount determined by the Division 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 Division 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 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 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.

(4)(6) Grace Period.

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

The member must notify the SBA, by a telephone call to the toll-free MyFRS Financial Guidance Line at 1(866)446-9377 or by written correspondence directly to the SBA, to the Plan Choice Administrator, or to the Division no later than 4:00 p.m. Eastern Time on the last business day of the election effective month.

(b) If the request to reverse the election is made timely and the SBA finds that the election was made in error, the member will be required to sign a release and return it to the SBA no later than 4:00 p.m. Eastern Time, on the last business day of the election effective month prior to the election’s being officially reversed. The member will acknowledge that failure to return a signed release by the requested due date will result in the original election being reinstated.

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

1. The Division will revise its database to reflect the member’s plan change. The member will have until his or her choice period deadline date to make a new election. If the member’s choice period has ended, the member will have one calendar month to make a new election. Failure to make a new election will result in the member’s defaulting into the Pension Plan, except for the situation described in subparagraph 3., below.

2. The Plan Choice Administrator will send the member written confirmation that the election has been reversed.

3. If the member had elected the FRS Investment Plan and decided to remain in the FRS Pension Plan, there is no need for another election, because the member is already in the FRS Pension Plan, his election to the FRS Investment Plan having been reversed.

(d) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(8)(9)(g)(f)3., F.S., and discussed in Rule 19-11.005, F.A.C.

(5)(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.

(6)(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 on his or her enrollment form as described in paragraph (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.

(7)(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.

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, _______.

 

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)(g)(e), F.S. This rule includes procedures for members 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 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.

(2) A member may make a valid 2nd election only if the 2nd election is made and processed by the Plan Choice Administrator while the member is actively employed, earning salary and service credit in an employer-employee relationship consistent with the requirements of Section 121.021(17)(b), F.S. FRS members must be actively employed earning salary and service credit to be eligible to make a valid 2nd Election. Members on an unpaid leave of absence, terminated members, or employees of an educational institution on summer break cannot use their 2nd Election until they return to covered FRS employment. In general terms, this means that the 2nd election must be made and processed while the member is actively working and being paid for that work. It is the responsibility of the member to assure that the 2nd election is received by the Plan Choice Administrator no later than 4:00 p.m. Eastern Time on the last business day the member is earning salary and earning service credit.

(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 member 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 also apply to the FRS Investment Plan. Any accrued service benefit transferred from the FRS Pension Plan to the FRS Investment Plan will be subject to the vesting requirements of the FRS Pension 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 chooses to retain his accrued service benefit in the FRS Pension Plan, in accordance with Section 121.4501(3)(c)1., F.S., 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, F.S.

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

(f) “Electronic Means” shall mean an enrollment on the MyFRS.com website, by telephone or other technology as specified by the SBA in a subsequent amended rule.(e) “ABO” “Accrued service benefit” or “accumulated benefit obligation” means the present value amount already earned by a member 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.

(2)(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” allows the member to choose the investment funds he wishes to use if changing 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 is choosing to have his 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) 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 TRS 711: 1(888)429-2160; or by using the MyFRS.com website and clicking on Resources and then on Forms.

(c) Elections made by form must be mailed to the FRS Plan Choice Administrator, P. O. Box 785027, Orlando, FL 32878-5027; Box 56290, Jacksonville, Florida 32241-6290 or faxed toll-free to [phone].

(d) For members transferring to the FRS Pension Plan, the election may require a personal payment if the member’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. If the required amount is not received by the Division by the date due, the election will be voided. The member will receive notification and proper instructions from the Division detailing where and in what form to send any personal payments.

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

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

(g) If the member submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name of the member, social security number, plan selection, or signature. The member will be required to resubmit a completed enrollment form. If the form is incomplete only because the member has made no investment selection, the form will be processed and the member 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 at any time once the transfer has been made.

(d) The member may elect to move between the Florida Retirement System retirement programs only if the member is earning service credit in an employer-employee relationship consistent with the requirements under Section 121.021(17)(b), F.S. FRS members must be actively employed earning salary and service credit to be eligible to make a valid 2nd Election. Members on an unpaid leave of absence, terminated members, or employees of an educational institution on summer break cannot use their 2nd Election until they return to covered FRS employment. The election must be received and processed by the FRS Plan Choice Administrator before the member terminates covered FRS employment. It is the responsibility of the member to ensure the election is received by the Plan Choice Administrator no later than 4:00 p.m. Eastern Time on the last business day the member is earning salary and earning service credit.

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

(a) All members are required to fill out Section 1 of the form by providing the member’s name and Social Security number and checking only one of three boxes, indicating which choice the member 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. Note that if a member transfers from the Investment Plan to the Pension Plan and leaves a balance in the member’s Investment Plan account, the member is a member of the Pension Plan. As such, the member cannot take a distribution of the surplus Investment Plan funds until he begins receiving his Pension Plan benefits.

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), F.S., as applicable.

2. You may designate a beneficiary by completing a Beneficiary Designation Form (BEN-001 Pension Plan or IPBEN-1 Investment Plan). Both forms are available online at www.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 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 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 who does not select any investment options will be defaulted into the FRS Select Moderate Balanced Fund. Any member 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 chooses other investment options.

(d) The fourth section on the form is an authorization section which will ensure that all members understand the information described. All members 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 has made.

1. For all members: 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 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 is not received by the Division of Retirement by the date due, the election will be voided. The 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 that 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 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 benefit 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 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 www.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 www.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 seven (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 that I trade excessively.

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), F.S., 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 and must include a daytime telephone number. Inclusion of an e-mail address or the name of the member’s employing agency is optional on the member’s part.

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

(g) The member 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 transferring to the FRS Pension Plan, the election may require a personal payment if the member’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. If the required amount is not received by the Division by the date due, the election will be voided. The member will receive notification and proper instructions from the Division detailing where and in what form to send any personal payments.

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

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

(k) If the member submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name of the member, social security number, plan selection, or signature. The member will be required to resubmit a completed enrollment form. If the form is incomplete only because the member has made no investment selection, the form will be processed and the member 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 at any time once the transfer has been made.

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

(a) Form ELE-2EZ, “2nd Election EZ Retirement Plan Enrollment Form,” Rev. 11-08, is hereby adopted and incorporated by reference.

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

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

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

(e) The member 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 transferring to the FRS Pension Plan, the election may require a personal payment if the member’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. If the required amount is not received by the Division by the date due, the election will be voided. The member will receive notification and proper instructions from the Division detailing where and in what form to send any personal payments. The Division is responsible for calculating that 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 address of record once the completed form is received and processed.

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

(i) If the member submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name of the member, social security number, the plan selection, or signature. The member will be required to submit a completed enrollment form.

(3)(6) Grace Period.

(a) If a member files an election with the Plan Choice Administrator and the member realizes that the election was made in error, or if the member has reconsidered his or her plan choice, the SBA will consider, on a case-by-case basis, whether the election will be reversed, subject to the following: The member must notify the SBA by a telephone call to the toll free MyFRS Financial Guidance Line at: [phone], or by written correspondence directly to the SBA, to the Plan Choice Administrator, to the Financial Guidance Line, or to the Division, no later than 4:00 p.m. Eastern Time on the last business day of the election effective month.

(b) If the request to reverse the election is made timely and the SBA finds the election was made in error, the member will be required to sign a release and return it to the SBA no later than 4:00 p.m., Eastern Time, on the last business day of the election effective month prior to the election’s being officially reversed. Upon receipt of the release, the Division and the Plan Choice Administrator will be directed to do the following:

2. The Plan Choice Administrator will send the member written confirmation that the election has been voided.1. The Division will revise its database to reflect the election has been reversed.

3. The member will make a new election consistent with subsections (3) and (4), above.

(c) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(8)(9)(g)(f)3., F.S. and discussed in Rule 19-11.005, F.A.C.

Rulemaking Authority 121.4501(8)(a) FS. Law Implemented 121.4501(3), (4), (8)(b)4., (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,_________.

 

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

(1) Purpose. This rule establishes procedures regarding employer and employee contributions, present value transfers, late payrolls, assessments, and market losses.

(2) Employer and Employee contributions.

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

(b) When an employer requests an adjustment to retirement contributions or accompanying payroll data for prior periods, the adjustment is processed.

(c) However, neither the SBA, nor the FRS Investment Plan Trust Fund, nor the Florida Retirement System Trust Fund shall incur any loss or gain as a result of an employer’s negative adjustments for an FRS Investment Plan member or a former member.

(3) In no event shall the aggregate of the allocation of contributions and forfeitures to an FRS Investment Plan member’s account(s) in the Plan and the annual addition to an FRS Investment Plan member’s account(s) in any other defined contribution plan maintained by the Employer exceed the limitation for defined contribution plans set forth in Internal Revenue Code Section 415(c)[the Code section “415(c) limitation”]. Employers shall cooperate with the FRS Investment Plan’s administrator or its agent in order for the administrator or its agent to be able to monitor the 415(c) limitation on contributions. Employers shall provide all financial and payroll data which the Plan’s administrator or its agent must use to determine whether or not the 415(c) limitation has been exceeded. [Note: Pursuant to Section 121.4501(5)(d), F.S., the Administrator is responsible for notifying the employer regarding maximum contribution levels permitted under the Code and if a member contributes to any other tax-deferred plan, he or she is responsible for ensuring that total contributions made to the FRS Investment Plan and to any other such plan do not exceed federally permitted maximums.]

(4) In the event the aggregate annual additions to a member’s account(s) in the FRS Investment Plan and in any other defined contribution plan maintained by the Employer exceed the 415(c) limitation during any limitation year, the excess shall be attributed first to such other plans. If any excess remains after attribution to such other plans, the amount of any such excess attributable to the allocation of forfeitures, to a reasonable error in estimating a member’s annual compensation or to any other circumstances that the Commissioner of Internal Revenue finds is justified, in accordance with Treasury Regulation 1.415-6(b)(6), shall be used to reduce the Employer’s contributions for such member under the Plan in the next and succeeding limitation years; provided, however, that if the member is not covered by the Plan at the end of the limitation year, such excess amount will be used to reduce the Employer’s contributions to remaining members under the Plan in the next, and succeeding, limitation years. If the correction method, above, is not available, other methods of correcting excess annual additions are permitted if in accordance with Treasury Regulation 1.415-6(b)(6).

(5) The employer and employee contributions received by a participating member of the FRS Investment Plan prior to effective enrollment in the FRS Investment Plan will be transferred into the employee’s FRS Investment Plan account at the rate established pursuant to Section 121.71, F.S. Only after effective enrollment in the FRS Investment Plan will the employee receive the employer and employee contribution at the rate established by Section 121.71, F.S. and Section 121.72, F.S. appropriate to that member’s class of membership, as specified in Section 121.4501(4)(a)2.b., (b)2.b., and (c)2.b., F.S.

(6) 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 Division 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 Division 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 Division shall determine the employee’s ABO, if any, through June 30.

(c) By the 15th day of the month, the Division shall notify the Administrator of the ABO for each employee whose effective date of enrollment is the first day of the month and the Administrator 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 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 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 Division. Thereafter, pursuant to Section 121.4501(3)(c)3., F.S., the Division shall re-compute 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 Division shall cause an adjustment of the transfer of assets between FRS Investment Plan account(s) of the affected member(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 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 on his or her enrollment form.

(g) If the recomputed ABO is less than the original amount transferred by $10 or more, the Administrator shall cause to be transferred from the member’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 on his or her enrollment form.

(h) The Division shall notify the SBA of the aggregate true-up amount plus interest within 45 days of the initial transfer. The Division shall notify the Administrator of the true-up amounts plus interest by member account within 45 days of the initial transfer. The true-up transfer shall include the true-up amount determined by the Division 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 Division 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 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 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.

(7) One percent penalty.

(a) The portion of the one percent penalty assessed on late contributions and accompanying payroll data attributable to contributions for the FRS Investment Plan shall be deposited into the member’s account, using the member’s investment allocation in effect at the time of the deposit of the assessment in the Florida Retirement System Trust Fund.

(b) Any employer requesting a waiver of the delinquency fee in accordance with Section 121.78(3)(e), F.S., shall fully explain and certify such waiver request in writing to the Office of Defined Contribution Programs, State Board of Administration of Florida, 1801 Hermitage Blvd., Suite 100, Tallahassee, Florida 32308. Once a delinquency fee has been paid to a member’s account, it cannot be waived.

(8) Market loss calculation.

(a) The Administrator will determine market losses using a member’s investment allocation in effect at the time of calculation. The Administrator will perform the market value calculation using a period certain which is the 15th of the month in which the payroll is due, or the next succeeding business day if the day falls on a weekend or Administrator-or Division of Retirement-observed legal holiday, in which contributions would have been processed, and ending on the date the payroll is received by the Administrator.

(b) If contributions and accompanying payroll data are not received within the calendar month they are due, but that lateness does not result in market losses to members, only the one percent late assessment will apply to the employer.

(c) The Administrator will not perform the market loss calculation until a covered payroll and accompanying payroll data is received and processed by the Administrator.

Rulemaking Authority 121.78(3)(c), 121.4501(8) FS. Law Implemented 121.78, 121.4501 FS. History–New_________.

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: June 16, 2011
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: May 27, 2011