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Senate Bill 0216c1

Florida Senate - 1998 CS for SB 216 By the Committee on Governmental Reform and Oversight and Senator Gutman 302-691A-98 1 A bill to be entitled 2 An act relating to the Florida Retirement 3 System; amending s. 121.091, F.S.; authorizing 4 certain persons to participate in the Deferred 5 Retirement Option Program notwithstanding 6 certain restrictions; providing a contingent 7 effective date. 8 9 Be It Enacted by the Legislature of the State of Florida: 10 11 Section 1. Paragraphs (a), (b), and (c) of subsection 12 (13) of section 121.091, Florida Statutes, as amended by 13 section 2 of chapter 97-154, Laws of Florida, and section 8 of 14 chapter 97-180, Laws of Florida, are amended to read: 15 121.091 Benefits payable under the system.--No 16 benefits shall be paid under this section unless the member 17 has terminated employment as provided in s. 121.021(39) and a 18 proper application has been filed in the manner prescribed by 19 the division. 20 (13) DEFERRED RETIREMENT OPTION PROGRAM.--In general, 21 and subject to the provisions of this section, the Deferred 22 Retirement Option Program, hereinafter referred to as the 23 DROP, is a program under which an eligible member of the 24 Florida Retirement System may elect to participate, deferring 25 receipt of retirement benefits while continuing employment 26 with his or her Florida Retirement System employer. The 27 deferred monthly benefits shall accrue in the System Trust 28 Fund on behalf of the participant, plus interest compounded 29 monthly, for the specified period of the DROP participation, 30 as provided in paragraph (c). Upon termination of employment, 31 the participant shall receive the total DROP benefits and 1 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 begin to receive the previously determined normal retirement 2 benefits. Employment in the DROP does not guarantee employment 3 for the specified period of DROP. 4 (a) Eligibility of member to participate in the 5 DROP.--All active Florida Retirement System members in a 6 regularly established position, and all active members of 7 either the Teachers' Retirement System established in chapter 8 238 or the State and County Officers' and Employees' 9 Retirement System established in chapter 122 which systems are 10 consolidated within the Florida Retirement System under s. 11 121.011, are eligible to elect participation in the DROP 12 provided that: 13 1. The member is not enrolled as a renewed member 14 under s. 121.122 or a participant in a defined contribution 15 plan under s. 121.051(2)(c), s. 121.055(6), or s. 121.35 in 16 lieu of the Florida Retirement System defined benefit plan. 17 2.1. Election to participate is made within 12 months 18 following the date on which the member first reaches normal 19 retirement date or age, or for a member who first reached 20 normal retirement date or age prior to the effective date of 21 this section, election to participate is made within 12 months 22 of the effective date of this section. A member who fails to 23 make an election within such 12-month limitation period shall 24 forfeit all rights to participate in the DROP. The member 25 shall advise his employer and the division in writing of the 26 date on which the DROP shall begin. Such beginning date may be 27 subsequent to the 12-month election period but must be within 28 the 60-month limitation period as provided in subparagraph 29 (b)1. When establishing either eligibility to participate in 30 DROP or the 60-month maximum participation period, the member 31 may elect to include or exclude any optional service credit 2 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 purchased by the member from the total service used to 2 establish the normal retirement date. A member who has dual 3 retirement dates is eligible to elect to participate in DROP 4 within 12 months after attaining the normal retirement date in 5 either class. 6 3.2. The retiring member's employer, or employers if 7 dually employed, shall acknowledge in writing to the division 8 the date the member's participation in the DROP begins and the 9 date the member's employment and DROP participation will 10 terminate. 11 4.3. Simultaneous employment of a participant by 12 additional Florida Retirement System employers subsequent to 13 the commencement of participation in the DROP shall be 14 permissible provided such employers acknowledge in writing a 15 DROP termination date no later than the participant's existing 16 termination date or the 60-month limitation period as provided 17 in subparagraph (b)1. 18 5. A DROP participant may change employers while 19 participating in DROP, subject to the following: 20 a. The change of employment must occur without a break 21 in service so that the member receives salary for each month 22 of continuous DROP participation. If no salary is received 23 during a month, DROP participation shall cease unless the 24 employer verifies that a continuing employer/employee 25 relationship exists for such participant pursuant to s. 26 121.021(39)(b). 27 b. Such participant and new employer must notify the 28 division on forms required by the division as to the identity 29 of the new employer. 30 c. The new employer must acknowledge in writing the 31 participant's DROP termination date, which may be extended, 3 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 but not beyond the original 60-month period provided in 2 subparagraph (b)1. and must acknowledge liability for any 3 additional retirement contributions and interest required if 4 the participant fails to terminate employment timely, and is 5 subject to the adjustment required in sub-subparagraph (c)4.d. 6 (b) Participation in the DROP.-- 7 1. An eligible member may elect to participate in the 8 DROP for a period not to exceed a maximum of 60 calendar 9 months immediately following the date on which the member 10 first reaches normal retirement age or date, including a 11 member who first reaches normal retirement age or date prior 12 to the effective date of this section. However, a member, 13 other than a Special Risk member described below, who has 14 reached normal retirement date prior to the effective date of 15 DROP is eligible to participate in the DROP for a period of 16 time not to exceed 60 calendar months immediately following 17 such DROP effective date. A member of the Special Risk Class 18 who has reached normal retirement date prior to the effective 19 date of the DROP and whose total accrued value exceeds 75 20 percent of average final compensation as of his or her 21 effective date of retirement is eligible to participate in the 22 DROP for no more than 36 calendar months immediately following 23 such DROP effective date. Any member who has exceeded the 24 60-month limitation shall not be eligible to participate in 25 the DROP. 26 2. Upon deciding to participate in the DROP, the 27 member shall submit, on forms required by the division: 28 a. A written election to participate in the DROP; 29 b. Selection of the DROP participation and termination 30 dates, which satisfy the limitations stated in paragraph (a) 31 and subparagraph 1. Such termination date shall be in a 4 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 binding letter of resignation with the employer, establishing 2 a deferred termination date. The member may change the 3 termination date within the limitations of subparagraph 1., 4 but only with the written approval of his employer; 5 c. A properly completed DROP application for service 6 retirement as provided in this section; and 7 d. Any other information required by the division. 8 3. The DROP participant shall be a retiree under the 9 Florida Retirement System for all purposes, except for 10 paragraph (5)(f) and subsection (9) and ss. 112.3173, 112.363, 11 121.053, and 121.122. 12 4. A reemployed retiree with renewed membership is not 13 eligible for DROP participation. 14 4.5. Elected officers shall be eligible to participate 15 in the DROP subject to the following: 16 a. An elected or a nonelected participant may run for 17 a term of office while participating in DROP and, if elected, 18 extend the DROP termination date accordingly, except, however, 19 if such additional term of office exceeds the 60-month 20 limitation established in subparagraph 1., and the officer 21 does not resign from office within such 60-month limitation, 22 the retirement and the participant's DROP shall be null and 23 void as provided in sub-subparagraph (c)4.d. 24 b. An elected officer who is dually employed and 25 elects to participate in DROP shall be required to satisfy the 26 definition of termination within the 60-month limitation 27 period as provided in subparagraph 1. for the nonelected 28 position and may continue employment as an elected officer as 29 provided in s. 121.053. The elected officer will be enrolled 30 as a renewed member in the Elected State and County Officers' 31 Class or the Regular Class, as provided in ss. 121.053 and 5 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 121.22, on the first day of the month after termination of 2 employment in the nonelected position and termination of DROP. 3 Distribution of the DROP benefits shall be made as provided in 4 paragraph (c). 5 c. An elected officer who reaches normal retirement 6 date during a term of office may defer the election to 7 participate in the DROP until the next succeeding term in such 8 office, if such election to participate is made within 12 9 months after the first day of the succeeding term. An elected 10 officer who exercises this option may participate in the DROP 11 only for up to 48 months or until the end of the next 12 succeeding term after making the election to participate in 13 the DROP, whichever is less. 14 (c) Benefits payable under the DROP.-- 15 1. Effective with the date of DROP participation, the 16 member's initial normal monthly benefit, including creditable 17 service, and average final compensation, optional form of 18 payment, and the effective date of retirement shall be fixed. 19 The beneficiary eligible for benefits payable under the 20 Florida Retirement System is the beneficiary eligible to 21 receive any DROP benefits payable if the DROP participant dies 22 before the completion of the DROP participation period. Such 23 retirement benefit, the annual cost of living adjustments 24 provided in s. 121.101, and interest shall accrue monthly in 25 the System Trust Fund. Such interest shall accrue at an 26 effective annual rate of 6.5 percent compounded monthly, on 27 the prior month's accumulated ending balance, up to the month 28 of termination or death. 29 2. The effective date of DROP participation and the 30 effective date of retirement of a DROP participant shall be 31 the first day of the month selected by the member to begin 6 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 participation in the DROP, provided that such date is properly 2 established, with the written confirmation of the employer and 3 the approval of the division, on forms required by the 4 division. 5 3. Normal retirement benefits and interest thereon 6 shall continue to accrue in the DROP until the established 7 termination date of the DROP, or until the participant 8 terminates employment or dies prior to such date. Although 9 individual DROP accounts shall not be established, a separate 10 accounting of each participant's accrued benefits under the 11 DROP shall be calculated and provided to participants 12 annually. 13 4. At the conclusion of the participant's DROP, the 14 division shall distribute the participant's total accumulated 15 DROP benefits, subject to the following provisions: 16 a. The division shall receive verification by the 17 participant's employer or employers that such participant has 18 terminated employment as provided in s. 121.021(39)(b). 19 b. The terminated DROP participant or, if deceased, 20 such participant's named beneficiary, shall elect on forms 21 provided by the division to receive payment of the DROP 22 benefits in accordance with one of the options listed below. 23 For a participant or beneficiary who fails to elect a method 24 of payment within 60 days of termination of the DROP, the 25 division will pay a lump sum as provided in 26 sub-sub-subparagraph(I). 27 (I) Lump sum.--All accrued DROP benefits, plus 28 interest, less withholding taxes remitted to the Internal 29 Revenue Service, shall be paid to the DROP participant or 30 surviving beneficiary. 31 7 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 (II) Direct rollover.--All accrued DROP benefits, plus 2 interest, shall be paid from the DROP directly to the 3 custodian of an eligible retirement plan as defined in s. 4 402(c)(8)(B) of the Internal Revenue Code. However, in the 5 case of an eligible rollover distribution to the surviving 6 spouse of a deceased participant, an eligible retirement plan 7 is an individual retirement account or an individual 8 retirement annuity as described in s. 402(c)(9) of the 9 Internal Revenue Code. 10 (III) Partial lump sum.--A portion of the accrued DROP 11 benefits shall be paid to the DROP participant or surviving 12 spouse, less withholding taxes remitted to the Internal 13 Revenue Service, and the remaining DROP benefits shall be 14 transferred directly to the custodian of an eligible 15 retirement plan as defined in s. 402(c)(8)(B) of the Internal 16 Revenue Code. However, in the case of an eligible rollover 17 distribution to the surviving spouse of a deceased 18 participant, an eligible retirement plan is an individual 19 retirement account or an individual retirement annuity as 20 described in s. 402(c)(9) of the Internal Revenue Code. The 21 proportions shall be specified by the DROP participant or 22 surviving beneficiary. 23 c. The form of payment selected by the DROP 24 participant or surviving beneficiary complies with the minimum 25 distribution requirements of the Internal Revenue Code and 26 payments begin no later than the date on which the participant 27 reaches age 70 years and 6 months. 28 d. For A DROP participant who fails to terminate 29 employment as defined in s. 121.021(39)(b), the member shall 30 be deemed not to be retired and the DROP election shall be 31 null and void. Florida Retirement System membership shall be 8 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 reestablished retroactively to the date of the commencement of 2 the DROP, and the employers with whom the participant 3 continues employment employer shall be required to pay to the 4 System Trust Fund the difference between the DROP 5 contributions paid in paragraph (i) and the contributions 6 required for the applicable Florida Retirement System class of 7 membership during the period the member participated in the 8 DROP, plus 6.5 percent interest compounded annually. 9 5. The accrued benefits of any DROP participant, and 10 any contributions accumulated under such program, shall not be 11 subject to assignment, execution, attachment, or to any legal 12 process whatsoever, except for qualified domestic relations 13 orders by a court of competent jurisdiction, income deduction 14 orders as provided in s. 61.1301, and federal income tax 15 levies. 16 6. DROP participants shall not be eligible for 17 disability retirement benefits as provided in subsection (4). 18 Section 2. This act shall take effect upon the 19 effective date of the amendments to section 121.091, Florida 20 Statutes, contained in section 2 of chapter 97-154, Laws of 21 Florida, and section 8 of chapter 97-180, Laws of Florida. 22 23 24 25 26 27 28 29 30 31 9 CODING: Words stricken are deletions; words underlined are additions. Florida Senate - 1998 CS for SB 216 302-691A-98 1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN COMMITTEE SUBSTITUTE FOR 2 Senate Bill 216 3 4 The committee substitute recognizes members of the Teacher's Retirement System (TRS) and the State and County Officers' and 5 Employees' Retirement System (SCOERS') as eligible participants in DROP. Additional language restricts DROP 6 participation to those active members of the FRS employed in regularly stablished positions. Members of the State Community 7 College System Optional Retirement Program, Senior Management Service Optional Annuity Program, and State University System 8 Optional Annuity Program are not eligible to participate in DROP. 9 The bill clarifies that a member who has purchased optional 10 service credit to establish normal retirement date may choose to include or exclude the credit when establishing DROP 11 eligibility. 12 The bill clarifies that a DROP participant may be simultaneously employed by other FRS employers and may change 13 employers provided the change takes place without a break in service. 14 The bill stipulates that Special Risk Members who have reached 15 retirement date and have a total accrued value exceeding 75% of average final compensation as of his or her effective date 16 of retirement may only participate in DROP for no more than 36 months. 17 On the effective date of participation of DROP, the optional 18 form of payment elected by the member will be fixed and if the member should die before completing DROP, then the current 19 beneficiary named to receive benefits under FRS shall also be the same to receive benefits payable under DROP. 20 The bill clarifies that the effective date of DROP and the 21 effective date of retirement are both the first day of the month following eligibility. 22 The bill deletes language requiring distribution of DROP 23 payment before the participant reached 70 years and 6 months of age. 24 The bill specifies that the employer is responsible and 25 financially liable for the employees timely termination from the DROP plan. 26 The bill allows elected officers, including constitutional 27 officers, who have reach normal retirement date during a term of office, to defer their election to participate in DROP 28 provided the election occurs within the first 12 months of the succeeding term. 29 30 31 10