House Bill 3649

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    Florida House of Representatives - 1998                HB 3649

        By Representatives Fuller, King, Wise, Thrasher, Arnall,
    Hill and Crady





  1                      A bill to be entitled

  2         An act relating to the City of Jacksonville

  3         Beach, Duval County; amending chapter 27643,

  4         Laws of Florida, 1951, as amended, the

  5         Employees' Retirement System of the City of

  6         Jacksonville Beach; specifying that benefits

  7         may be payable to a participant's Deferred

  8         Retirement Option Program; specifying that the

  9         option selection for payment of benefits shall

10         be final at the time a benefit payment is

11         assigned to the Deferred Retirement Option

12         Program; specifying death benefits applicable

13         to Deferred Retirement Option Program

14         participants; providing overview of the

15         Deferred Retirement Option Program; providing

16         eligibility criteria; providing for procedures

17         for election of participation; providing for

18         benefits payable; providing for death benefits;

19         providing limitations on employment after

20         participation; specifying contribution rates;

21         specifying that Deferred Retirement Option

22         Program participation does not exempt such

23         participants from the forfeiture of benefits

24         under the provisions of s. 112.3173, F.S.;

25         providing for administration of the program;

26         providing an effective date.

27

28  Be It Enacted by the Legislature of the State of Florida:

29

30         Section 1.  Subsection (5) is added to section 9 of

31  chapter 27643, Laws of Florida, 1951, as amended, to read:

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  1         Section 9.  Amount of a pension.--

  2         (5)  Deferred retirement option program.--In general,

  3  and subject to the provisions of this section, the Deferred

  4  Retirement Option Program, hereinafter referred to as the

  5  DROP, is a program under which an eligible member of the

  6  retirement system may elect to participate, deferring receipt

  7  of retirement benefits while continuing employment with the

  8  city. The deferred monthly benefits shall accrue in the

  9  reserve for pension payments fund on behalf of the

10  participant, plus interest compounded monthly, for the

11  specified period of the DROP participation, as provided in

12  paragraph (c). Upon termination of employment, the participant

13  shall receive the total DROP benefits and begin to receive the

14  previously determined normal retirement benefits. Employment

15  in the DROP does not guarantee employment for the specified

16  period of DROP.

17         (a)  Eligibility of member to participate in the

18  DROP.--All retirement system members are eligible to elect

19  participation in the DROP provided that election to

20  participate is made on or after the member first reaches

21  normal retirement date or age. The member shall advise the

22  city and the retirement system in writing of the date on which

23  the DROP shall begin.

24         (b)  Participation in the DROP.--

25         1.  An eligible member may elect to participate in the

26  DROP for a period not to exceed a maximum of 36 consecutive

27  months. Any member who has exceeded the 36-month limitation

28  shall not be eligible to participate in the DROP.

29         2.  Upon deciding to participate in the DROP, the

30  member shall submit on forms required by the retirement

31  system:

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  1         a.  A written election to participate in the DROP.

  2         b.  Selection of the DROP participation and termination

  3  dates, which satisfy the limitations stated in paragraph (a)

  4  and subparagraph 1. Such termination date shall be in a

  5  binding letter of resignation with the city, establishing a

  6  deferred termination date. The member may terminate before the

  7  termination date within the limitations of subparagraph 1.,

  8  but only with advance written notice to the city.

  9         c.  A properly completed DROP application for service

10  retirement as provided in this section.

11         d.  A written election of form of pension payment,

12  pursuant to section 10.

13         e.  Any other information required by the retirement

14  system.

15         3.  The DROP participant shall be a retirant under the

16  retirement system for all purposes except that payment of

17  benefits to the retirant shall be deferred until separation

18  from city employment.

19         4.  A reemployed retirant with renewed membership is

20  not eligible for DROP participation.

21         (c)  Benefits payable under the DROP.--

22         1.  Effective with the date of DROP participation, the

23  member's initial normal monthly benefit, including credited

24  service and final average compensation, shall be fixed. Such

25  retirement benefit, any annual cost-of-living adjustments

26  which may be provided, and interest shall accrue monthly in

27  the retirement system's reserve for pension payments. Such

28  interest shall accrue at an annual rate set quarterly by the

29  board of trustees, which shall not be less than 3.5 percent

30  compounded monthly, on the prior month's accumulated ending

31  balance, up to the month of termination or death. An annual

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  1  administration fee of 0.75 percent shall be deducted from each

  2  DROP participant's accrued benefits, prorated monthly.

  3         2.  The effective date of retirement of a DROP

  4  participant shall be the first day of the month selected by

  5  the member to begin participation in the DROP.

  6         3.  Normal retirement benefits and interest thereon

  7  shall continue to accrue in the DROP until the established

  8  termination date of the DROP, or until the participant

  9  terminates employment or dies prior to such date. Although

10  individual DROP accounts shall not be established, a separate

11  accounting of each participant's accrued benefits under the

12  DROP shall be calculated and provided to participants

13  annually.

14         4.  At the conclusion of the participant's DROP, the

15  retirement system shall distribute the participant's total

16  accumulated DROP benefits, subject to the following

17  provisions:

18         a.  The retirement system shall receive verification

19  from the city that the participant has terminated employment.

20         b.  The terminated DROP participant or if deceased,

21  such participant's named beneficiary, shall elect on forms

22  provided by the retirement system to receive payment of the

23  DROP benefits in accordance with one of the options listed

24  below. For a participant or beneficiary who fails to elect a

25  method of payment within 60 days of termination of the DROP,

26  the retirement system will pay a lump sum as provided in (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.

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  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 Section

  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 Section 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 Section 402(c)(8)(B) of the

16  Internal Revenue Code. However, in the case of an eligible

17  rollover 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 Section 402(c)(9) of the Internal Revenue Code.

21  The 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 city

29  employment at the expiration of the 36-month maximum DROP

30  participation period, the member shall be deemed not to be

31  retired, the DROP election shall be null and void, and the

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  1  member shall have no accumulated DROP benefits. Retirement

  2  system membership shall be reestablished retroactively to the

  3  date of the commencement of the DROP, and the member shall be

  4  required to pay to the retirement system the member

  5  contributions at the rate set forth in section 20, and the

  6  city contributions, as established pursuant to section 32,

  7  required 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, Florida Statutes, and

15  federal income tax levies.

16         6.  DROP participants shall not be eligible for

17  disability retirement benefits as provided in sections 15, 16,

18  17, and 18, and the participant's beneficiaries and survivors

19  shall not be eligible for the automatic survivor pension,

20  death in the line of duty pension, or survivor pension as

21  provided respectively in sections 12, 13, and 14.

22         (d)  Death benefits under the DROP.--

23         1.  Upon the death of a DROP participant, the named

24  beneficiary shall be entitled to apply for and receive the

25  accrued benefits in the DROP as provided in subparagraph

26  (c)4.b.

27         2.  The normal retirement benefit accrued to the DROP

28  during the month of a participant's death shall be the final

29  monthly benefit credited for such DROP participant.

30         3.  Eligibility to participate in the DROP terminates

31  upon death of the participant. If the participant dies on or

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  1  after the effective date of enrollment in the DROP, but prior

  2  to the first monthly benefit being credited to the DROP,

  3  retirement system benefits shall be paid as though the DROP

  4  election had not been made.

  5         (e)  Contributions.--

  6         1.  Member contributions shall not be made, due, or

  7  payable during a participant's DROP participation, section 20

  8  hereof notwithstanding.

  9         2.  The city shall not pick up member contributions or

10  a DROP participant during a participant's DROP participation,

11  section 21 hereof notwithstanding, but instead shall be paid

12  to the DROP participant as wages or salary.

13         (f)  Forfeiture of retirement benefits.--Nothing in

14  this section shall be construed to remove DROP participants

15  from the scope of s. 8(d), Art. II of the State Constitution,

16  and s. 112.3173, Florida Statutes. DROP participants who

17  commit a specified felony offense while employed will be

18  subject to forfeiture of all retirement benefits, including

19  DROP benefits, pursuant to those provisions of law.

20         (g)  Administration of program.--The board of trustees

21  shall make such rules as are necessary for the effective and

22  efficient administration of this subsection. The retirement

23  system shall not be required to advise members of the federal

24  tax consequences of an election related to the DROP but may

25  advise members to seek independent advice.

26         Section 2.  This act shall take effect upon becoming a

27  law.

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