Florida Senate - 2008 SB 2344
By Senator Rich
34-02997-08 20082344__
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A bill to be entitled
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An act relating to the Florida Retirement System DROP
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Program; amending s. 121.091, F.S.; including among
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eligible participants pre-kindergarten instructional
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personnel; providing an effective date.
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Be It Enacted by the Legislature of the State of Florida:
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Section 1. Subsection (13) of section 121.091, Florida
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Statutes, is amended to read:
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121.091 Benefits payable under the system.--Benefits may
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not be paid under this section unless the member has terminated
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employment as provided in s. 121.021(39)(a) or begun
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participation in the Deferred Retirement Option Program as
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provided in subsection (13), and a proper application has been
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filed in the manner prescribed by the department. The department
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may cancel an application for retirement benefits when the member
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or beneficiary fails to timely provide the information and
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documents required by this chapter and the department's rules.
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The department shall adopt rules establishing procedures for
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application for retirement benefits and for the cancellation of
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such application when the required information or documents are
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not received.
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(13) DEFERRED RETIREMENT OPTION PROGRAM.--In general, and
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subject to the provisions of this section, the Deferred
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Retirement Option Program, hereinafter referred to as the DROP,
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is a program under which an eligible member of the Florida
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Retirement System may elect to participate, deferring receipt of
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retirement benefits while continuing employment with his or her
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Florida Retirement System employer. The deferred monthly benefits
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shall accrue in the System Trust Fund on behalf of the
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participant, plus interest compounded monthly, for the specified
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period of the DROP participation, as provided in paragraph (c).
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Upon termination of employment, the participant shall receive the
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total DROP benefits and begin to receive the previously
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determined normal retirement benefits. Participation in the DROP
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does not guarantee employment for the specified period of DROP.
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Participation in the DROP by an eligible member beyond the
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initial 60-month period as authorized in this subsection shall be
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on an annual contractual basis for all participants.
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(a) Eligibility of member to participate in the DROP.--All
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active Florida Retirement System members in a regularly
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established position, and all active members of either the
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Teachers' Retirement System established in chapter 238 or the
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State and County Officers' and Employees' Retirement System
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established in chapter 122 which systems are consolidated within
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the Florida Retirement System under s. 121.011, are eligible to
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elect participation in the DROP provided that:
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1. The member is not a renewed member of the Florida
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Retirement System under s. 121.122, or a member of the State
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Community College System Optional Retirement Program under s.
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121.051, the Senior Management Service Optional Annuity Program
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under s. 121.055, or the optional retirement program for the
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State University System under s. 121.35.
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2. Except as provided in subparagraph 6., election to
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participate is made within 12 months immediately following the
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date on which the member first reaches normal retirement date,
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or, for a member who reaches normal retirement date based on
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service before he or she reaches age 62, or age 55 for Special
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Risk Class members, election to participate may be deferred to
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the 12 months immediately following the date the member attains
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57, or age 52 for Special Risk Class members. For a member who
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first reached normal retirement date or the deferred eligibility
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date described above prior to the effective date of this section,
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election to participate shall be made within 12 months after the
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effective date of this section. A member who fails to make an
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election within such 12-month limitation period shall forfeit all
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rights to participate in the DROP. The member shall advise his or
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her employer and the division in writing of the date on which the
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DROP shall begin. Such beginning date may be subsequent to the
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12-month election period, but must be within the 60-month or,
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with respect to members who are instructional personnel employed
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by the Florida School for the Deaf and the Blind and who have
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received authorization by the Board of Trustees of the Florida
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School for the Deaf and the Blind to participate in the DROP
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beyond 60 months, or who are instructional personnel as defined
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in s. 1012.01(2)(a)-(d) in grades pre-K through 12 K-12 and who
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have received authorization by the district school superintendent
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to participate in the DROP beyond 60 months, the 96-month
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limitation period as provided in subparagraph (b)1. When
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establishing eligibility of the member to participate in the DROP
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for the 60-month or, with respect to members who are
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instructional personnel employed by the Florida School for the
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Deaf and the Blind and who have received authorization by the
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Board of Trustees of the Florida School for the Deaf and the
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Blind to participate in the DROP beyond 60 months, or who are
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instructional personnel as defined in s. 1012.01(2)(a)-(d) in
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grades pre-K through 12 K-12 and who have received authorization
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by the district school superintendent to participate in the DROP
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beyond 60 months, the 96-month maximum participation period, the
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member may elect to include or exclude any optional service
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credit purchased by the member from the total service used to
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establish the normal retirement date. A member with dual normal
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retirement dates shall be eligible to elect to participate in
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DROP within 12 months after attaining normal retirement date in
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either class.
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3. The employer of a member electing to participate in the
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DROP, or employers if dually employed, shall acknowledge in
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writing to the division the date the member's participation in
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the DROP begins and the date the member's employment and DROP
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participation will terminate.
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4. Simultaneous employment of a participant by additional
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Florida Retirement System employers subsequent to the
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commencement of participation in the DROP shall be permissible
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provided such employers acknowledge in writing a DROP termination
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date no later than the participant's existing termination date or
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the 60-month limitation period as provided in subparagraph (b)1.
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5. A DROP participant may change employers while
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participating in the DROP, subject to the following:
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a. A change of employment must take place without a break
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in service so that the member receives salary for each month of
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continuous DROP participation. If a member receives no salary
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during a month, DROP participation shall cease unless the
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employer verifies a continuation of the employment relationship
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for such participant pursuant to s. 121.021(39)(b).
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b. Such participant and new employer shall notify the
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division on forms required by the division as to the identity of
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the new employer.
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c. The new employer shall acknowledge, in writing, the
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participant's DROP termination date, which may be extended but
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not beyond the original 60-month or, with respect to members who
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are instructional personnel employed by the Florida School for
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the Deaf and the Blind and who have received authorization by the
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Board of Trustees of the Florida School for the Deaf and the
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Blind to participate in the DROP beyond 60 months, or who are
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instructional personnel as defined in s. 1012.01(2)(a)-(d) in
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grades pre-K through 12 K-12 and who have received authorization
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by the district school superintendent to participate in the DROP
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beyond 60 months, the 96-month period provided in subparagraph
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(b)1., shall acknowledge liability for any additional retirement
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contributions and interest required if the participant fails to
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timely terminate employment, and shall be subject to the
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adjustment required in sub-subparagraph (c)5.d.
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6. Effective July 1, 2001, for instructional personnel as
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defined in s. 1012.01(2), election to participate in the DROP
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shall be made at any time following the date on which the member
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first reaches normal retirement date. The member shall advise his
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or her employer and the division in writing of the date on which
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the Deferred Retirement Option Program shall begin. When
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establishing eligibility of the member to participate in the DROP
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for the 60-month or, with respect to members who are
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instructional personnel employed by the Florida School for the
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Deaf and the Blind and who have received authorization by the
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Board of Trustees of the Florida School for the Deaf and the
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Blind to participate in the DROP beyond 60 months, or who are
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instructional personnel as defined in s. 1012.01(2)(a)-(d) in
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grades pre-K through 12 K-12 and who have received authorization
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by the district school superintendent to participate in the DROP
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beyond 60 months, the 96-month maximum participation period, as
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provided in subparagraph (b)1., the member may elect to include
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or exclude any optional service credit purchased by the member
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from the total service used to establish the normal retirement
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date. A member with dual normal retirement dates shall be
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eligible to elect to participate in either class.
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(b) Participation in the DROP.--
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1. An eligible member may elect to participate in the DROP
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for a period not to exceed a maximum of 60 calendar months or,
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with respect to members who are instructional personnel employed
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by the Florida School for the Deaf and the Blind and who have
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received authorization by the Board of Trustees of the Florida
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School for the Deaf and the Blind to participate in the DROP
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beyond 60 months, or who are instructional personnel as defined
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in s. 1012.01(2)(a)-(d) in grades pre-K through 12 K-12 and who
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have received authorization by the district school superintendent
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to participate in the DROP beyond 60 calendar months, 96 calendar
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months immediately following the date on which the member first
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reaches his or her normal retirement date or the date to which he
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or she is eligible to defer his or her election to participate as
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provided in subparagraph (a)2. However, a member who has reached
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normal retirement date prior to the effective date of the DROP
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shall be eligible to participate in the DROP for a period of time
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not to exceed 60 calendar months or, with respect to members who
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are instructional personnel employed by the Florida School for
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the Deaf and the Blind and who have received authorization by the
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Board of Trustees of the Florida School for the Deaf and the
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Blind to participate in the DROP beyond 60 months, or who are
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instructional personnel as defined in s. 1012.01(2)(a)-(d) in
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grades pre-K through 12 K-12 and who have received authorization
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by the district school superintendent to participate in the DROP
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beyond 60 calendar months, 96 calendar months immediately
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following the effective date of the DROP, except a member of the
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Special Risk Class who has reached normal retirement date prior
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to the effective date of the DROP and whose total accrued value
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exceeds 75 percent of average final compensation as of his or her
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effective date of retirement shall be eligible to participate in
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the DROP for no more than 36 calendar months immediately
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following the effective date of the DROP.
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2. Upon deciding to participate in the DROP, the member
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shall submit, on forms required by the division:
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a. A written election to participate in the DROP;
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b. Selection of the DROP participation and termination
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dates, which satisfy the limitations stated in paragraph (a) and
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subparagraph 1. Such termination date shall be in a binding
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letter of resignation with the employer, establishing a deferred
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termination date. The member may change the termination date
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within the limitations of subparagraph 1., but only with the
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written approval of his or her employer;
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c. A properly completed DROP application for service
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retirement as provided in this section; and
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d. Any other information required by the division.
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3. The DROP participant shall be a retiree under the
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Florida Retirement System for all purposes, except for paragraph
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121.122. However, participation in the DROP does not alter the
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participant's employment status and such employee shall not be
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deemed retired from employment until his or her deferred
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resignation is effective and termination occurs as provided in s.
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121.021(39).
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4. Elected officers shall be eligible to participate in the
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DROP subject to the following:
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a. An elected officer who reaches normal retirement date
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during a term of office may defer the election to participate in
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the DROP until the next succeeding term in that office. Such
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elected officer who exercises this option may participate in the
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DROP for up to 60 calendar months or a period of no longer than
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such succeeding term of office, whichever is less.
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b. An elected or a nonelected participant may run for a
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term of office while participating in DROP and, if elected,
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extend the DROP termination date accordingly, except, however, if
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such additional term of office exceeds the 60-month limitation
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established in subparagraph 1., and the officer does not resign
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from office within such 60-month limitation, the retirement and
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the participant's DROP shall be null and void as provided in sub-
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subparagraph (c)5.d.
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c. An elected officer who is dually employed and elects to
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participate in DROP shall be required to satisfy the definition
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of termination within the 60-month or, with respect to members
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who are instructional personnel employed by the Florida School
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for the Deaf and the Blind and who have received authorization by
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the Board of Trustees of the Florida School for the Deaf and the
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Blind to participate in the DROP beyond 60 months, or who are
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instructional personnel as defined in s. 1012.01(2)(a)-(d) in
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grades pre-K through 12 K-12 and who have received authorization
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by the district school superintendent to participate in the DROP
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beyond 60 months, the 96-month limitation period as provided in
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subparagraph 1. for the nonelected position and may continue
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employment as an elected officer as provided in s. 121.053. The
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elected officer will be enrolled as a renewed member in the
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Elected Officers' Class or the Regular Class, as provided in ss.
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termination of employment in the nonelected position and
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termination of DROP. Distribution of the DROP benefits shall be
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made as provided in paragraph (c).
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(c) Benefits payable under the DROP.--
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1. Effective with the date of DROP participation, the
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member's initial normal monthly benefit, including creditable
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service, optional form of payment, and average final
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compensation, and the effective date of retirement shall be
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fixed. The beneficiary established under the Florida Retirement
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System shall be the beneficiary eligible to receive any DROP
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benefits payable if the DROP participant dies prior to the
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completion of the period of DROP participation. In the event a
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joint annuitant predeceases the member, the member may name a
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beneficiary to receive accumulated DROP benefits payable. Such
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retirement benefit, the annual cost of living adjustments
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provided in s. 121.101, and interest shall accrue monthly in the
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System Trust Fund. Such interest shall accrue at an effective
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annual rate of 6.5 percent compounded monthly, on the prior
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month's accumulated ending balance, up to the month of
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termination or death.
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2. Each employee who elects to participate in the DROP
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shall be allowed to elect to receive a lump-sum payment for
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accrued annual leave earned in accordance with agency policy upon
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beginning participation in the DROP. Such accumulated leave
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payment certified to the division upon commencement of DROP shall
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be included in the calculation of the member's average final
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compensation. The employee electing such lump-sum payment upon
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beginning participation in DROP will not be eligible to receive a
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second lump-sum payment upon termination, except to the extent
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the employee has earned additional annual leave which combined
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with the original payment does not exceed the maximum lump-sum
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payment allowed by the employing agency's policy or rules. Such
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early lump-sum payment shall be based on the hourly wage of the
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employee at the time he or she begins participation in the DROP.
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If the member elects to wait and receive such lump-sum payment
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upon termination of DROP and termination of employment with the
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employer, any accumulated leave payment made at that time cannot
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be included in the member's retirement benefit, which was
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determined and fixed by law when the employee elected to
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participate in the DROP.
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3. The effective date of DROP participation and the
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effective date of retirement of a DROP participant shall be the
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first day of the month selected by the member to begin
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participation in the DROP, provided such date is properly
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established, with the written confirmation of the employer, and
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the approval of the division, on forms required by the division.
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4. Normal retirement benefits and interest thereon shall
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continue to accrue in the DROP until the established termination
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date of the DROP, or until the participant terminates employment
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or dies prior to such date. Although individual DROP accounts
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shall not be established, a separate accounting of each
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participant's accrued benefits under the DROP shall be calculated
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and provided to participants.
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5. At the conclusion of the participant's DROP, the
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division shall distribute the participant's total accumulated
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DROP benefits, subject to the following provisions:
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a. The division shall receive verification by the
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participant's employer or employers that such participant has
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terminated employment as provided in s. 121.021(39)(b).
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b. The terminated DROP participant or, if deceased, such
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participant's named beneficiary, shall elect on forms provided by
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the division to receive payment of the DROP benefits in
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accordance with one of the options listed below. For a
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participant or beneficiary who fails to elect a method of payment
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within 60 days of termination of the DROP, the division will pay
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a lump sum as provided in sub-sub-subparagraph (I).
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(I) Lump sum.--All accrued DROP benefits, plus interest,
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less withholding taxes remitted to the Internal Revenue Service,
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shall be paid to the DROP participant or surviving beneficiary.
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(II) Direct rollover.--All accrued DROP benefits, plus
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interest, shall be paid from the DROP directly to the custodian
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of an eligible retirement plan as defined in s. 402(c)(8)(B) of
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the Internal Revenue Code. However, in the case of an eligible
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rollover distribution to the surviving spouse of a deceased
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participant, an eligible retirement plan is an individual
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retirement account or an individual retirement annuity as
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described in s. 402(c)(9) of the Internal Revenue Code.
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(III) Partial lump sum.--A portion of the accrued DROP
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benefits shall be paid to the DROP participant or surviving
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spouse, less withholding taxes remitted to the Internal Revenue
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Service, and the remaining DROP benefits shall be transferred
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directly to the custodian of an eligible retirement plan as
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defined in s. 402(c)(8)(B) of the Internal Revenue Code. However,
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in the case of an eligible rollover distribution to the surviving
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spouse of a deceased participant, an eligible retirement plan is
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an individual retirement account or an individual retirement
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annuity as described in s. 402(c)(9) of the Internal Revenue
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Code. The proportions shall be specified by the DROP participant
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or surviving beneficiary.
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c. The form of payment selected by the DROP participant or
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surviving beneficiary complies with the minimum distribution
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requirements of the Internal Revenue Code.
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d. A DROP participant who fails to terminate employment as
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defined in s. 121.021(39)(b) shall be deemed not to be retired,
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and the DROP election shall be null and void. Florida Retirement
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System membership shall be reestablished retroactively to the
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date of the commencement of the DROP, and each employer with whom
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the participant continues employment shall be required to pay to
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the System Trust Fund the difference between the DROP
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contributions paid in paragraph (i) and the contributions
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required for the applicable Florida Retirement System class of
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membership during the period the member participated in the DROP,
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plus 6.5 percent interest compounded annually.
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6. The accrued benefits of any DROP participant, and any
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contributions accumulated under such program, shall not be
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subject to assignment, execution, attachment, or to any legal
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process whatsoever, except for qualified domestic relations
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orders by a court of competent jurisdiction, income deduction
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orders as provided in s. 61.1301, and federal income tax levies.
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7. DROP participants shall not be eligible for disability
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retirement benefits as provided in subsection (4).
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(d) Death benefits under the DROP.--
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1. Upon the death of a DROP participant, the named
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beneficiary shall be entitled to apply for and receive the
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accrued benefits in the DROP as provided in sub-subparagraph
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(c)5.b.
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2. The normal retirement benefit accrued to the DROP during
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the month of a participant's death shall be the final monthly
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benefit credited for such DROP participant.
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3. Eligibility to participate in the DROP terminates upon
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death of the participant. If the participant dies on or after the
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effective date of enrollment in the DROP, but prior to the first
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monthly benefit being credited to the DROP, Florida Retirement
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System benefits shall be paid in accordance with subparagraph
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(7)(c)1. or subparagraph 2.
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4. A DROP participants' survivors shall not be eligible to
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receive Florida Retirement System death benefits as provided in
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paragraph (7)(d).
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(e) Cost-of-living adjustment.--On each July 1, the
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participants' normal retirement benefit shall be increased as
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provided in s. 121.101.
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(f) Retiree health insurance subsidy.--DROP participants
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are not eligible to apply for the retiree health insurance
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subsidy payments as provided in s. 112.363 until such
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participants have terminated employment and participation in the
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DROP.
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(g) Renewed membership.--DROP participants shall not be
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eligible for renewed membership in the Florida Retirement System
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effectuated as provided in s. 121.021(39)(b).
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(h) Employment limitation after DROP participation.--Upon
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satisfying the definition of termination of employment as
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provided in s. 121.021(39)(b), DROP participants shall be subject
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to such reemployment limitations as other retirees. Reemployment
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restrictions applicable to retirees as provided in subsection (9)
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shall not apply to DROP participants until their employment and
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participation in the DROP are terminated.
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(i) Contributions.--
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1. All employers paying the salary of a DROP participant
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filling a regularly established position shall contribute 8.0
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percent of such participant's gross compensation for the period
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of July 1, 2002, through June 30, 2003, and 11.56 percent of such
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compensation thereafter, which shall constitute the entire
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employer DROP contribution with respect to such participant. Such
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contributions, payable to the System Trust Fund in the same
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manner as required in s. 121.071, shall be made as appropriate
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for each pay period and are in addition to contributions required
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for social security and the Retiree Health Insurance Subsidy
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Trust Fund. Such employer, social security, and health insurance
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subsidy contributions are not included in the DROP.
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2. The employer shall, in addition to subparagraph 1., also
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withhold one-half of the entire social security contribution
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required for the participant. Contributions for social security
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by each participant and each employer, in the amount required for
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social security coverage as now or hereafter provided by the
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federal Social Security Act, shall be in addition to
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contributions specified in subparagraph 1.
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3. All employers paying the salary of a DROP participant
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filling a regularly established position shall contribute the
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percent of such participant's gross compensation required in s.
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121.071(4), which shall constitute the employer's health
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insurance subsidy contribution with respect to such participant.
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Such contributions shall be deposited by the administrator in the
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Retiree Health Insurance Subsidy Trust Fund.
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(j) Forfeiture of retirement benefits.--Nothing in this
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section shall be construed to remove DROP participants from the
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scope of s. 8(d), Art. II of the State Constitution, s. 112.3173,
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and paragraph (5)(f). DROP participants who commit a specified
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felony offense while employed will be subject to forfeiture of
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all retirement benefits, including DROP benefits, pursuant to
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those provisions of law.
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(k) Administration of program.--The division shall make
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such rules as are necessary for the effective and efficient
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administration of this subsection. The division shall not be
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required to advise members of the federal tax consequences of an
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election related to the DROP but may advise members to seek
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independent advice.
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Section 2. This act shall take effect July 1, 2008.
CODING: Words stricken are deletions; words underlined are additions.