Florida Senate - 2020 SB 1734 By Senator Taddeo 40-00453A-20 20201734__ 1 A bill to be entitled 2 An act relating to reemployment after retirement of 3 instructional personnel; amending s. 121.021, F.S.; 4 revising the definition of “termination” to conform to 5 changes made by the act; amending s. 121.091, F.S.; 6 authorizing former members of the Florida Retirement 7 System to be reemployed as instructional personnel 8 following 1 calendar month of retirement or 9 termination of participation in the Deferred 10 Retirement Option Program; specifying limitations and 11 restrictions; amending s. 121.591, F.S.; conforming a 12 cross-reference; requiring the State Board of 13 Administration and the Department of Management 14 Services to request a determination letter and private 15 letter ruling from the United States Internal Revenue 16 Service; providing for nonapplicability; providing a 17 declaration of important state interest; providing 18 effective dates. 19 20 WHEREAS, for many years, state law authorized retirees of 21 the Florida Retirement System to return to employment with a 22 participating employer after 1 calendar month had passed from 23 the retiree’s date of retirement, while suspending the 24 reemployed retiree’s receipt of retirement benefits for the 2nd 25 through the 12th calendar months immediately following 26 retirement, and 27 WHEREAS, in 2009, the Legislature enacted chapter 2009-209, 28 Laws of Florida, which made numerous changes to the laws 29 governing the Florida Retirement System, including increasing 30 the time that the retirees may not be reemployed with a 31 participating employer following retirement from 1 calendar 32 month to 6 calendar months, and 33 WHEREAS, the impact of this change has resulted in 34 hardships for some retirees because they are sometimes unable to 35 bridge the gap in maintaining an adequate income level between 36 retiring from the Florida Retirement System and later becoming 37 eligible for certain federal benefits, such as Medicare and 38 Social Security, and often have to seek other employment during 39 this interim period after retirement, and 40 WHEREAS, this act will provide a narrow exception to the 41 2009 law by allowing retirees to be reemployed as instructional 42 personnel with a covered employer 1 calendar month following 43 retirement, which will help to alleviate financial hardships 44 that have resulted for some retirees under the present 45 reemployment limitations, NOW, THEREFORE, 46 47 Be It Enacted by the Legislature of the State of Florida: 48 49 Section 1. Subsection (39) of section 121.021, Florida 50 Statutes, is amended to read: 51 121.021 Definitions.—The following words and phrases as 52 used in this chapter have the respective meanings set forth 53 unless a different meaning is plainly required by the context: 54 (39)(a) “Termination” occurs, except as provided in 55 paragraph (b), when a member ceases all employment relationships 56 with participating employers, however: 57 1. For retirements effective before July 1, 2010, if a 58 member is employed by any such employer within the next calendar 59 month, termination shall be deemed not to have occurred. A leave 60 of absence constitutes a continuation of the employment 61 relationship, except that a leave of absence without pay due to 62 disability may constitute termination if such member makes 63 application for and is approved for disability retirement in 64 accordance with s. 121.091(4). The department or state board may 65 require other evidence of termination as it deems necessary. 66 2. For retirements effective on or after July 1, 2010, if a 67 member is employed by any such employer within the next 6 68 calendar months, termination shall be deemed not to have 69 occurred except as provided under s. 121.091(9)(d)2. and (9)(g). 70 A leave of absence constitutes a continuation of the employment 71 relationship, except that a leave of absence without pay due to 72 disability may constitute termination if such member makes 73 application for and is approved for disability retirement in 74 accordance with s. 121.091(4). The department or state board may 75 require other evidence of termination as it deems necessary. 76 (b) “Termination” for a member electing to participate in 77 the Deferred Retirement Option Program occurs when the program 78 participant ceases all employment relationships with 79 participating employers in accordance with s. 121.091(13), 80 however: 81 1. For termination dates occurring before July 1, 2010, if 82 the member is employed by any such employer within the next 83 calendar month, termination will be deemed not to have occurred, 84 except as provided in s. 121.091(13)(b)4.c. A leave of absence 85 shall constitute a continuation of the employment relationship. 86 2. For termination dates occurring on or after July 1, 87 2010, if the member becomes employed by any such employer within 88 the next 6 calendar months, termination will be deemed not to 89 have occurred, except as provided in s. 121.091(9)(g) and 90 (13)(b)4.c.
s. 121.091(13)(b)4.c.A leave of absence constitutes 91 a continuation of the employment relationship. 92 (c) Effective July 1, 2011, “termination” for a member 93 receiving a refund of employee contributions occurs when a 94 member ceases all employment relationships with participating 95 employers for 3 calendar months. A leave of absence constitutes 96 a continuation of the employment relationship. 97 Section 2. Paragraphs (c) and (d) of subsection (9) of 98 section 121.091, Florida Statutes, are amended, and paragraph 99 (g) is added to that subsection, to read: 100 121.091 Benefits payable under the system.—Benefits may not 101 be paid under this section unless the member has terminated 102 employment as provided in s. 121.021(39)(a) or begun 103 participation in the Deferred Retirement Option Program as 104 provided in subsection (13), and a proper application has been 105 filed in the manner prescribed by the department. The department 106 may cancel an application for retirement benefits when the 107 member or beneficiary fails to timely provide the information 108 and documents required by this chapter and the department’s 109 rules. The department shall adopt rules establishing procedures 110 for application for retirement benefits and for the cancellation 111 of such application when the required information or documents 112 are not received. 113 (9) EMPLOYMENT AFTER RETIREMENT; LIMITATION.— 114 (c) Any person whose retirement is effective on or after 115 July 1, 2010, or whose participation in the Deferred Retirement 116 Option Program terminates on or after July 1, 2010, who is 117 retired under this chapter, except under the disability 118 retirement provisions of subsection (4) or as provided in s. 119 121.053, may be reemployed by an employer that participates in a 120 state-administered retirement system and receive retirement 121 benefits and compensation from that employer. However, a person 122 may not be reemployed by an employer participating in the 123 Florida Retirement System before meeting the definition of 124 termination in s. 121.021 and may not receive both a salary from 125 the employer and retirement benefits for 6 calendar months after 126 meeting the definition of termination, except as provided in 127 paragraph (f) or paragraph (g). However, a DROP participant 128 shall continue employment and receive a salary during the period 129 of participation in the Deferred Retirement Option Program, as 130 provided in subsection (13). 131 1. The reemployed retiree may not renew membership in the 132 Florida Retirement System, except as provided in s. 121.122. 133 2. The employer shall pay retirement contributions in an 134 amount equal to the unfunded actuarial liability portion of the 135 employer contribution that would be required for active members 136 of the Florida Retirement System in addition to the 137 contributions required by s. 121.76. 138 3. A retiree initially reemployed in violation of this 139 paragraph and an employer that employs or appoints such person 140 are jointly and severally liable for reimbursement of any 141 retirement benefits paid to the retirement trust fund from which 142 the benefits were paid, including the Florida Retirement System 143 Trust Fund and the Florida Retirement System Investment Plan 144 Trust Fund, as appropriate. The employer must have a written 145 statement from the employee that he or she is not retired from a 146 state-administered retirement system. Retirement benefits shall 147 remain suspended until repayment is made. Benefits suspended 148 beyond the end of the retiree’s 6-month reemployment limitation 149 period shall apply toward the repayment of benefits received in 150 violation of this paragraph. 151 (d) This subsection applies to retirees, as defined in s. 152 121.4501(2), of the Florida Retirement System Investment Plan, 153 subject to the following conditions: 154 1. Except as provided in subparagraph 2., a retiree may not 155 be reemployed with an employer participating in the Florida 156 Retirement System until such person has been retired for 6 157 calendar months. 158 2. A retiree may initially be reemployed as instructional 159 personnel with an employer participating in the Florida 160 Retirement System, as authorized pursuant to paragraph (g), on a 161 probationary contractual basis in accordance with ss. 1012.33(8) 162 and 1012.335(2) after he or she has been retired for 1 calendar 163 month. 164 3. A retiree employed in violation of this subsection and 165 an employer that employs or appoints such person are jointly and 166 severally liable for reimbursement of any benefits paid to the 167 retirement trust fund from which the benefits were paid. The 168 employer must have a written statement from the retiree that he 169 or she is not retired from a state-administered retirement 170 system. 171 (g) A former member of the Florida Retirement System may 172 initially be reemployed as instructional personnel, as defined 173 in s. 1012.01(2), on a probationary contractual basis in 174 accordance with ss. 1012.33(8) and 1012.335(2) by an employer 175 that participates in the Florida Retirement System after he or 176 she has been retired, or terminated from Deferred Retirement 177 Option Program participation, for 1 calendar month. Any former 178 member who is reemployed within 1 calendar month after 179 retirement or termination from the Deferred Retirement Option 180 Program voids his or her application for retirement benefits. 181 Retirement benefits for a former member who is reemployed 182 pursuant to this paragraph shall be suspended for the second 183 calendar month through the 12th calendar month immediately 184 subsequent to the date of retirement or termination from the 185 Deferred Retirement Option Program. The former member may not 186 renew membership in the Florida Retirement System, except as 187 provided in s. 121.122. 188 Section 3. Paragraph (a) of subsection (1) of section 189 121.591, Florida Statutes, is amended to read: 190 121.591 Payment of benefits.—Benefits may not be paid under 191 the Florida Retirement System Investment Plan unless the member 192 has terminated employment as provided in s. 121.021(39)(a) or is 193 deceased and a proper application has been filed as prescribed 194 by the state board or the department. Benefits, including 195 employee contributions, are not payable under the investment 196 plan for employee hardships, unforeseeable emergencies, loans, 197 medical expenses, educational expenses, purchase of a principal 198 residence, payments necessary to prevent eviction or foreclosure 199 on an employee’s principal residence, or any other reason except 200 a requested distribution for retirement, a mandatory de minimis 201 distribution authorized by the administrator, or a required 202 minimum distribution provided pursuant to the Internal Revenue 203 Code. The state board or department, as appropriate, may cancel 204 an application for retirement benefits if the member or 205 beneficiary fails to timely provide the information and 206 documents required by this chapter and the rules of the state 207 board and department. In accordance with their respective 208 responsibilities, the state board and the department shall adopt 209 rules establishing procedures for application for retirement 210 benefits and for the cancellation of such application if the 211 required information or documents are not received. The state 212 board and the department, as appropriate, are authorized to cash 213 out a de minimis account of a member who has been terminated 214 from Florida Retirement System covered employment for a minimum 215 of 6 calendar months. A de minimis account is an account 216 containing employer and employee contributions and accumulated 217 earnings of not more than $5,000 made under the provisions of 218 this chapter. Such cash-out must be a complete lump-sum 219 liquidation of the account balance, subject to the provisions of 220 the Internal Revenue Code, or a lump-sum direct rollover 221 distribution paid directly to the custodian of an eligible 222 retirement plan, as defined by the Internal Revenue Code, on 223 behalf of the member. Any nonvested accumulations and associated 224 service credit, including amounts transferred to the suspense 225 account of the Florida Retirement System Investment Plan Trust 226 Fund authorized under s. 121.4501(6), shall be forfeited upon 227 payment of any vested benefit to a member or beneficiary, except 228 for de minimis distributions or minimum required distributions 229 as provided under this section. If any financial instrument 230 issued for the payment of retirement benefits under this section 231 is not presented for payment within 180 days after the last day 232 of the month in which it was originally issued, the third-party 233 administrator or other duly authorized agent of the state board 234 shall cancel the instrument and credit the amount of the 235 instrument to the suspense account of the Florida Retirement 236 System Investment Plan Trust Fund authorized under s. 237 121.4501(6). Any amounts transferred to the suspense account are 238 payable upon a proper application, not to include earnings 239 thereon, as provided in this section, within 10 years after the 240 last day of the month in which the instrument was originally 241 issued, after which time such amounts and any earnings 242 attributable to employer contributions shall be forfeited. Any 243 forfeited amounts are assets of the trust fund and are not 244 subject to chapter 717. 245 (1) NORMAL BENEFITS.—Under the investment plan: 246 (a) Benefits in the form of vested accumulations as 247 described in s. 121.4501(6) are payable under this subsection in 248 accordance with the following terms and conditions: 249 1. Benefits are payable only to a member, an alternate 250 payee of a qualified domestic relations order, or a beneficiary. 251 2. Benefits shall be paid by the third-party administrator 252 or designated approved providers in accordance with the law, the 253 contracts, and any applicable board rule or policy. 254 3. The member must be terminated from all employment with 255 all Florida Retirement System employers, as provided in s. 256 121.021(39). 257 4. Benefit payments may not be made until the member has 258 been terminated for 3 calendar months, except that the state 259 board may authorize by rule for the distribution of up to 10 260 percent of the member’s account after being terminated for 1 261 calendar month if the member has reached the normal retirement 262 date as defined in s. 121.021. 263 5. If a member or former member of the Florida Retirement 264 System receives an invalid distribution, such person must either 265 repay the full amount within 90 days after receipt of final 266 notification by the state board or the third-party administrator 267 that the distribution was invalid, or, in lieu of repayment, the 268 member must terminate employment from all participating 269 employers. If such person fails to repay the full invalid 270 distribution within 90 days after receipt of final notification, 271 the person may be deemed retired from the investment plan by the 272 state board and is subject to s. 121.122. If such person is 273 deemed retired, any joint and several liability set out in s. 274 121.091(9)(d)3. s. 121.091(9)(d)2.is void, and the state board, 275 the department, or the employing agency is not liable for gains 276 on payroll contributions that have not been deposited to the 277 person’s account in the investment plan, pending resolution of 278 the invalid distribution. The member or former member who has 279 been deemed retired or who has been determined by the state 280 board to have taken an invalid distribution may appeal the 281 agency decision through the complaint process as provided under 282 s. 121.4501(9)(g)3. As used in this subparagraph, the term 283 “invalid distribution” means any distribution from an account in 284 the investment plan which is taken in violation of this section, 285 s. 121.091(9), or s. 121.4501. 286 Section 4. (1) Effective upon this act becoming a law, the 287 State Board of Administration and the Department of Management 288 Services shall request, as soon as practicable, a determination 289 letter and private letter ruling from the United States Internal 290 Revenue Service. If the United States Internal Revenue Service 291 refuses to act upon a request for a private letter ruling, then 292 a legal opinion from a qualified tax attorney or firm may be 293 substituted for the private letter ruling. 294 (2) If the state board or the department receives 295 notification from the United States Internal Revenue Service 296 that this act or any portion of this act will cause the Florida 297 Retirement System, or a portion thereof, to be disqualified for 298 tax purposes under the Internal Revenue Code, then the portion 299 that will cause the disqualification does not apply. Upon 300 receipt of such notice, the state board and the department shall 301 notify the presiding officers of the Legislature. 302 Section 5. The Legislature finds that a proper and 303 legitimate state purpose is served when employees and retirees 304 of the state and its political subdivisions, as well as the 305 dependents, survivors, and beneficiaries of such employees and 306 retirees, are extended the basic protections afforded by 307 governmental retirement systems that provide fair and adequate 308 benefits and that are managed, administered, and funded in an 309 actuarially sound manner as required by s. 14, Article X of the 310 State Constitution and part VII of chapter 112, Florida 311 Statutes. Therefore, the Legislature determines and declares 312 that this act fulfills an important state interest. 313 Section 6. Except as otherwise expressly provided in this 314 act and except for this section, which shall take effect upon 315 this act becoming a law, this act shall take effect January 1, 316 2021.