19-11.002: Beneficiary Designation for FRS Investment Plan
19-11.004: Excessive Trading in the FRS Investment Plan
19-11.006: Enrollment Procedures for New Hires
19-11.007: Second Election Enrollment Procedures for the FRS Retirement Programs
19-11.008: Forfeitures
19-11.009: Reemployment with an FRS-covered Employer after Retirement
PURPOSE AND EFFECT: To amend existing rules to add new policies, to change policies, and to address new legislation.
SUMMARY: Rule 19-11.002, F.A.C., regarding beneficiaries: amending to provide procedures for Alternate Payee to name a beneficiary; to provide procedures for a distribution when there is no social security number; and to provide for a distribution if there is no Estate Identification Number; Rule 19-11.004, F.A.C., regarding excessive trading is amended to provide notification that some mutual fund managers may ask about trading policies and may impose restrictions. Rule 19-11.006, F.A.C., regarding new hires; amending the grace period subsection to provide a more streamlined approach for a member's asking for a reversal of an election. Rule 19-11.007, F.A.C., regarding second elections: clarifying that a member may only make a second election while he is earing service credit; stating that the second election can be done online; and streamling procedures when an election is made in error. Rule 19-11.008, F.A.C., regarding forfeitures: clarifying the use of funds in the IP Forfeiture Account. Rule 19-11.009, F.A.C., regarding reemployment after retirement: clarifying when a retired employee may or may not return to work for an FRS-covered employer; providing liability for an employer who knowingly employs an employee who is not entitled to return to work.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The Board has prepared a statement and found the cost to be minimal.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 121.4501(3)(c)4., (8)(a) FS.
LAW IMPLEMENTED: 121.029(29),(39), 121.051, 121.055, 121.35, 121.091(5),(8), (9)(b),(c), 121.4501(2),(3),(4),(5),(6), (8), (13),(14), (15), (20), 121.591(1)(a)4.,(3), 121.73, 121.74, 121.78, 215.44(8)(b), 744.301, 1012.875(3) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: Tuesday, September 2, 2008, 2:00 p.m. – 4:00 p.m.
PLACE: Emerald Coast Room, Hermitage Centre, 1801 Hermitage Blvd., Tallahassee, Florida 32308
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Cindy Morea, Office of Defined Contribution Programs, State Board of Administration, 1801 Hermitage Blvd., Tallahassee, Florida 32308: (850)413-1491; or cindy.morea@sbafla.com. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Cindy Gokel, Assistant General Counsel, SBA: (850)413-1199 or cindy.gokel@sbafla.com
THE FULL TEXT OF THE PROPOSED RULE IS:
19-11.002 Beneficiary Designation for FRS Investment Plan.
(1) through (5) No change.
(6)(a) An Alternate Payee may name a beneficiary to receive the benefits which may be payable in the event of the Alternate Payee’s death at any time, as outlined in paragraphs (4)(a) through (f) above, once the Alternate Payee’s account has been established by the FRS Investment Plan Administrator.
(b) If the Alternate Payee does not name a beneficiary(ies), then the Alternate Payee’s beneficiary(ies) will be those as described in Section 121.4501(20)(a), F.S. which are: first, the spouse, if he or she is still living after the member’s death; second, living children, if the spouse is dead; third, the member’s father or mother, if living; fourth, to the member’s estate. This means that the spouse will receive the member’s account balance if living; but if not, the children will receive the account balance, if living; but if not, the father or mother will receive the account balance, and if none of the people mentioned in this paragraph are still living, the account balance will be paid to the Alternate Payee’s estate.
(7)(a) If the deceased member has named a beneficiary but has not provided the beneficiary’s social security number or address, or if the social security number is incorrect, then, after at least three unsuccessful attempts by the SBA or the FRS Investment Plan Administrator to contact the beneficiary, the FRS Investment Plan Administrator will issue a check payable to the beneficiary and hold the check for 180 days, at which time the check will be considered stale-dated.
(b) The FRS Investment Plan Administrator will, at the time of distribution, make a reasonable effort to obtain the beneficiary’s Taxpayer Identification Number, using available search tools, including the internet, Nexis Lexis Accurint, the Internal Revenue Service, and the Social Security Administration. Additionally, by calendar year-end, in the year the distribution occurred, the FRS Investment Plan Administrator will attempt to locate and obtain the social security number of the beneficiary, and, at least one time in the calendar year following the distribution, to locate the beneficiary. The Investment Plan Administrator will document for the Internal Revenue Service the efforts taken to locate the beneficiary’s Taxpayer Identification Number.
(c) Once 180 days have elapsed from the date the check was issued, the funds shall be transferred to the Stale-dated Check Account, indicating the name of the deceased member and the name of the beneficiary. The amount will be held in the FRS Investment Plan Stale-dated Check Account until (1) the beneficiary contacts the FRS Investment Plan; or (2) another beneficiary requests consideration as the deceased’s proper beneficiary; or, (3) at the end of 10 years in the Stale-dated Check Account, the amount is transferred to the FRS Investment Plan Forfeiture Account, where it is held indicating the name of the deceased member and the name of the beneficiary.
(d) Should the beneficiary be located and provides a social security number, the check will be reissued, without interest or earnings due to the delay in payment, subject to applicable income tax withholding, which shall be paid to the tax authorities at the time of such payment to the beneficiary.
(8)(a) Pursuant to Federal guidelines, if the deceased member’s account is to be paid to the member’s estate but no Estate Identification Number is provided, the account will not be paid until receipt of the Estate Identification Number. In this circumstance, and in accordance with federal guidelines, the FRS Investment Plan Administrator will issue a check payable to the estate of the member and hold the check for 180 days, at which time the check will be considered stale-dated.
(b) The FRS Investment Plan Administrator will, at the time of distribution, make a reasonable effort to obtain the Estate Identification Number. Additionally, by calendar year-end, in the year the distribution occurred, the FRS Investment Plan Administrator will attempt to locate and obtain the Estate Identification Number, and, at least one time in the calendar year following the distribution, to locate the Estate Identification Number. The Investment Plan Administrator will document for the Internal Revenue Service the efforts taken to obtain an Estate Identification Number.
(c) Once 180 days have elapsed from the date the check was issued, the funds shall be transferred to the Stale-dated Check Account, indicating the name of the deceased member and the name of the estate. The amount will be held in the FRS Investment Plan Stale-dated Check Account until (1) the member’s estate representative contacts the FRS Investment Plan; or (2) a beneficiary requests consideration as the deceased’s proper beneficiary; or, (3) at the end of 10 years in the Stale-dated Check Account, the amount is transferred to the FRS Investment Plan Forfeiture Account, where it is held indicating the name of the deceased member.
(d) Should the estate’s representative subsequently provide an Estate Identification Number, the check will be reissued, without interest or earnings due to the delay in payment, subject to applicable income tax withholding, which shall be paid to the tax authorities at the time of such payment to the estate.
Specific Authority 121.4501(8) FS. Law Implemented 121.091(8), 121.4501(20), 121.591(3) FS. History–New 10-21-04, Amended 3-9-06, 11-26-07,___________.
19-11.004 Excessive Trading in the FRS Investment Plan.
(1) Purpose.
(a) The purpose of this rule is to mitigate the negative impact on members in the FRS Investment Plan from excessive trading and to establish limitations on such excessive trading. The Trustees of the State Board of Administration of Florida (SBA) have a fiduciary duty to make decisions about the FRS Investment Plan in the best interests of all members and beneficiaries.
(b) Excessive trading by just a few of a fund’s investors can disrupt fund operations, increase expenses and harm fund performance for all investors. In particular, some members have shown a high proclivity to make numerous short-term trades in foreign stock funds in an attempt to exploit funds’ pricing conventions and other technical factors. Therefore, this rule establishes limitations so that excessive trading between approved investment funds shall be prevented, without materially inhibiting all members’ opportunities to direct contributions and account balances between investment funds with a frequency that is appropriate in light of the market volatility of the funds.
(c) The Executive Director of the SBA is directed to establish a policy on excessive trading in Section V of the Investment Policy Statement, adopted and incorporated by reference in Rule 19-9.001, F.A.C. This rule establishes that policy.
(d)1. Effective October 16, 2007, tThe United States Securities and Exchange Commission has adopted Rule 22c-2.(17CFR270.22c-2.) regarding excessive trading for open-end mutual funds. This rule does not apply to institutional funds nor to mutual funds for which the SBA FRS has received exemptions. This rule gives mutual funds the right to ask the FRS Investment Plan Administrator for information about members and their trading activities. If the mutual funds determine that the member has engaged in excessive trading under the mutual funds’ policies standards, the mutual funds are entitled to impose redemption fees or prevent block trading that violates the mutual funds’ excessive trading policies. It is the responsibility of the member to comply with the trading restrictions permitted by the U.S. Securities and Exchange Commission. Any applicable The fees will be deducted directly from the members’ accounts. To prevent FRS Investment Plan members from having to pay monetary penalties or being prevented from making additional transactions, the FRS has requested that the Administrator use its “best efforts,” by using a computer-based system, to monitor members’ trading activities and to prevent restricted trades from occurring in any of the three mutual funds in subparagraph 2., below. However, if a restricted trade is not prevented, the member will be responsible for paying any monetary penalties through a reduction in his or her account balance in the amount of the penalty and will also be subject to continued trading restrictions.
2. All approved mutual funds in the FRS Investment Plan have agreed to use the Investment Plan’s let the SBA continue with its excessive trading policy as outlined in this rule except the following three four funds: Fidelity Growth Company, T. Rowe Price Small Cap Stock, and PIMCO High Yield, and PIMCO Total Return. This investigation is scheduled to begin on October 16, 2007. When this list changes, members will be notified. Note that the restrictions in the SEC Rule 22c-2 are in addition to the restrictions in this Rule 19-11.004, F.A.C.
(2) No change.
(3) Limitations.
(a) Regarding authorized foreign or global stock funds: After making a non-exempt transaction by transferring any portion of their account balance into an authorized foreign or global or stock fund, members are prohibited from completing a Roundtrip Trade in that fund for a minimum of 7 calendar days, using the convention of last-dollar-in and first-dollar-out for the roundtrip calculation.
(b) Regarding all authorized funds, except for money market funds:
1. Members who engage in Market Timing Trades in authorized funds will receive a warning letter, sent by U.S. Mail, certified/return receipt requested. The warning letter shall notify the member that excessive trades have been identified in his/her accounts and any additional violations will result in a direction letter.
2. Members who engage in Market Timing Trades in authorized funds and who have previously received a warning letter described in subparagraph 1., above, will be sent a certified/return-receipt direction letter delivered by courier. The direction letter shall require that the member shall not have access to automated online or telephonic trade instructions for at least one full calendar month following the date of the direction letter. The member shall be required to conduct trades via telephone by contacting the Plan Administrator for at least one full calendar month.
3. Members who engage in Market Timing Trades and who have previously received a direction letter, as described in subparagraph 2., above, will be sent another certified/return-receipt direction letter, delivered by courier. This direction letter shall require that the member shall not have access to automated or telephonic trade instructions for at least three full calendar months following the date of the direction letter. The member shall be required to conduct trades via telephone by contacting the Plan Administrator for at least three full calendar months+.
4. Members who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraph 3., above, will be sent another direction letter, delivered by courier. The direction letter shall require that the member shall only be permitted be required to conduct trades via paper trading forms for at least three full calendar months following the date of the direction letter.
5. Members who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraph 4., above, will be sent another certified/return-receipt direction letter, delivered by courier. The direction letter shall require that the member shall only be permitted be required to conduct trades via paper trading forms for at least twelve full calendar months following the date of the direction letter.
6. Members who engage in Market Timing Trades and who have previously received a direction letter as described in subparagraph 5., above, will be sent another certified/return-receipt direction letter, delivered by courier. The direction letter shall require that the member shall only be permitted be required to conduct trades via paper trading forms for the remainder of any time that any balance exists in the member’s Investment Plan account following the date of the direction letter.
(c) If Member A receives a direction letter as described in subparagraph (3)(b)2., above, on November 15, Member A’s access to automated online or telephonic trade instructions shall be denied until January 1. “One full calendar month,” in this context, means the full calendar month following the month in which the direction letter is received. The direction letter, in this example, was received in November. The “one full calendar month” is December. Therefore, access will not be resumed until January.
(4) through (5) No change.
Specific Authority 121.4501(8) FS. Law Implemented 121.4501(13), (14), (15) FS. History–New 10-21-04, Amended 3-9-06, 10-25-07, _________.
19-11.006 Enrollment Procedures for New Hires.
(1) through (5) No change.
(6) Grace Period.
(a) If a member an employee files an election with the Plan Choice Administrator and the member employee realizes that the election was made in error, the SBA will consider, on a case-by-case basis, whether the election will be voided, subject to the following requirements:
1. Member Elects the FRS Investment Plan. The member employee must notify the SBA, by a telephone call to the toll-free MyFRS Financial Guidance Line at number: 1(866)446-9377, or by e-mail, or by written correspondence directly to the SBA, to the Plan Choice Administrator, or to the Division, before assets are transferred from the FRS Pension Plan to the member’s FRS Investment Plan account. This transfer occurs no later than 4:00 PM Eastern Time on the last business day of the month following the election effective month.
2. Member Actively Elects the FRS Pension Plan. The employee must notify the SBA no later than the last business day of the month following the election month.
(b) If the request to reverse void the election is made timely and the SBA finds that the election was made in error agrees the election will be voided, the member will be required to sign a release and return it to the SBA no later than 4:00 PM, Eastern Time, on the last business day of the election effective month prior to the election’s being officially reversed voided. The member will acknowledge that failure to return a signed release by the requested due date will result in the original election being reinstated make a new election within one calendar month will result in the original election’s being reinstated, and that once the revised election is made it cannot be changed (unless the member uses his second election, if available).
(c) Upon receipt of the release, the Division and the Administrator will be directed to do the following:
1. The Division will revise its database to reflect the member’s plan change. The member will have until his or her choice period deadline date to make a new election. If the member’s choice period has ended, the member will have one calendar month to make a new election. Failure to make a new election will result in the member’s defaulting into the Pension Plan and extend the member’s election period by one calendar month, except for the situation described in subparagraph 3.4., below.
2. The Plan Choice Administrator will send the member written confirmation contact the member via telephone or email and tell him or her that the election has been reversed voided.
3. The member will make a new election via telephone, or using the website at www.MyFRS.com or using a form prior to the newly-established deadline.
3.4. If the member had elected the FRS Investment Plan and decided to remain in the FRS Pension Plan, there is no need for another election, because the member is already in the FRS Pension Plan, his election to the FRS Investment Plan having been reversed voided.
(d) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(9)(f)3., F.S.
(7) through (9) No change.
Specific Authority 121.4501(3)(c)4., (8)(a) FS. Law Implemented 121.051, 121.055, 121.35, 121.4501(2), (3), (4), (5), (6), (8), (15), 121.73, 121.74, 121.78, 215.44(8)(b), 1012.875(3) FS. History–New 10-21-04, Amended 3-9-06, 10-25-07,_________.
19-11.007 Second Election Enrollment Procedures for the FRS Retirement Programs.
(1) Purpose. The purpose of this rule is to establish procedures for making the second election permitted by Section 121.4501(4)(e), F.S. This rule includes procedures for members who initially chose the FRS Investment Plan or the FRS Investment Plan Hybrid Option to use their 2nd election to transfer to the FRS Pension Plan; or for members who chose or defaulted into the FRS Pension Plan to use their 2nd election to transfer to the FRS Investment Plan or the FRS Investment Plan Hybrid Option. A member may make a valid 2nd election only if the 2nd election is made and processed by the Plan Choice Administrator while the member is earning service credit in an employer-employee relationship consistent with the requirements of Section 121.021(17)(b), F.S. FRS members must be actively employed earning salary and service credit to be eligible to make a valid 2nd Election. Members on an unpaid leave of absence, terminated members, or employees of an educational institution on summer break cannot use their 2nd Election until they return to covered FRS employment. In general terms, this means that the 2nd election must be made and processed while the member is actively working and being paid for that work. It is the responsibility of the member to assure that the 2nd election is received by the Plan Choice Administrator no later than 4:00 PM Eastern Time on the last business day the member is earning salary and earning service credit.
(2) Definitions.
(a) “FRS Investment Plan” means the optional defined contribution retirement plan within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a member participant chooses to transfer his accrued service benefit in the FRS Pension Plan, if any, to the FRS Investment Plan or the FRS Investment Plan Hybrid Option and further chooses that all future employer contributions be deposited in his FRS Investment Plan account. Although established in Parts II and III, certain parts of Part I of Chapter 121 also apply to the FRS Investment Plan. Any accrued service benefit transferred from the FRS Pension Plan to the FRS Investment Plan will be subject to the vesting requirements of the FRS Pension Plan.
(b) “FRS Investment Plan Hybrid Option” or “FRS Hybrid Option” means the optional defined contribution retirement plan within the Florida Retirement System, established in Parts II and III of Chapter 121, F.S., in which a member chooses to retain his accrued service benefit in the FRS Pension Plan, in accordance with Section 121.4501(3)(b), F.S., and further chooses that all future employer contributions be deposited in his FRS Investment Plan Hybrid Option account. Although established in Parts II and III, certain parts of Part I of Chapter 121, F.S., also apply to the FRS Investment Plan Hybrid Option.
(c) “FRS Pension Plan” means the defined benefit retirement plan within the Florida Retirement System, established in Part I of Chapter 121, F.S.
(d) “I,” “you,” or “your:” these references are to the member in the context of relevant parts of the two enrollment forms described in this rule.
(e) “ABO” “Accrued service benefit” or “accumulated benefit obligation” means the present value amount already earned by a member in the FRS Pension Plan which, if the participant uses the 2nd election, will be transferred to his or her account in the FRS Investment Plan.
(3) General Procedures.
(a) All members who wish to change their FRS retirement plan using their 2nd second election must use a 2nd election enrollment form or, if moving from the FRS Pension Plan to the FRS Investment Plan or FRS Investment Plan Hybrid Option, may do so online by accessing the Second Choice Service at MyFRS.com. There are two types of enrollment forms. The “2nd Election Retirement Plan Enrollment Form” allows requires the member to choose the investment funds options he wishes to use if changing he is choosing to move to either the FRS Investment Plan or the FRS Investment Plan Hybrid Option. Alternatively, by using the “2nd Election EZ Retirement Plan Enrollment Form,” the member is choosing to have his employer contributions and any transfers from the FRS Pension Plan invested in the FRS Select Moderate Balanced Fund. The member may change the his investment selection at any time after he is transferred to the FRS Investment Plan or the FRS Investment Plan Hybrid Option account is activated. Activation occurs when contributions are deposited to the member’s FRS Investment Plan account.
(b) Both forms are available by calling the toll-free number for the MyFRS Financial Guidance Line: 1(866)446-9377, or for the hearing-impaired: 1(888)429-2160; or by using the MyFRS.com website and clicking on Resources and then on Forms.
(c) Elections made by The form must be mailed to the FRS Plan Choice Administrator, CitiStreet, FRS Investment Plan Administrator, P. O. Box 56290, Jacksonville, Florida 32241-6290; or faxed toll-free to 1(888)310-5559.
(d) The member may elect to move between the Florida Retirement System retirement programs only if the member is earning service credit in an employer-employee relationship consistent with the requirements under Section 121.021(17)(b), F.S. FRS members must be actively employed earning salary and service credit to be eligible to make a valid 2nd Election. Members on an unpaid leave of absence, terminated members, or employees of an educational institution on summer break cannot use their 2nd Election until they return to covered FRS employment., excluding unpaid leaves of absence. The election form must be received and processed by the FRS Plan Choice Administrator before the member terminates covered FRS employment is terminated. It is the responsibility of the member to ensure the election is received by the Plan Choice Administrator no later than 4:00 PM Eastern Time on the last business day the member is earning salary and earning service credit. If the last day of the month is a Saturday, Sunday, or legal holiday, the deadline is the last business day of the month.
1. Example: if a member submits the 2nd Election Retirement Plan Enrollment Form in the month of November, the effective date of the plan change will be December.
2. Example: if a member intends to terminate his FRS-covered employment, he must ensure that the form is received by the FRS Plan Choice Administrator before he terminates his employment. Therefore, if a member wishes to terminate on November 27, he must ensure that the form is received and processed by the FRS Plan Choice Administrator before that date.
3. Example: the last day of February, 2004, was Sunday, February 29. Therefore, the last business day was the preceding Friday, February 27. For a 2nd Election to have been effective as of March 1, 2004, the form must have been received by the FRS Plan Choice Administrator before 4:00 p.m. Eastern Time on Friday, February 27.
(4) No change.
(5) Specific Procedures for the “2nd Election EZ Retirement Plan Enrollment Form.”
(a) Form ELE-2EZ, “2nd Election EZ Retirement Plan Enrollment Form,” Rev. 1-08 07-07, is hereby adopted and incorporated by reference.
(b) All members choosing to use this form are required to fill out Section 1 of the form by providing the member’s name and Social Security number and checking only one of three boxes, indicating which choice the member is making.
(c) The form must be signed and dated by the member and must include a daytime telephone number. Inclusion of an e-mail address or the name of the member’s employing agency is optional on the member’s part.
(d) The form must be mailed to the address set out in paragraph (3)(c), above.
(e) The member must put his Social Security number at the bottom of each page of the form so that if the pages become separated, they can be properly reassembled.
(f) For members transferring to the FRS Pension Plan, the election may require a personal payment if the member’s account balance was less than the calculated amount required to buy back into the FRS Pension Plan. Such payment, if necessary, must be received by the date determined by the Division. If the required amount is not received by the Division by the date due, the election will be voided. The member will receive notification and proper instructions from the Division detailing where and in what form to send any personal payments. The Division is responsible for calculating that amount for those wishing to use their second elections to transfer to the FRS Pension Plan. The actuarial calculation is a forward-looking projection based on the employee’s salary and service and increases as additional creditable service and salary are earned.
(g) A confirmation statement will be mailed to the member’s address of record once the completed form is received and processed.
(h) The member should carefully review the form and be sure that it is signed and dated. The member should keep a copy for his records.
(i) If the member submits a form that is incomplete, it will not be processed. An incomplete form is a form which is missing the name and address and phone numbers of the member, social security numbers, the plan selection, signatures, or dates. The incomplete form will be returned to the member to add any missing information.
(6) Grace Period.
(a) If a member files an election with the Plan Choice Administrator and the member employee realizes that the election was made in error, the SBA will consider, on a case-by-case basis, whether the election will be reversed voided, subject to the following requirements: 1. The mMember must notify the The SBA must be notified, by a telephone call to the toll free MyFRS Financial Guidane Line at number: 1(866)446-9377, or by e-mail, or by written correspondence directly to the SBA, to the Plan Choice Administrator, or to the Division, before assets are transferred from the FRS Pension Plan to the member’s FRS Investment Plan account. This transfer occurs no later than 4:00 p.m. Eastern Time on the last business day of the month following the election effective month.
2. Member Elects the FRS Pension Plan. The SBA must be notified no later than the last business day of the month following the election month.
(b) If the request to reverse void the election is made timely and the SBA finds agrees the election was made in error, the member will be required to sign a release and return it to the SBA no later than 4:00 PM, Eastern Time, on the last business day of the election effective month prior to the election’s being officially reversed will be voided, Upon receipt of the release, the Division and the Plan Choice Administrator will be directed to do the following:
1. The Division will revise its database to reflect the election has been reversed voided.
2. The Plan Choice Administrator will send the member written confirmation contact the member via telephone or email and tell him or her that the election has been voided.
3. The member will make a new election using a form consistent with subsections (3) and (4), above.
4. If the member had elected the FRS Investment Plan and decided to remain in the FRS Pension Plan, there is no need for another election, because the member is already in the FRS Pension Plan, his election to the FRS Investment Plan having been voided.
(c) Nothing contained in this subsection will interfere with a member’s right to file a complaint, as permitted by Section 121.4501(9)(f)3., F.S.
Specific Authority 121.4501(8)(a) FS. Law Implemented 121.4501(3), (4), (8)(b)4., (15)(b), (20) FS. History–New 10-21-04, Amended 3-9-06, 10-25-07,_________.
19-11.008 Forfeitures.
(1) Purpose. The purpose of this rule is to clarify the provisions regarding forfeitures of account balances.
(2) Forfeitures after Separation or Retirement from FRS Employment.
(a) If a member terminates FRS-covered employment before vesting in his Investment Plan benefit or any transferred Pension Plan benefit, he will not be entitled to any benefit. The account balance will be placed in a suspense account. The suspense account shall be is invested in the FRS Select U.S. Treasury Inflation-Protected Securities (TIPS) Fund, where it will accrue actual investment earnings. If the member returns to work for an FRS employer within five (5) years from the date of termination, the member’s will be returned to the Investment Plan and the account balance, plus any earnings while invested in the TIPS Fund, will be returned to the member’s account. The service credit for the restored service, combined with any future service credit, will be applied towards vesting of the member’s account. If the member never returns to work for an FRS employer or if the member returns to FRS covered employment 5 or more years after the date of termination, the member will forfeit the unvested account balance and the associated service credit.
(b) If the member leaves FRS-covered employment after vesting in his Investment Plan account, but before the member vests in any transferred Pension Plan benefit, the member shall only be entitled to receive the vested Investment Plan benefit. However, if the member takes any distribution from his vested Investment Plan account, the unvested Pension Plan benefit transferred into the Investment Plan, plus any earnings on these funds will be forfeited along with the associated service credit. If the member is required to receive a required minimum distribution (RMD), the unvested Pension Plan benefit and the associated service credit, will not be forfeited, when the first RMD payment is received. If the member does not take a distribution from his Investment Plan account, the unvested Pension Plan benefit will be transferred to a suspense account. The suspense account is invested in the FRS Select U.S. Treasury Inflation-Protected Securities (TIPS) Fund, where it will accrue actual investment earnings. If the member returns to work for an FRS employer within five (5) years from the date of termination, the member’s account balance, plus any earnings while invested in the TIPS Fund, will be returned to the member’s account. The service credit for the restored service, combined with any future service credit, will be applied towards vesting of the member’s account.
(c) If an FRS Investment Plan Hybrid Option member leaves FRS-covered employment after vesting in his Investment Plan account, but before he vests in his Pension Plan benefit, the member shall only be entitled to receive the vested Investment Plan benefit. However, if the member takes any distribution from his vested Investment Plan account, the unvested Pension Plan benefit will be forfeited along with the associated service credit. If the member is required to receive a required minimum distribution (RMD), the unvested Pension Plan benefit and the associated service credit, will not be forfeited, when the first RMD payment is received. If the member does not take a distribution from his Investment Plan account and later returns to work for an FRS employer, the member will be returned to the FRS Investment Plan Hybrid Option and the service credit for the existing Pension Plan and Investment Plan service, combined with any future service credit, will be applied towards vesting of the member’s account.
(d) If a member’s benefit and service are forfeited because the member did not return to FRS-covered employment within five (5) years, but the member later returns to FRS-covered employment after the forfeiture has occurred, the member will be returned to the plan in which he or she was participating at the time of the forfeiture. If the member’s benefit and service credit in the Pension Plan are forfeited because the member took a distribution of his vested Investment Plan benefit, and the member later returns to FRS-covered employment, he will be considered a new employee and will be entitled to a new retirement plan choice during his new employee window period.
(3) Forfeitures of FRS Investment Plan accounts Due to Criminal Activity.
(a) The Florida Constitution (Section 8, Article II) and Florida statutes provide that any member of the Florida Retirement System who commits certain crimes and is found guilty by a jury or by the court hearing the case without a jury shall forfeit all rights and benefits under Chapter 121, F.S. These crimes include embezzlement or theft from his or her employer, bribery in connection with the employment, engaging in strikes as a public employee, or killing the member to receive the member’s benefits. Please see Sections 112.3173 and 121.091(5), F.S. and the other statutory sections mentioned therein, since these may be changed by the Legislature.
(b) When the SBA, on behalf of the FRS Investment Plan, becomes aware of any accusation of criminal wrongdoing against any employee who is a member of the FRS Investment Plan, the SBA will put a hold on the member’s account to preclude the member from removing his or her money from the account, until a determination is made on whether charges have been filed and whether the charges are for a forfeitable offense.
(c) If the charges against the member are not pursued and are dropped by law enforcement officials, the hold on the member’s account will be released.
(d) If the member is indicted and convicted or pleads guilty, the SBA will acquire a certified copy of the judgment and will contact the member to advise the member that his account is forfeited and, if he wants to contest the forfeiture, he has the right to a hearing. The hold on the member’s account will remain in place until.
1. The time to request a hearing has passed and no request for a hearing is made, or
2. The conclusion of the hearing and any appeal of the final order issued after the conclusion of the hearing.
(e) At the conclusion of either subparagraph (d)1. above, or (d)2. above, if the member's hearing and/or appeal is unsuccessful, the SBA will direct the Investment Plan Administrator to transfer the member’s account balance to the Investment Plan Forfeiture Account.
(4) Authorized uses of the Investment Plan Trust Fund Forfeiture Account.
(a) The Investment Plan Forfeiture Account is funded with unvested account balances forfeited by members as described above in this rule and with account balances forfeited due to criminal activity as described above in this rule.
(b) Section 121.4501(13), Florida Statutes, requires that the Investment Plan be administered so as to comply with the requirements of the Internal Revenue Code in order to maintain a tax-qualified status.
(c) Pursuant to a private letter ruling from the Internal Revenue Service, the Forfeiture Account may be used for two purposes:
1. Payment of Investment Plan Administrative expenses, and
2. Reduction of future employer contributions to the Investment Plan.
(d) Consistent with Internal Revenue Service Rulings 80-155 and 74-340, unallocated reserves within the Forfeiture Account will be used as quickly and as prudently as possible considering fiduciary duty. The expected withdrawals from the Account should endeavor to reduce the Account to zero each fiscal year end.
Specific Authority 121.4501(8)(a) FS. Law Implemented 121.021(29), (39), 121.091(5), 121.4501(13), (20), 121.591, 744.301 FS. History–New 3-9-06, Amended_________.
19-11.009 Reemployment with an FRS-covered Employer after Retirement.
(1) Purpose: The purpose of this rule is to clarify the provisions regarding reemployment after retirement for FRS Investment Plan members.
(2)(a) A member who has terminated FRS-covered employment and has taken a distribution from his Investment Plan account is considered a retiree, as of the date of the distribution, in accordance with Section 121.4501(2)(j), F.S. As a retiree, the former member shall not be reemployed with an FRS-covered employer until he has been retired for 12 months, except under certain limitations without suspending his benefits. Any retiree member may return to employment with an FRS-covered employer after 12 months of retirement and may take distributions from prior career benefits, even while reemployed. A retiree may work for any private employer or for any public employer who does not participate in the FRS without affecting his/her FRS retirement benefits.
(b) There are exceptions to paragraph (2)(a) above. This paragraph does not contain an exhaustive list of all possible situations. Members who are not in exactly the same circumstances as described in this paragraph should call the toll-free MyFRS Financial Guidance Line at 1(866)446-9377, Option 1, to have their situations properly analyzed.
1. A member who has reached his normal retirement date, in accordance with Section 121.021(29), F.S., may return to FRS-covered employment after being retired for one calendar month. One calendar month means the full calendar month following the month the member retired. The retiree may return to employment in one of the excepted positions identified in Section 121.091(9)(b), F.S., and continue to take distributions from prior career benefits. If the retiree returns to work in a position that is not one of the exceptions allowed by law, he/she must suspend receipt of any remaining retirement benefits for the remainder of the 12 months after retirement may get up to ten percent of his account balance one calendar month following his month of termination, and he may get the balance after a total of three calendar months following his month of termination, unless he returns to FRS-covered employment, during this three-calendar -month period.
2. If the member in subparagraph 1, above, takes a partial distribution and then returns to work, the member will not be eligible for any further distributions until the member terminates employment from all FRS covered employers, or suspends further benefits for the reminder of the 12 months, or the first 12 months of retirement are completed.
3. A member who has reached his normal retirement date, in accordance with Section 121.021(29), F.S., can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., one calendar month after taking a distribution.
2.4. A member who has not reached his normal retirement date, in accordance with Section 121.021(29), F.S., may return to FRS-covered employment in certain positions after being retired for three calendar months. “Three calendar months” means three full calendar months following the month in which the member retired. For example, if a member retires in January, the three calendar months are February, March, and April. The retiree may return to employment in May in one of the excepted positions identified in Section 121.091(9)(b), F.S., and continue to take distributions from prior career benefits. If the retiree returns to work in a position which is not one of the exceptions allowed by law, he/she must suspend receipt of any remaining retirement benefits for the remainder of the 12 months after retirement.
(3) The Plan Choice Administrator must be informed whenever an FRS Investment Plan retiree returns to employment with an FRS-covered employer during the first 12 months of retirement.
(4) Any retiree employed in violation of the FRS Investment Plan reemployment limitations and any employing agency which knowingly employs or appoints such person shall be jointly and severally liable to the retirement trust fund for reimbursement of any benefits paid. To avoid liability, such employing agency must have a written statement from the retiree that he or she is not retired from a state-administered retirement system can return to work in one of the excepted positions identified in Section 121.091(9)(b), F.S., three calendar months after taking a distribution.
Specific Authority 121.4501(8)(a) FS. Law Implemented 121.021(29), (39), 121.091(9)(b),(c), 121.4501(2)(j), 121.591(1)(a)4. FS. History–New 11-26-07, Amended_________.