RS 11:2257 Deferred retirement option plan
§2257. Deferred Retirement Option Plan
A. In lieu of terminating employment and accepting a service retirement allowance under R.S. 11:2256, any member of this system who has not less than twenty years of creditable service and who is eligible to receive a service retirement allowance may elect to participate in the deferred retirement option plan and defer the receipt of benefits in accordance with the provisions of this Section.
B. For purposes of this Section, creditable service shall include service credit reciprocally recognized under R.S. 11:142, but for eligibility purposes only.
C. The duration of participation in the plan shall be specified and shall not exceed three years.
D. A member may participate in the plan only once.
E. Upon the effective date of the commencement of participation in the plan, membership in the system shall terminate and neither employee nor employer contributions shall be payable. For purposes of this Section, compensation and creditable service shall remain as they existed on the effective date of commencement of participation in the plan. The monthly retirement benefits that would have been payable, had the member elected to cease employment and receive a service retirement allowance, shall be paid into the deferred retirement option plan account. Upon termination of employment, deferred benefits shall be payable as provided by Subsection H.
F.(1) A person who participates in this program shall not be eligible to receive a cost-of-living increase from the retirement system while participating and shall not be eligible until his employment which makes him eligible to be a member of this system has been terminated for at least one full year.
(2)(a) With respect to any individual who was eligible to participate in the Deferred Retirement Option Plan before January 1, 2004, after a person who participates in the plan has terminated the employment which made him eligible to be a member of this system, his individual account balance in the plan shall earn interest at a rate equal to the percentage rate of return of the system's investment portfolio, less the cost of merger notes, as certified by the actuary in his yearly evaluation report, less the cost of administering the Deferred Retirement Option Plan to be determined annually by the board of trustees. This interest shall be credited to the retiree's individual account balance on an annual basis. However, if such an individual returns to employment which makes him eligible to be a member of this system, his individual account balance in the plan shall not earn interest while he remains so employed.
(b) With respect to any individual who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, and except as provided in Subparagraph (d) of this Paragraph, all amounts which remain credited to the individual's subaccount after termination of participation in the plan shall be placed in liquid asset money market investments at the discretion of the board of trustees. Such account balances shall be credited with interest at the actual rate of return earned on such account balance investments less one-fourth of one percent per annum; or at the option of the system, the funds may be credited to subaccounts as herein established:
(i) The contributing period shall mean that time period when funds are being credited to the participant's subaccount which is maintained by the system.
(ii) After the contributing period ends, the balance of the subaccount may then be transferred to a self-directed subaccount. The period after the contributing period ends shall be known as the investment period. Both subaccounts shall be within the Deferred Retirement Option Plan established in this Section. Management of the funds shall be by the system during the contributing period. When the funds are transferred to the self-directed subaccount for the investment period, the system is authorized to hire a third-party provider. The third-party provider shall act as an agent of the system for purposes of investing balances in the self-directed subaccounts of the participant as directed by the participant. The participant shall be given such options as comply with federal law for self-directed plans.
(c) The participant in the self-directed portion of this plan agrees that the benefits payable to the participant are not the obligations of the state or the system and that any returns and other rights of the plan are the sole liability and responsibility of the participant and the designated provider to which contributions have been made. Furthermore, each participant, in accordance with this provision, shall expressly waive his rights as set forth in Article X, Section 29(A) and (B) of the Louisiana Constitution as it relates to his subaccount in the self-directed portion of the plan. By participating in the self-directed portion of the plan, the participant agrees that he and the provider shall be responsible for complying with all applicable provisions of the Internal Revenue Code. The participant also agrees that if any violation of the Internal Revenue Code occurs as a result of the participant's participation in the self-directed portion of the plan, it shall be the sole responsibility and liability of the participant and the provider, not the state or the system. There shall be no liability on the part of and no cause of action of any nature shall arise against the state, the system, or its agents or employees, for any action taken by the participant for choices the participant makes in relationship to the funds in which he chooses to place his subaccount balance.
(d)(i) Notwithstanding the provisions of Subparagraphs (b) and (c) of this Paragraph, any individual who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, may make an irrevocable written election to waive his rights as set forth in Article X, Section 29 of the Louisiana Constitution as it relates to the interest earned by his Deferred Retirement Option Plan account. After any such person who participates in the plan has terminated the employment which made him eligible to be a member of this system, his individual account balance in the plan shall earn interest at a rate equal to the percentage rate of return of the system's investment portfolio, less the cost of merger notes as certified by the actuary in his yearly valuation report, less the cost of administering the Deferred Retirement Option Plan to be determined annually by the board of trustees. However, by making such an election, the person shall expressly acknowledge that his account shall be debited in the event the system's investment portfolio experiences a negative earnings rate. The member shall further expressly acknowledge his consent to having the value of his account balance permanently reduced as a result of the devaluation of system assets caused by such a negative earnings rate. As a precondition of making this election, the member shall expressly acknowledge his understanding of the possibility of such account reductions.
(ii) The provisions of this Subparagraph shall apply prospectively only, beginning effective July 1, 2006. Waivers executed during the 2006 calendar year shall be applicable to interest that is posted effective on or after January 1, 2007.
(iii) Any individual who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, and who does not elect to waive his rights pursuant to Item (i) of this Subparagraph, shall continue to be governed by the provisions of Subparagraphs (b) and (c) of this Paragraph.
(iv) Should any participant's waiver executed pursuant to the provisions of Item (i) of this Subparagraph be declared null, void, inapplicable, or unenforceable, the participant's individual account shall be treated as though he had not executed such waiver, and the balance therein shall be adjusted to reflect such treatment.
G. Repealed by Acts 2003, No. 962, §2, eff. Jan. 1, 2004.
H. Upon termination of employment at the end of the specified period of participation, a participant in the plan shall receive, at his option, a lump sum payment from the account equal to the payments to the account, or a true annuity based upon his account, or he may elect any other method of payment if approved by the board of trustees. The monthly benefits that were being paid into the fund during the period of participation shall begin being paid to the retiree.
I.(1) If a participant dies during the period of participation in the program, a lump sum payment equal to his account balance shall be paid to his named beneficiary or, if none, to his estate; in addition, normal survivor benefits payable to survivors of retirees shall be payable.
(2) If a participant terminates employment prior to the end of the specified period of participation he shall receive, at his option, a lump sum payment from the account equal to the payments to the account, or a true annuity based upon his account balance, or he may elect any other method of payment if approved by the board of trustees.
(3) The monthly benefits that were paid into the fund during the period of participation shall begin being paid to the retiree.
J.(1) If employment is not terminated at the end of the period specified for participation, payments into the account shall cease.
(2) Payment from the account shall not be made until employment is terminated, nor shall the monthly benefits being paid into the fund during the period of participation be payable to the individual until he terminates employment.
(3) Upon termination of employment a member shall receive, at his option, a lump sum payment from the account equal to the payments to the account, or a true annuity based upon his account balance, or he may elect any other method of payment if approved by the board of trustees.
K.(1) If employment is not terminated at the end of the period specified for participation, he shall resume active contributing membership in the system.
(2) Upon termination of employment, the monthly benefits which were being paid to the fund shall begin to be paid to him. He may not change the option which was originally selected.
(3) Upon termination of employment, he shall receive an additional retirement benefit based on his additional service rendered since termination of participation in the fund, using the normal method of computation of benefit, subject to the following:
(a) If his period of additional service is less than thirty-six months, the average compensation figure used to calculate the additional benefit shall be that used to calculate his original benefit.
(b) If his period of additional service is thirty-six or more months, the average compensation figure used to calculate the additional benefit shall be based on his compensation during the period of additional service.
(c) The option used shall be that applicable to the original benefit.
(d) In no event shall the additional benefit exceed an amount which, when combined with the original benefit, equals one hundred percent of the average compensation figure used to compute the additional benefit.
(4) If he dies or becomes disabled during the period of additional service, he shall be considered as having retired on the date of death or commencement of disability.
Acts 1984, No. 450, §1; Acts 1985, No. 153, §1; Acts 1985, No. 458, §1; Redesignated from R.S. 33:2155.1 by Acts 1991, No. 74, §3, eff. June 25, 1991; Amended by Acts 1991, No. 57, §1, eff. June 25, 1991; Acts 1992, No. 496, §1, eff. July 1, 1992; Acts 2001, No. 1028, §1 ; Acts 2003, No. 962, §§1, 2, eff. Jan. 1, 2004; Acts 2004, No. 532, §1, eff. June 25, 2004; Acts 2006, No. 566, §1, eff. June 23, 2006.
NOTE: See Acts 2004, No. 532, §2, relative to persons electing to have retirement benefits deposited in his DROP account before effective date of the Act.