Retirement & DROP
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Eligibility for Early, Normal, or Deferred Retirement - ORP
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| Under the SUSORP, there is no age or length-of-service requirement you must meet before you can "retire" (take a lump-sum distribution or begin receiving payments). To receive employer-funded benefits, an ORP participant must simply be terminated from all employment with all FRS employers.
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| When you retire 1, if you elect to receive your benefits in the form of a lifetime annuity, the company or companies in which you are invested will determine your monthly annuity income based on the value of your account and your age at that time, and on the lifetime payment option you choose.
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| The earlier you retire, of course, the less you are likely to receive. Also, penalties may be assessed if you elect to take a distribution before reaching age 59½. And, once you retire, you will be subject to reemployment and renewed membership restrictions that could limit your future employment and benefit options.
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| If you terminate covered employment before retirement, your account remains fully "vested" - that is, you never lose the right to the contributions made to your account. The underwriting company or companies to which you have directed your contributions will maintain your retirement account(s) while you are inactive. The various SUSORP payment options are discussed further in the Benefits section.
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| 1 ORP participants are not eligible to participate in the Deferred Retirement Option Program or DROP. For a description of this program, see below.
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Eligibility for Early, Normal, or Deferred Retirement and/or DROP - FRS Pension Plan
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| You must complete at least six years of creditable service 2 to be "vested" under the FRS Pension Plan. Upon becoming vested, you are eligible to retire with full benefits at age 62- the "normal retirement age" for all FRS Pension Plan members except those in special risk classes. If you are not vested when you reach age 62, you will be eligible for normal retirement on the first of the month after you have vested. You will continue to earn retirement benefits for covered employment beyond your normal retirement date. You are also eligible to retire and receive full benefits from the FRS Pension Plan, regardless of your age, when you have completed 30 years of creditable service.
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| Under the FRS Pension Plan, if you terminate covered employment before you have sufficient creditable service to be vested in the plan, then you will not be entitled to any monthly benefits from FRS, except for a lump sum refund of any employee contributions 3 you may have made to the plan. (However, you may return to FRS-covered employment at any time and earn additional credit toward becoming vested.)
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| If you are vested, but haven't yet reached your normal retirement date, you may elect to take early retirement. If you do, however, the amount of your benefit will be reduced by five percent for each year remaining before you would reach your normal retirement age.
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| If you terminate covered employment after you have sufficient creditable service to be vested in the plan, but before you have reached your normal retirement age, you may elect to take a deferred retirement (postponing receipt of your benefits to a later date). Your benefit will be reduced by five percent for each year that benefits commence prior to age 62, unless you have attained 30 years or more of creditable service. This adjustment reflects the greater number of years over which the benefit will be paid.
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| Members of the FRS Pension Plan also have the option of participating in the Deferred Retirement Option Program (DROP). DROP is a program under which an eligible FRS member may retire and defer receipt of retirement benefits while continuing employment for up to five years of participation. The initial benefit is determined at retirement. Deferred monthly retirement benefits, plus 6.5 percent interest compounded annually and annual three percent cost-of-living adjustments, accrue while the retiree is in DROP. Upon termination, the DROP participant is eligible to receive the accrued DROP benefits and begin receiving monthly FRS retirement benefits, plus future cost-of-living increases and health insurance subsidy (HIS) payments.
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| For more information on FRS service retirement or participation in DROP, please contact your benefits department or the Bureau of Retirement Calculations. Outside the Tallahassee calling area, you may telephone the bureau toll free at 888-738-2252. You may also reach the bureau at 850-488-6491 or by e-mail (calculations@dms.MyFlorida.com).
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2 Effective July 1, 2001, Florida law was amended to allow FRS Pension Plan members of ALL membership classes to vest after completing six years of creditable FRS service. To vest with six years under the new provisions, a member had to be actively employed in an FRS-covered position on July 1, 2001. Inactive members with six or more years of FRS service did not automatically vest on July 1, 2001; in order to vest, they must return to work and complete at least one work year of creditable service under the FRS (except that no one is required to compete more service than was required under the prior law for their membership class).
3 Employee contributions have not been required under the FRS since 1975 when the system became employee-noncontributory. However, any employee who worked in a covered position before then made retirement contributions, which would be on deposit in the employee's name unless he/she left covered employment and took a refund of his/her contributions. Contributions could also be on deposit for employees who made voluntary contributions to purchase optional service credit.
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Eligibility for Early, Normal, or Deferred Retirement - FRS Investment Plan
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| Like the SUSORP, the FRS Investment Plan is a tax-qualified 4 defined contribution retirement plan. Employer contributions are made to each participant account, based on rates set by state law for each membership class. (Employee contributions are not allowed.) Benefits consist of the total account value at retirement (distribution), which is based on accumulated employer contributions, plus interest and earnings on those contributions, less fees and plan charges. Benefits are payable to the member, or to his/her designated beneficiary or estate upon the member's death.
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| A member must complete at least one year of creditable service 5 to be "vested" under the FRS Investment Plan, but he/she can count any Pension Plan service toward the one-year vesting requirement. If a member terminates covered employment before vesting, any nonvested balance in his/her account is held in a suspense account for up to five years. Upon returning to covered employment within the five-year period, the member's account balance is restored. Any moneys remaining in the suspense account five years after termination are forfeited.
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| Members are not permitted to make withdrawals from the Plan while still employed by an FRS employer. After terminating all FRS-covered employment for three calendar months, a member can request a distribution of vested account proceeds. However, if the member meets the age/service requirements for normal retirement under the FRS Pension Plan, ( see description above), he/she may take a distribution of up to ten percent of the account balance after being terminated for one calendar month.
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| With certain exceptions, members can leave their moneys invested in the FRS Investment Plan until they elect to receive a distribution from the Plan, or they may elect to "roll it over" to an Individual Retirement Account (IRA) or to the plan of a new employer (if allowed).
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| For more information about the FRS Investment Plan, you may call toll free to 866-446-9377 or go to the MyFRS Web site.
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4 The FRS Investment Plan is qualified under Sec. 401(a) of the Internal Revenue Code, while the ORP is qualified under Sec. 403(b) of the tax code.
5 If a member of the FRS Pension Plan transfers to the FRS Investment Plan and also elects to transfer the value of his/her Pension Plan service to the Investment Plan, the transferred amount becomes vested - i.e., the member will "own" this money - only after he/she has satisfied the FRS Pension Plan six-year vesting requirement.
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| E-mail your SUSORP comments or questions to us. Please include your name, mailing address, e-mail address, the last four digits of your social security number (SSN), and your phone number if you require an answer from us.
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