2006 Louisiana Laws - RS 11:1456 — Deferred retirement option plan

§1456.  Deferred Retirement Option Plan

A.  In lieu of terminating employment and accepting a service retirement allowance pursuant to R.S. 11:1421, any member who becomes eligible for a normal retirement allowance pursuant to R.S. 11:1421 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 not include service credit reciprocally recognized under R.S. 11:142.

C.  The duration of participation in the plan shall be specified and shall not exceed three years.

D.  A person may participate in the plan only once.  At the time the member elects to participate in the plan, the member shall exercise a retirement option for normal retirement under the provisions of R.S. 11:1423.  No change in the option selected shall be permitted after it has been filed with the board.

E.(1)  Upon the effective date of the commencement of participation in the plan, active membership in the system shall cease, inactive membership in the system shall commence. Employer and employee contributions shall continue to be payable during the person's participation in the plan. 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 person elected to cease employment and receive a service retirement allowance, shall be paid into the Deferred Retirement Option Plan Fund.

(2)  Any person who on July 1, 1999, is participating in the Deferred Retirement Option Plan as it existed prior to such date, may elect to extend the duration of his participation beyond two years. Such a person shall pay into the fund the amount of employee contributions applicable to the entire period of his participation to the date of his election and thereafter as is otherwise required by law for a participation on and after July 1, 1999.

F.(1)  The Deferred Retirement Option Plan Fund shall not earn interest while a member is a participant in the plan.  With respect to any individual who was eligible to participate in the Deferred Retirement Option Plan prior to January 1, 2004, if after completion of participation in the Deferred Retirement Option Plan employment is not terminated, the member's individual account balance in the plan shall earn interest at the actual rate of return, less one percent, earned on the funds.  The funds in such account shall be invested as directed by the board of trustees.  A member's account shall cease to earn interest upon termination of employment.  With respect to any individual who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, 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 may 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:

(a)  The contributing period shall mean that time period when funds are being credited to the participant's subaccount which is maintained by the system.

(b)  After the contributing period ends, the balance of the subaccount then may be transferred to a self-directed subaccount, which shall be known as the investment period.*  Both subaccounts shall be within the Deferred Retirement Option Plan established herein.  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 that 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.

(2)  A person who participates in this plan shall not be eligible to receive a cost-of-living increase while participating, and shall not be eligible for a cost-of-living increase until his employment which made him eligible to become a member of the system has been terminated for at least one full calendar year.

G.  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 Deferred Retirement Option Plan Fund equal to the payments made to that fund on his behalf, a true annuity based upon his account in that fund, or any other method of payment approved by the board of trustees.  If a person elects to receive a true annuity or other method of payment approved by the board of trustees, funds shall be transferred from the Deferred Retirement Option Plan Fund to the Annuity Reserve Fund to provide for the annuity payments.  The monthly benefits that were being paid into the Deferred Retirement Option Plan Fund shall begin being paid to the retiree.

H.  If a participant dies during the period of participation in the plan, a lump sum equal to his account balance in the plan fund shall be paid to his named beneficiary or, if none, to his estate.  If a participant terminates employment prior to the end of the specified period of participation, he shall receive a lump sum payment from the plan fund equal to his account in that fund, a true annuity based upon his account in that fund, or any other method of payment approved by the board of trustees and the monthly benefits that were being paid into the plan fund shall begin to be paid to the retiree.  If a person elects to receive a true annuity or other method of payment approved by the board of trustees, funds shall be transferred from the plan fund to the Annuity Reserve Fund to provide for the annuity payments.

I.(1)  If employment is not terminated at the end of the period specified for participation in the plan, payments into the plan fund shall cease and the person shall resume active contributing membership in the system.

(2)  Payments from the plan fund shall not be made until employment is terminated, nor shall the monthly benefits which were being paid into the plan fund during the period of participation be payable to the person until he terminates employment.

J.(1)  Upon termination of employment, the person shall receive a lump sum payment from the plan fund equal to his account in that fund, a true annuity based upon his account in that fund, or any other method of payment approved by the board of trustees.  If a person elects to receive a true annuity or other method of payment approved by the board of trustees, funds shall be transferred from the plan fund to the Annuity Reserve Fund to provide for the annuity payments.

(2)  Upon termination of employment, and in addition to the payment provided for in Paragraph (1) of this Subsection, the monthly benefits which were being paid into the plan fund shall begin to be paid to the retiree and he shall receive a supplemental benefit based on his additional service rendered since termination of participation in the fund and resuming active contributing membership in the system, using the normal method of computation of benefit, in an amount attributable to the service and average compensation during the subsequent participation based on the computation formula in effect at the end of the subsequent participation, subject to the following:

(a)  Any supplemental benefit shall be based on the subsequent participation compensation and service credit only, except that the years of subsequent participation shall be added to the member's retirement service credit to determine the supplemental service credit accrual rate for purposes of computing any supplemental benefits earned during the subsequent participation.

(b)  No change in the retirement option selected by the member shall be permitted as to the original retirement. However, at the end of the subsequent participation the member shall be permitted to select any option authorized as to any supplemental benefits earned by virtue of the subsequent participation.

(c)  In the event of the member's death during the subsequent participation, payment of benefits to the surviving spouse with whom the member was living at the time of death shall be in accordance with the Option 2 as provided in R.S. 11:1423, on the supplemental benefits earned by virtue of subsequent participation.

(d)  In the event a member becomes disabled during the period of subsequent participation, supplemental benefits earned by virtue of subsequent participation shall be computed as though the member retired on the date disability began.

(e)  In no event shall the supplemental benefit exceed an amount which, when combined with the original service retirement benefit, equals one hundred percent of the average compensation figure used to compute the supplemental benefit.

Acts 1999, No. 24, §1, eff. July 1, 1999; Acts 2001, No. 97, §1, eff. July 1, 2001; Acts 2003, No. 962, §1, eff. Jan. 1, 2004.

*As appears in enrolled bill.