2006 Louisiana Laws - RS 11:1763 — Deferred retirement option plan

§1763.  Deferred Retirement Option Plan

A.  In lieu of terminating employment and accepting a service retirement allowance pursuant to R.S. 11:1781 and 1782 or R.S. 11:1801 and 1802, any member of Plan A who is eligible for a normal retirement pursuant to R.S. 11:1781 or any member of Plan B who is eligible for a normal retirement pursuant to R.S. 11:1801 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.(1)  The duration of participation in the plan shall be specified and shall not exceed three years.

(2)   Any person who had previously participated in the Deferred Retirement Option Plan, who remained in service after participating in the plan and who continues to be in service on July 1, 1993, shall be allowed to participate in the plan for one additional year subject to the same conditions and benefit payments that existed when the person first entered participation; written notice of the member's decision to reenter participation shall be given to the system.

D.  A person may participate in the plan only once.

E.  Upon the effective date of the commencement of participation in the plan, active membership and participation in the regular retirement plan of the system shall terminate and active membership and participation in the Deferred Retirement Option Plan of the system shall commence.  Employer contributions shall continue to be payable by the employer during the person's membership and participation in the plan, but payment of employee contributions shall cease upon the effective date of the person's commencement of 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 a subaccount within the Deferred Retirement Option Plan, which reflects the credits attributed to the person in the plan, but the monies shall remain a part of the regular retirement fund until disbursed to the person in accordance with plan provisions, and the monies shall not be subject to state income taxation while maintained in the fund or upon distribution therefrom.

F.(1)  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 year.

(2)  With respect to any individual who was eligible to participate in the Deferred Retirement Option Plan prior to January 1, 2004, after a person has terminated his participation in the Deferred Retirement Option Plan, his individual account balance in the plan shall earn interest at the actual rate of return earned on the funds left on deposit with the system for the purpose of earning interest thereon as certified by the custodian of the system's assets. Any such interest shall be credited to his individual account balance on a daily basis.  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 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:

(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.

G.  The deferred retirement option plan fund shall not be subject to any fees, charges, or other similar expenses of any kind for any purpose.

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 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 to be paid to the retiree.

I.  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.

J.  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.  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.  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.  Also upon termination of employment, the monthly benefits which were being paid into the plan fund shall begin to be paid to the retiree and he shall receive an additional 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:

(1)(a)  If his first employment making him eligible for membership in the system began on or before June 30, 2006, and 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 first employment making him eligible for membership in the system began on or after July 1, 2006, and his period of additional service is less than sixty months, the average compensation figure used to calculate the additional benefit shall be that used to calculate his original benefit.

(2)(a)  If his first employment making him eligible for membership in the system began on or before June 30, 2006, and his period of additional service is thirty-six months or more, the average compensation figure used to calculate the additional benefit shall be based on his compensation during the period of additional service.

(b)  If his first employment making him eligible for membership in the system began on or after July 1, 2006, and his period of additional service is sixty 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.

(3)  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.

If a person 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 1991, No. 74, §3, eff June 25, 1991; Acts 1991, No. 68, §1; Acts 1992, No. 543, §1, eff. Jan. 1, 1993; Acts 1993, No. 929, §1, eff. July 1, 1993; Acts 1995, No. 569, §1, eff. July 1, 1995; Acts 2001, No. 960, §1, eff. July 1, 2001; Acts 2003, No. 962, §1, eff. Jan. 1, 2004; Acts 2006, No. 590, §1, eff. July 1, 2006; Acts 2006, No. 780, §1, eff. June 30, 2006.

*As appears in enrolled bill.