2013 Maryland Code
STATE PERSONNEL AND PENSIONS
§ 26-401 - Service retirement

§26-401.

(a) (1) Subject to paragraph (2) of this subsection, a member may retire with a normal service retirement allowance if:

(i) on or before the date of retirement, the member:

1. has at least 25 years of eligibility service; or

2. is at least 50 years old; and

(ii) the member completes and submits a written application to the Board of Trustees on the form that the Board of Trustees provides stating the date when the member desires to retire.

(2) A member may not retire before the first day of the month after employment ends.

(b) (1) Except as provided in paragraphs (2) and (3) of this subsection, on retirement under this section, a member is entitled to receive a normal service retirement allowance that equals the number of years of the member’s creditable service multiplied by 2% of the member’s average final compensation.

(2) A member’s normal service retirement allowance under paragraph (1) of this subsection may not exceed 60% of the member’s average final compensation.

(3) (i) This paragraph applies only to a member who is not subject to the Law Enforcement Officers’ Modified Pension Benefit under Subtitle 2, Part II of this title.

(ii) On retirement under this paragraph, the member is entitled to receive a normal service retirement allowance that equals:

1. 2.3% of the member’s average final compensation multiplied by each year of the member’s first 30 years of creditable service; and

2. 1% of the member’s average final compensation multiplied by each year of creditable service in excess of 30 years.

§ 26-401 - 1. Deferred Retirement Option Program (DROP)

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "DROP" means the Deferred Retirement Option Program established under this section.

(3) "DROP member" means a member of the Law Enforcement Officers' Pension System who:

(i) is eligible to participate in the DROP as provided in subsection (c) of this section; and

(ii) elects to participate in the DROP as provided in subsection (e) of this section.

(b) Eligible members. -- There is a DROP for eligible members of the Law Enforcement Officers' Pension System.

(c) Years of service. --

(1) In this subsection, "creditable service" does not include credit for unused sick leave as provided in § 20-206 of this article.

(2) A member of the Law Enforcement Officers' Pension System is eligible to participate in the DROP if the member has at least 25 and less than 30 years of creditable service.

(d) Period of participation. --

(1) In this subsection, "creditable service" does not include credit for unused sick leave as provided in § 20-206 of this article.

(2) An eligible member may elect to participate in the DROP for a period not to exceed the lesser of:

(i) 5 years;

(ii) the difference between 30 years and the member's creditable service as of the date of the member's election to participate in the DROP and retire from the Law Enforcement Officers' Pension System; or

(iii) a term selected by the member.

(e) Election to participate. --

(1) An eligible member who elects to participate in the DROP shall:

(i) complete and submit a written election form to the Board of Trustees, on the form that the Board of Trustees provides, stating:

1. the member's intention to participate in the DROP;

2. the date when the member desires to retire;

3. the period that the member desires to participate in the DROP, as provided in subsection (d) of this section;

4. the date when the member intends to terminate employment with the State in the form of a binding letter of resignation accepted by the Secretary or the Secretary's designee of the Department for which the member is employed; and

5. any other information required by the Board of Trustees to implement the DROP; and

(ii) complete and submit a written retirement application form to the Board of Trustees, on the form that the Board of Trustees provides.

(2) An eligible member's election to participate in the DROP is irrevocable.

(f) Commencement. --

(1) A DROP member's participation in the DROP shall commence on the first day of the month following acceptance by the Board of Trustees of the DROP member's completed election form, retirement application form, and any other information required by the Board of Trustees.

(2) A DROP member is a retiree of the Law Enforcement Officers' Pension System.

(g) Termination. -- Participation in the DROP ends if the DROP participant:

(1) separates from employment in accordance with the binding letter of resignation submitted with the member's election form;

(2) dies;

(3) is terminated from employment by the DROP member's participating employer at any time before the date specified on the member's election form;

(4) shortens the time period for participation in the DROP by delivering to the DROP member's participating employer and the Board of Trustees written notice of the intent of the DROP member to terminate employment; or

(5) accepts an accidental disability retirement allowance as provided in subsection (k) of this section.

(h) Service retirement allowance. --

(1) As of the effective date of participation in the DROP, the Board of Trustees shall determine the DROP member's normal service retirement allowance under § 26-401 of this subtitle.

(2) During the period that a DROP member participates in the DROP, the Board of Trustees shall:

(i) deposit the DROP member's normal service retirement allowance in the DROP for the DROP member's benefit;

(ii) adjust the DROP member's normal service retirement allowance each fiscal year as provided in Title 29, Subtitle 4, Part VI of this article; and

(iii) accrue interest on the amounts calculated under subparagraphs (i) and (ii) of this paragraph for the DROP member into the DROP at the rate of:

1. 6% a year, compounded monthly if the individual is a DROP member on or before June 30, 2011; or

2. 4% a year, compounded annually, if the individual becomes a DROP member on or after July 1, 2011.

(3) A DROP member may not receive creditable service or eligibility service during the period that the DROP member participates in the DROP.

(4) A DROP member's compensation during the period that the DROP member participates in the DROP may not be:

(i) subject to the employer pickup provisions of § 21-303 of this article or any reduction or deduction as a member contribution for pension or retirement purposes; or

(ii) used to increase the DROP member's average final compensation except as provided in subsection (k) of this section.

(5) During the period that a DROP member participates in the DROP, the DROP member shall:

(i) continue to receive compensation, health insurance, and other benefit options established under the State Employee and Retiree Health and Welfare Benefit Program administered by the Secretary of Budget and Management, and any other benefits as an employee of the State;

(ii) be subject to the personnel law, regulations, and policies applicable to an employee of the State agency for which the member is employed; and

(iii) receive retirement benefits only to the extent provided in this section.

(6) The Board of Trustees is not required to establish an individual DROP account for each DROP member.

(7) Each year, the Board of Trustees shall provide a DROP member with a written accounting of the DROP member's account balance in the DROP.

(i) Payment upon termination or death. --

(1) Subject to paragraphs (2), (3), and (4) of this subsection, on termination of a DROP member's participation in the DROP, the Board of Trustees shall pay to the DROP member or, if the DROP member has died, the designated beneficiary of the DROP member, the amount accrued in the DROP for the DROP member under subsection (h)(2) of this section, reduced by any withholding taxes remitted to the Internal Revenue Service or other taxing authority, in a lump sum.

(2) The designated beneficiary of a DROP member is:

(i) the DROP member's surviving spouse;

(ii) if there is not a surviving spouse or if the surviving spouse dies before the youngest child is 18 years old, each child of the deceased DROP member who is under 18 years old; or

(iii) if there is not a surviving spouse or a child who is under 18 years old, the person named as a beneficiary in an acknowledged written designation filed with the Board of Trustees by the DROP member.

(3) A DROP member or designated beneficiary of a DROP member may direct the Board of Trustees to pay all or a portion of the amount accrued for the DROP member's benefit under subsection (h)(2) of this section directly to the custodian of an eligible retirement plan as provided in Title 21, Subtitle 6 of this article.

(4) A DROP member or designated beneficiary of a DROP member is eligible to receive the amount due under this subsection within 90 days after:

(i) the date of termination of the DROP member's participation in the DROP;

(ii) the receipt by the Board of Trustees of a completed application to receive the DROP amount, on the form that the Board of Trustees provides; and

(iii) the receipt by the Board of Trustees of any other information that the Board of Trustees requires to process payment of the DROP member's account balance to the DROP participant, the designated beneficiary of the DROP participant, or the custodian of an eligible retirement plan.

(j) Payment upon termination or death -- Time frame. --

(1) Except as provided in paragraph (2) of this subsection, as of the first day of the month following termination of a DROP member's participation in the DROP, the Board of Trustees shall commence and continue payment of the normal service retirement allowance, including the cost-of-living adjustments as provided in Title 29, Subtitle 4, Part VI of this article, to the member as provided in §§ 26-401 and 26-402 of this subtitle.

(2) If a DROP member dies before termination of the DROP member's participation in the DROP, the Board of Trustees shall pay 50% of the normal service retirement allowance, including the cost-of-living adjustments as provided in Title 29, Subtitle 4, Part VI of this article, to the beneficiary as provided in § 26-402 of this subtitle.

(k) Accidental disability retirement allowance. --

(1) A DROP member is eligible to apply for an accidental disability retirement allowance under § 29-109 of this article if after the DROP member commences participation in the DROP:

(i) the member is totally and permanently incapacitated for duty arising out of or in the course of the actual performance of duty that occurs while participating in DROP, and without willful negligence of the member; and

(ii) the medical board certifies that:

1. the member is totally incapacitated, either mentally or physically, for the further performance of duty by the occurrence described under item (i) of this paragraph;

2. the incapacity is likely to be permanent; and

3. the member should be retired.

(2) If the Board of Trustees grants a DROP member an accidental disability retirement allowance, the DROP member may elect to receive the accidental disability retirement allowance or continue to participate in the DROP.

(3) (i) If a DROP member elects to receive a disability retirement allowance instead of continuing to participate in the DROP, the DROP member shall:

1. submit an application to the Board of Trustees, on the form the Board of Trustees provides, to receive payment of the amount accrued in the DROP in accordance with subsection (i) of this section;

2. execute a written waiver of any benefits to which the DROP member may be entitled under the DROP; and

3. submit an application to retire with an accidental disability retirement allowance, on the form the Board of Trustees provides, stating the effective date of the DROP member's retirement as an accidental disability retiree.

(ii) On acceptance of the application for payment and application to retire, the Board of Trustees shall commence payment of an accidental disability allowance to the DROP member as provided in § 29-110 of this article, except that the DROP member's average final compensation shall be computed as of the effective date of the DROP member's application for an accidental disability retirement allowance.