(a)
Contributions to DROP
account.
(1)
(A) For a member who has thirty (30) or more
years of actual service, the contribution shall:
(i) Be seventy-five percent (75%) of the
member's computed benefit after election of a straight life or option benefit,
as required by Subchapter 8 of Chapter 3 of Title 24 of the Arkansas Code;
and
(ii) Include the temporary
annuity, if applicable.
(B) For a member who has twenty-eight (28)
years but less than thirty (30) years of actual service, the contribution shall
be seventy-five percent (75%) reduced by five-tenths percent (0.5%) for each
month that the DROP election precedes the date the member would complete thirty
(30) years of actual service.
(2) Contributions to the account shall be
increased for COLAs and ad hoc increases granted to retirees.
(b)
Interest on the DROP
account.
(1) Interest shall be credited
monthly and compounded annually to the date of actual retirement.
(2) The Board of Trustees of the Arkansas
Public Employees' Retirement System:
(A) Shall
reevaluate the DROP interest rate annually at its regular February meeting;
and
(B) May modify it by a simple
majority vote without promulgating additional rules.
(c)
DROP payment
methods.
(1) The member may elect a
lump sum or an annuity that concludes at the completion of twenty-five (25)
years.
(2)
(A) The member may select a combination of
lump sum, rollover, and annuity, never to exceed the total amount of the DROP
accrual.
(B) If the member elects a
lump sum, the member may request that the lump sum be transferred to another
qualified plan in a trustee-to-trustee transfer.
(C)
(i) If
the member elects a monthly annuity, the monthly amount shall remain constant
for the twenty-five-year term.
(ii)
That is, COLAs and ad hoc increases will not be added to this monthly annuity
and the balance in the account will not earn interest after the effective date
of retirement.
(d)
Death of a DROP participant.
(1) In the event a DROP participant dies
during the period of participation, the benefit payable from the Arkansas
Public Employees' Retirement System shall be determined as though the
participant had separated from service and been found eligible for monthly
benefits by the board on the day prior to the death, with death following
immediately thereafter (per Acts 1997, No. 1052).
(2) The balance in the DROP account shall be
paid to the designated beneficiary or to the member's estate if no designated
beneficiary survives or is named.
(e)
Death of a retiree receiving a
monthly annuity from DROP.
(1) Upon the
death of a retiree who was receiving a monthly annuity from the DROP:
(A) The DROP annuity will be treated as if it
had been a straight life benefit; and
(B) The undistributed remaining balance in
the DROP account, if any, will be paid to the designated beneficiary.
(2) The regular monthly retirement
benefit will be treated according to the election made by the retiree at his or
her entry into the DROP.
(f)
Failure to terminate covered
employment within the maximum allowable time from DROP entry.
(1) If a DROP participant fails to terminate
employment within ten (10) years of entry into the DROP, the participant shall
forfeit the balance in the DROP account.
(2)
(A) The
participant's employer shall be required to pay all contributions, with
interest, that would have been paid on behalf of the member had he or she not
participated in the DROP.
(B) The
employer will acknowledge this requirement on the member's application for
participation in the DROP.
(3)
(A)
However, a DROP participant also enrolled in the Arkansas Teacher Retirement
System T-DROP due to reciprocal service credit shall be permitted to keep the
accrued balance on account with the Arkansas Public Employees' Retirement
System until completion of the term of the Arkansas Teacher Retirement System
T-DROP.
(B) No interest shall be
paid on such balances.
(C) COLAs
will continue to be paid.
(g)
Review of provisions.
(1)
(A) The
provisions of the DROP program will be reviewed periodically, as determined to
be necessary by the Board.
(B) The
contribution and interest rate provisions may be adjusted prospectively as the
board considers such action to be actuarially appropriate.
(2) A member whose DROP participation has
ceased shall not be prohibited from thereafter seeking and taking a
publicly-elected office that otherwise is covered under the Arkansas Public
Employees' Retirement System but that member shall not be eligible to rejoin
the Arkansas Public Employees' Retirement System.
(h)
DROP provisions for members called
to active duty.
(1)
Generally.
(A)
(i) A DROP participant who is called to
active duty will provide the Arkansas Public Employees' Retirement System with
a copy of his or her orders that will be maintained in the member's
file.
(ii) A copy of the orders
will be utilized to verify the date that the member is called to active
duty.
(B)
(i) The employer will continue to report the
DROP participant on the monthly DROP report.
(ii) The employer representative will
indicate that the member is on military leave.
(C) When the member is released from active
duty, he or she will submit a copy of the DD214 Form or other appropriate
documents to the Arkansas Public Employees' Retirement System to verify that
the member has returned to covered employment, been released from active duty,
or both.
(2)
Maximum participation period.
(A)
A DROP participant who is on active duty shall continue to receive his or her
monthly DROP payment (which includes any benefit enhancements awarded to
eligible retirees) until the maximum allowable time in the DROP has occurred or
the member requests retirement and distribution of his or her DROP account,
whichever occurs first.
(B)
(i) If the member has participated in the
DROP for at least five (5) years, he or she must:
(a) Complete a retirement application packet
and DROP distribution form or forms prior to his or her departure for active
duty; and
(b) Deliver the completed
forms to the Arkansas Public Employees' Retirement System office along with a
copy of his or her orders.
(ii) The retirement application and DROP
distribution forms will be held and processed on the effective date indicated
unless he or she returns to covered employment within the maximum allowable
DROP term.
(C) Should
the DROP member not deliver a retirement application packet and DROP
distribution form or forms to the Arkansas Public Employees' Retirement System
and the maximum allowable time in the DROP expires prior to the member
returning to covered employment, requesting retirement, or both:
(i) The monthly DROP accrual will cease after
reaching the maximum allowable time in the DROP and no additional interest will
be paid;
(ii) The monthly
retirement benefit will not become effective until the member files a completed
retirement application and complies with applicable deadlines; and
(iii) The DROP account balance shall be
distributed upon the member's filing of the required DROP distribution form or
forms.
(i)
Death while on active duty.
(1) In the event a DROP participant on active
duty dies during the period of DROP participation, the benefit payable from the
Arkansas Public Employees' Retirement System shall be determined as though the
participant had separated from service and been found eligible for monthly
benefits on the day prior to his or her death, with death following immediately
thereafter.
(2)
(A) If survivor benefits are payable in
accordance with Arkansas Code § 24-4606, the surviving spouse (who has
been married to the participant for at least one (1) year), dependent children,
or dependent parents will receive monthly benefits.
(B) The spousal benefit will be computed as
if the member had elected Option B75.
(3)
(A) The
balance in the participant's DROP account will be adjusted to reflect a balance
as if the member had chosen Option B75 upon entering the DROP.
(B) The DROP balance will then be paid to the
designated beneficiaries.
(j)
Becoming eligible for DROP
participation while on active duty.
(1)
(A) If a member becomes eligible to
participate in the DROP while on active duty, he or she will be placed in the
plan retroactive to the date of initial eligibility providing the application
is received within one (1) month of the member returning to covered
employment.
(B) Such participation
will also be contingent upon the necessary employee, if applicable, and
employer contributions being made to the Arkansas Public Employees' Retirement
System for the period of active duty prior to the employee entering the
DROP.
(k)
Reemployment.
(1) After release
from active duty, should a DROP member fail to apply for reemployment or fail
to accept reemployment pursuant to the provisions of
38
U.S.C. §
4312, as amended, the employer
shall promptly notify the Arkansas Public Employees' Retirement
System.
(2) After notice to the
member and opportunity for hearing, should the Arkansas Public Employees'
Retirement System determine that the member failed to apply for or accept
reemployment as provided above, the Arkansas Public Employees' Retirement
System shall:
(A) Determine that the member's
retirement application and DROP distribution form required under Maximum
Participation Period, subdivision (h)(2)(C)(ii) of this section are void as of
the date of the member's release from active duty;
(B) Terminate payments of the deferred
benefit into the member's DROP account;
(C) Deduct any payments of the deferred
benefit into the member's DROP account after date of the member's release from
active duty and interest thereon and pay said amount of the deferred benefit
without interest thereon to the member as accumulated monthly annuity payments
upon the member's filing a completed retirement application and DROP
distribution forms in compliance with applicable deadlines;
(D) Not pay interest on the member's DROP
account after the date of the member's release from active duty and hold said
account balance pending the member's filing of the DROP distribution forms;
and
(E) Pay the member's monthly
retirement annuity to the member upon his or her filing a completed retirement
application and in compliance with applicable deadlines.
(l)
Procedures applicable to
DROP - Active duty issues.
(1) The
Executive Director of the Arkansas Public Employees' Retirement System shall:
(A) Determine all issues of interpretation or
implementation of this rule in regard to DROP members and active military duty;
and
(B) Conduct any hearings
provided for herein or required by other law.
(2)
(A) If
the member is not satisfied with the executive director's decision on matters
that were not decided in conjunction with a hearing, the member may request
that the issue be presented to the board.
(B) The board shall:
(i) Review the:
(a) Member's request for review;
(b) Record considered by the executive
director; and
(c) Executive
director's decision;
(ii) Afford the member the opportunity to:
(a) Present additional information or
documentation; and
(b) Appear
before the board; and
(iii) Determine whether to:
(a) Affirm or modify the executive director's
decision; or
(b) Return the case to
the executive director for further consideration.
(3)
(A) A member who was a party to a hearing by
the executive director concerning DROP and active military duty and who is not
satisfied with the executive director's decision may file an appeal to the
board.
(B) The member shall file
notice of appeal in writing, stating the grounds therefore, with the executive
director on or before thirty (30) days following the date of record of the
executive director's decision.
(C)
The executive director's written decision shall be mailed to the member by
certified mail, return receipt requested, restricted delivery to the member's
last known address of record.
(4) Upon appeal, the review by the board
shall be confined to the record considered by the executive director, provided,
however:
(A)
(i) The member may apply to present
additional evidence and should the board find that the evidence is material and
that there were good reasons for failure to present it in the proceeding before
the executive director, the board may order that the additional evidence be
taken before the executive director upon any conditions that may be
just.
(ii) The executive director:
(a) May modify the findings and decision by
reason of the additional evidence; and
(b) Shall file that evidence and any
modification, new findings, or decisions with the board; and
(B)
(i) Should the member assert any alleged
irregularity in procedure before the executive director not shown in the
record, the board:
(a) May hear testimony on
that issue; or
(b) In its
discretion may remand the matter to the executive director to conduct further
proceedings on the record on the member's allegation of procedural
irregularity.
(ii) After
any further proceeding by the executive director regarding any procedural
irregularity, the executive director:
(a) May
modify the findings and decision by reason of the additional evidence;
and
(b) Shall file that evidence
and any modifications, new findings, or decisions with the board.
(iii) The member may request the
opportunity to make an oral presentation to the board.
(5) The board may affirm or
reverse the executive director's decision or remand the case for further
proceedings.
(m)
Separation from employment - Popularly-elected official.
(1)
(A) In
accord with Acts 2019, No. 624, a member who participates in the Arkansas
Public Employees' Retirement System Deferred Retirement Option Plan (DROP) is
not required to separate from service at the end of the maximum allowable time
in the DROP participation following entry into the DROP if it would prevent
that member from taking or holding office as a popularly-elected
official.
(B) That member will not
forfeit their DROP balance if they separate from service as provided under
Arkansas Code §
24-4-520
after that member leaves elected office.
(2)
(A) The
DROP balance of a popularly-elected official who does not separate service
after the maximum allowable time in the DROP and pursuant to Acts 2019, No.
624, shall remain with the Arkansas Public Employees' Retirement System until
he or she separates from service.
(B) At that time, the member's DROP balance
shall be distributed according to the Arkansas Public Employees' Retirement
System rules regarding distribution.
(C) That DROP balance shall not accrue
interest while being held by the Arkansas Public Employees' Retirement System
pursuant to this part.
(3) A member who does not separate service
after the maximum allowable time in the DROP and pursuant to Act 624 of 2019
shall have his or her monthly Arkansas Public Employees' Retirement System
retirement annuity benefit paid to begin when the member separates from service
as provided under Arkansas Code §
24-4-520.
(4) The employer of the popularly-elected
official shall continue to make the same employer contributions on behalf of
the popularly-elected official as it would have been required to make for a
rehired retiree.
Authority. Arkansas Code §
24-4-105.
Codification Notes. This section as promulgated
prior to codification into the Code of Arkansas
Rules 2024 provided as follows:
"214- 1997 (5) - DROP Provisions (as amended May 1999, May 2001,
August 2003, November 2010, May 2011, November 2011, October 2017, and December
2019)"
"COLA" means cost of living adjustment.
"DROP" means deferred retirement option plan.
"T-DROP" means teacher deferred retirement option
plan.
Notes
075.00.22 Ark. Code R.
§
002
Adopted
by
Arkansas
Register Volume 47 Number 05, Effective
5/8/2022