DEFINITIONS
1.
ATRS means the Arkansas Teacher Retirement System.
2.
Board means the Board of
Trustees of the Arkansas Teacher Retirement System.
3.
DROP means a deferred
retirement option plan enacted by the General Assembly and administered under
ATRS or a reciprocal system.
4.
Participant means a member who elects to participate in T-DROP
under A.C.A. § 24-7-1301 et seq. by authorizing ATRS to make plan
deposits, plan interest, or 10-year plus T-DROP interest into a member's T-DROP
account.
5.
Plan
deposits means the deposits made to each participant's T-DROP account
pursuant to A.C.A. § 24-7-1306.
6.
Plan interest means the rate
per annum, compounded annually on June 30, as the Board shall set and adopt at
the end of each fiscal year, credited annually in each T-DROP participant's
T-DROP account. The interest rate shall be 2% less than the System's average
rate of return with a maximum of 6% and minimum of 2%. The Board will determine
the interest rate for the following fiscal year based upon the rate of return
for the immediately preceding twelve-month period ending March 31 prior to the
start of such fiscal year. The initial calculation of this rate shall begin
March 31, 2005, for interest to be credited in the 2005-2006 fiscal
year.
7.
T-DROP means
the Teacher Deferred Retirement Option Plan established by ATRS under Act 1096
of 1995.
8.
10-year plus
T-DROP interest means the rate per annum, compounded annually, as the
Board shall set and adopt at the end of each fiscal year, credited on June 30
into a member's T-DROP account that meets the following criteria:
A. The member participated in T-DROP for ten
(10) years and continued employment with an ATRS covered employer;
and
B. The member has not retired.
T-DROP PARTICIPATION and ACCOUNT CREDIT
Effective July 1, 1995, in lieu of terminating employment and retiring
under A.C.A. § 24-7-701, an active member of ATRS may elect to participate
in T-DROP and continue to work for a covered employer. By continuing covered
employment, the participant defers receipt of retirement benefits until a later
date.
During participation in T-DROP, ATRS shall credit each participant's
T-DROP account with plan deposits and plan interest.
The plan interest rate determined by majority vote of the Board is
final and binding upon ATRS and shall not be adjusted based on any revised rate
of return reported after that date.
The 10-year plus T-DROP interest rate shall be set by the Board at same
meeting that the plan interest rate is set. The 10-year plus T-DROP interest
rate is limited to a maximum of six percent (6%) and a minimum of four percent
(4%). The 10-year plus T-DROP interest rate will be credited to the
participant's T-DROP account on June 30th of each
year.
The initial 10-year plus T-DROP interest rate for 2010 is set at four
percent (4%) and will be credited to the participant's T-DROP account on June
30, 2010. The 10-year plus T-DROP interest rate shall be set prospectively by
the Board prior to the beginning of each fiscal year and that interest rate
shall be credited to the participant's T-DROP account June
30th of the following year.
The 10-year plus T-DROP interest rate for each year determined by
majority vote of the Board is final and binding upon the ATRS and shall not be
adjusted based on any revised rate of return reported after that date.
RULES
1. To
participate in the T-DROP, the member shall have twenty-eight (28) or more
years of ATRS service credit. For reciprocal service, refer to the section in
this rule titled "DROP PARTICPATION UNDER RECIPROCAL
SYSTEMS".
2. To participate
in the T-DROP, the member shall make the election on an application form
approved by ATRS.
3. Upon review of
the member's application, ATRS shall determine if the member meets the
eligibility requirements specified in A.C.A. § 24-7-1302, and approve or
disapprove the application.
4. If
the member meets the eligibility requirements, the member's T-DROP
participation will begin the July 1 after the application is
approved.
5. The participant's
T-DROP benefit will be the monthly straight life annuity benefit to which the
member would have been entitled had the member retired under A.C.A. §
24-7-701. The participant's T-Drop benefit may be reduced under the conditions
of No. 7 below. The T-DROP deposit shall not include the benefits provided in
A.C.A. § 24-7-713(b) (stipend).
6. Plan deposits shall be a percentage of the
T-DROP benefit, as follows:
A. One hundred
percent (100%) reduced by the product of one percent (1.0%) multiplied by the
number of years of contributory service credit and fractions thereof,
plus,
B. One hundred percent (100%)
reduced by the product of six-tenths percent (0.6%) multiplied by the number of
years of noncontributory service credit and fractions thereof.
C.
i.
In the event a participant whose effective date in the T-DROP is before
September 1, 2003, has more than thirty (30) years of service, the years of
service above thirty (30) years shall be reduced by one-half of one percent
(0.5%) for contributory years and three-tenths of one percent (0.3%) for
noncontributory years.
ii.
Beginning July 1, 2001, when a participant whose effective date in the T-Drop
is before September 1, 2003, reaches normal retirement age, the plan deposits
shall be 100% with no reduction.
iii. For a participant whose effective date
in the T-Drop is September 1, 2003, or after, and who has more than thirty (30)
years of service, the plan deposits for the years of service above thirty (30)
years shall be reduced under Nos. 6A and 6B.
iv. For a participant whose effective date in
the T-Drop is September 1, 2003, or after, the plan deposits for a participant
who reaches normal retirement age shall continue as reduced under Nos. 6A and
6B.
7. A
participant's plan deposit will incur an additional reduction of 0.5% for each
month the member lacks having thirty (30) years of credited service.
8. A participant may elect an annuity option
provided in A.C.A. § 24-7-706. The election shall be made at the time the
participant separates from service and is granted a monthly retirement benefit
or files for retirement upon reaching normal retirement age.
9. A member's participation in T-DROP shall
not exceed ten (10) consecutive calendar years for accruing plan deposits.
If a participant continues covered employment after completing ten (10)
years in T-DROP, the T-DROP account will be credited with 10-year plus T-DROP
interest as set by the Board. Benefits payable at retirement will be based on
the account balance the month before the participant begins drawing retirement
benefits.
10. The annuity
upon which plan deposits are calculated shall receive the cost-of-living
increase provided for in A.C.A. § 24-7-713(a) or § 24-7-727. The
annuity plus the cost-of-living increase is reduced or adjusted under the
procedure described in No. 6 above.
11. The election to participate in the T-DROP
is irrevocable.
12. An application
for ATRS disability benefits by a participant is considered a voluntary
retirement. Therefore, a participant is not eligible for disability retirement
benefits.
13. During or after
completion of T-DROP participation, a member shall not receive service credit
in ATRS or any other state-supported retirement system.
14. A member may not rescind T-DROP
participation or retirement after T-DROP participation to accrue additional
service credit for retirement.
15.
If a T-DROP participant elects to retire and ATRS distributes the T-DROP
account to the participant, the participant shall not be allowed to reenroll in
T-DROP.
16 As soon as possible
after the end of each fiscal year, ATRS shall furnish the participant an annual
statement of the participant's T-DROP account.
17. Participation in T-drop ceases when:
a. The participant separates from service and
is granted a monthly retirement benefit from ATRS or a reciprocal plan;
or
b. The participant reaches
normal retirement age and retires without separation from service.
18. When the member's
participation in the T-DROP ceases, the member may elect to receive the balance
in the T-DROP account as a lump sum or as a monthly benefit annuitized
according to an annuity option offered for voluntary retirement and elected by
the member. If annuitized, the T-DROP benefit shall be in addition to the
monthly benefit that the member is entitled to under the age and service
retirement provisions.
19. A
lump-sum distribution of a participant's T-DROP account balance is eligible to
be rolled over into a qualifying retirement plan. The ATRS may only roll over
the T-DROP account balance into one qualifying plan. A participant must elect
to roll over a minimum of $2,500 in order to request a rollover of the T-DROP
account balance. All rollovers must be done in accordance with Policy No. 8-4
(Rollover Acceptance and Distribution).
20. If the participant elects to receive the
balance in the T-DROP account as a monthly benefit, a factor approved by the
Board shall be used to determine the conversion of the T-DROP balance to a
lifetime monthly benefit amount.
21. When the member's participation in the
T-DROP ceases, ATRS shall calculate age and service retirement as if the member
had retired on the T-DROP election date.
22. The T-DROP is intended to operate in
accordance with Section 415 and other applicable sections of the IRS Code. Any
provision of the T-DROP that conflicts with an applicable provision of the IRS
Code is invalid.
23. If a
participant separates from covered employment but does not apply for monthly
retirement benefits, the T-DROP monthly deposit shall cease the month of
separation from service. No deposits will be credited to the participant's
account for the duration of the separation. Upon returning to covered
employment, the monthly deposits will resume. Upon application for retirement,
benefits will be paid according to the account balance at the time of
separation from service or the month prior to the effective date of benefits
after reaching normal retirement age.
24. If a T-DROP participant leaves
ATRS-covered employment to serve, on a voluntary or involuntary basis, in the
uniformed services of the United States and returns to ATRS-covered employment,
the member shall be treated as not having incurred a break in
service with the
employer. The employer shall certify to the ATRS that reemployment was in
accordance with the requirements set forth in Section 4312 of P.L.103-353, the
Uniformed Services Employment and Reemployment Act (USERA) of 1994.
Under this subsection, uniformed services of the United States are
limited to the armed forces, the Army, and the Air National Guard when engaged
in active duty for training, inactive duty training, full-time National Guard
duty, the commissioned corps of the Public Health Service, and any other
category of persons designated by the President in time of war or
emergency.
DEATH OF A T-DROP PARTICIPANT PRIOR TO RETIREMENT
1. In the event a T-DROP participant dies,
the benefits payable from the T-DROP account shall be determined according to
A.C.A. § 24-7-710.
2. A T-DROP
participant's surviving spouse may choose to receive the T-DROP benefit in a
lump sum. If the spouse elects a lump-sum payment of the T-DROP balance, the
survivor annuities payable under A.C.A. § 24-7-710 shall be calculated on
the service credit and salary earned by the member prior to participating in
T-DROP.
3. For the purposes of
A.C.A. § 24-7-709 related to disposition of residue, any amount received
from the T-DROP account, either in the form of a lump sum or annuity payments,
shall be considered to be annuity payments received by the member or his or her
designated beneficiary and shall act to reduce or eliminate the disposition of
residue payable under A.C.A. § 24-7-1310(c).
DROP PARTICPATION UNDER RECIPROCAL SYSTEMS
1. If a reciprocal system offers a DROP for
its members, service credit in ATRS, a reciprocal system, or the combination of
service credit in the systems may be counted to meet the minimum service credit
requirements for participation under each system's DROP.
2. The benefit payable by the reciprocal
system shall be based on the DROP provisions of each system. The final average
salary used to determine plan deposits shall be that of the reciprocal system
which furnishes the highest final average salary at the time of retirement.
Each reciprocal system shall use the method of computing final average salary
stipulated by its law. Salaries earned in the Arkansas Judicial Retirement
System and alternate retirement plans shall not be used in computing final
average salary.
3 Plan deposits and
plan interest credited to the DROP account will be paid under the deferred
retirement option program in effect for that reciprocal system.
4. ATRS shall promulgate
rules and
regulations to coordinate its benefits with any reciprocal system providing a
DROP.
Approved: June 13, 1995
Amended: July 30, 1997
June 17, 2003
February 15, 2005
July 18, 2005
April 26, 2007
February 1, 2010 under emergency rules.
June 7, 2010 Permanent
