Fla. Admin. Code Ann. R. 19-11.003 - Distributions from FRS Investment Plan Accounts

(1) Distributions from Investment Plan accounts are made after the member terminates all employment from all Florida Retirement System (FRS) employers and meets distribution eligibility requirements as set out below in subsection (2), or after the member's death. Monies that are rolled over from the Pension Plan Deferred Retirement Option Program (DROP) are available for immediate distribution.

(2) Distributions are available after the member terminates all employment with all FRS employers.

(a) An Investment Plan member is not entitled to an account distribution until the member has terminated and no longer providing services, in paid or unpaid arrangements, with all FRS employers for three (3) full calendar months following the month of termination, except as provided in paragraph (d), below. This includes but not limited to, employment in any regularly established position, full-time or part-time employment, temporary employment, employment through third-parties providing services to an FRS employer, Other Personal Services (OPS), election poll employment, or substitute or adjunct teaching. Example: If a member terminates on May 15, the three full calendar months are June, July, and August. Therefore, the member cannot request a distribution until September.

(b) If the member's termination date has not been submitted by the employer on the monthly retirement report within the three (3) calendar months, the employer can complete and return the "Employment Termination Form," Form ETF-2, rev. 06-19, http://www.flrules.org/Gateway/reference.asp?No=Ref-14010, which is hereby adopted and incorporated by this reference. The termination form can be obtained by accessing the website MyFRS.com and then clicking on Forms or by calling the MyFRS Financial Guidance Line at 1(866)446-9377, Option 4 or, for members who are deaf, hard of hearing, or speech impaired, TRS 711. This form has instructions and a section for the employer to provide the member's date of termination. Alternatively, the employer can log onto the employer page at MyFRS.com and go to FRS Online for Employer Services and submit the termination date electronically.

(c) Upon the expiration of the three (3) calendar months after termination of all employment from all FRS-participating employers, the member may request a distribution from the Investment Plan Administrator, by calling the toll free MyFRS Financial Guidance Line at 1(866)446-9377, Option 4 (TRS 711), or by logging on to the MyFRS.com website, accessing his or her personal account information, and then requesting the distribution through the online services.

(d) A member who has reached his or her normal retirement date, as provided in Section 121.021(29), F.S., and has terminated all employment from all FRS employers for one (1) calendar month may request a one-time distribution of up to 10 percent (10%) of the vested account balance. For example, if such a member terminates on May 15, the one calendar month is June. The member can request a one-time distribution of up to 10 percent (10%) in July.

(e) A member who transfers to the Pension Plan from the Investment Plan and leaves a balance in the member's Investment Plan account is a member of the Pension Plan and, as such, the member cannot take a distribution of the surplus Investment Plan funds until the member begins receiving their monthly Pension Plan benefit.

(3) All distributions of benefits from a member's account(s) in the Investment Plan shall begin and be made no later than as prescribed by Code s. 401(a)(9) and the regulations issued thereunder, including any proposed regulations, and shall be subject to the incidental death benefit rules of Code s. 401(a)(9)(G). A copy of the Code section can be obtained by accessing the IRS website at irs.gov.

(a) Distribution of benefits to a member shall be made or commence not later than April 1 following the close of the calendar year during which the member attains age 73 and has terminated all employment from all FRS employers.

(b) Any benefits payable to a beneficiary designated by the member shall be distributed as set forth in Rule 19-11.002, F.A.C.

(4) A member may request benefits to be distributed as a periodic or installment distribution, a partial lump-sum payment, various annuity options, or a lump-sum distribution. A member may elect to have any portion of the eligible rollover distribution paid directly to an eligible retirement plan specified by the member as a direct rollover. Any distribution, if applicable, will be subject to the withholding of taxes which are remitted to the Internal Revenue Service.

(5) All distributions of benefits must be made in accordance with Code provisions, which shall override any distribution options inconsistent with such provisions.

(6) Distributions to Alternate Payees as a result of a Qualified Domestic Relations Order (QDRO).

(a) Upon receipt of a QDRO from a court of competent jurisdiction, the amount of the member's Investment Plan assets specified by the QDRO will be transferred to the named alternate payee. The alternate payee may leave the transferred assets in the Investment Plan or request a distribution from the account once the account has been established in the alternate payee's name as provided in the QDRO and the alternate payee has received a Personal Identification Number (PIN).

(b) Upon receipt of the PIN, the alternate payee may request a distribution by calling the toll free MyFRS Financial Guidance Line at 1(866) 446-9377, Option 4 or by logging on to MyFRS.com, going to "Investment Plan," accessing his or her personal account information, and then requesting the distribution through the online services.

(7) De Minimis Distributions.

(a) If an inactive member's account balance is $1,000.00 or less, such amount may be subject to an automatic distribution. However, a distribution will not occur until the member has been terminated from all employment with FRS-participating employers for a minimum of six (6) calendar months.

(b) If the member meets the termination requirements and upon receiving notification of the automatic distribution, the distribution either will be made as a complete lump-sum liquidation of the account balance, subject to the provisions of the Internal Revenue Code, or if so instructed by the member, a lump-sum direct rollover distribution on the member's behalf paid directly to the custodian of an eligible retirement plan, as defined by the Internal Revenue Code. If a member rolls money into the Investment Plan from another qualified plan, which brings the account balance greater than $1,000.00, no automatic distribution will occur unless the balance should become $1,000.00 or less in the future.

(c) If such member returns to work for an FRS employer after receiving this automatic distribution, the member is not considered a reemployed retiree and will not be subject to any limitation applicable to such employees.

(8) Required Minimum Distributions ("RMD").

(a) Members, age 73 or older, must begin taking an annual minimum distribution from their Investment Plan accounts if they have terminated all employment with FRS employers.

(b) The amount of an RMD in any year is based on account balances as of December 31st of the prior year. Once the RMD has been calculated, the RMD will be paid to the member, even if the member returns to employment with an FRS employer during the calendar year.

(c) The Investment Plan Administrator will notify a member who is subject to an RMD distribution at the beginning of each calendar year. At the end of the calendar year in which the RMD was required to be paid, if the member has not requested the required RMD distribution amount, the Investment Plan Administrator will initiate an automatic RMD to meet the mandatory required distribution amount. Members have the right to defer the initial RMD to April of the year following the year in which the RMD was payable. Members can defer the initial RMD by calling the Investment Plan Administrator at 1(866)446-9377, Option 4 or, for members who are deaf, hard of hearing, or speech impaired, TRS 711, by November 30.

(d) If such member returns to work with an FRS employer after receiving this automatic distribution, the member is not considered a reemployed retiree and will not be subject to any limitations applicable to such employees.

(9) Pending Distributions.

(a) An Investment Plan member eligible to request a distribution pursant to subsection (2) above, may request a distribution forty five (45) days prior to his or her eligibility date and have it pended for processing until the first business day of the month the member is eligible for the distribution. A member who has reached his or her normal retirement date is eligible to request a distribution fifteen (15) days prior to his or her eligibility date for the one-time distribution of up to ten (10%) of the member's vested account balance. The distribution will process after 4:00 p.m. (EST) on the first business day of the month the member is eligible for the distribution. The distribution will be based on the total account balance at the close of business on the day the distribution is processed. The member can call the Investment Plan Administrator at 1(866)446-9377, Option 4, or, if deaf, hard of hearing, or speech impaired, at TRS 711, to process the distribution.

1. Example 1: A member terminates on May 15. The three calendar months are June, July, and August. Thus, the member is eligible to request a distribution the first business day of September. On July 15, or the first business day after July 15, the member can call the Investment Plan Administrator to process the distribution. The distribution will pend and process on the first business day in September.

2. Example 2: A member who has reached his or her normal retirement as provided in paragraph (2)(a) above, terminates on August 15. One full calendar month is the month of September. The member is eligible to request a one-time distribution of up to 10 percent (10%) of the vested account balance on the first business day of October. On September 15, or the first business day after September 15, the member can call the Investment Plan Administrator to process the distribution. The distribution will pend and process on the first business day in October.

(b) A member can make changes to a pending distribution up until 4:00 p.m. (EST) on the pending distribution date. Example: If a pending distribution is scheduled to process on June 1, the member can make changes to the pending distribution up to 4:00 p.m. (EST) on June 1.

(c) A member who returns to employment with an FRS employer in any capacity during the pending distribution period must notify the Investment Plan Administrator to cancel the distribution.

(d) If the Investment Plan Administrator receives notification that the member's employment status has changed from terminated to active during the pending distribution period, the pending distribution will be canceled.

(e) A distribution cannot be pended if the member has passed his or her distribution eligibility date.

(10) Invalid distributions.

(a) If a member or a former member of the Investment Plan receives an invalid distribution, the member or former member is required to repay the entire invalid distribution within ninety (90) days of the member's receipt of a final notification from the SBA, or in lieu of repayment, the member must terminate all employment from all FRS-participating employers. If the member fails to repay the invalid distribution, or terminate employment, the employer is liable for the repayment of the invalid distribution even if the member signed a statement at the time the member was hired that no benefit had been received from the Plan.

1. If a member repays the entire distribution, the member's repayment will be deposited in the member's Investment Plan account; the member will be returned to the Investment Plan; and all future employee and employer contributions will be deposited in the funds the member has chosen.

2. If the employer repays the entire distribution, the repayment will be deposited in the Investment Plan Trust Fund and allocated to the Investment Plan's forfeiture account to offset plan expenses. The member will be returned to the Investment Plan; and all future employee and employer contributions will be deposited in the funds the member has chosen. The member will not receive contributions for the amount repaid by the employer.

3. If the member fails to repay the invalid distribution and terminates employment, the SBA will declare the member a retiree and will not pursue the repayment of the invalid distribution pursuant to paragraph (a), above. As a retiree, the member is subject to the provisions of Section 121.122, F.S., if the member is reemployed in the future with an FRS-participating employer in a regularly established position.

(b) The following are examples of scenarios that could result in invalid distributions. These are only examples and are not inclusive of all possible situations. Members and employers are encouraged to contact the Investment Plan Administrator to discuss the particular situation.

1. Example 1: A member joined the Investment Plan effective September 1, 2002. The member terminated all employment from his FRS employer on August 24, 2023. On December 15, 2023, the member takes a partial distribution from the Investment Plan account. However, the member returned to employment with an FRS employer on December 1, 2023. The member took an invalid distribution because the member was working for an FRS employer at the time the member received the distribution.

2. Example 2: A member joined the Investment Plan effective April 1, 2004. The member terminates employment with an FRS employer on November 12, 2023. On March 1, 2024, the member takes a total distribution from his Investment Plan account. The member returns to employment as a substitute teacher with an FRS employer on April 15, 2024. The March 1, 2024 distribution is invalid since the member returned to work within six (6) full calendar months of the retirement date.

3. Example 3: A member joined the Investment Plan effective May 1, 2005. The member terminates employment with the member's FRS employer on November 12, 2023. The member has reached the normal retirement date. On January 5, 2024, the member receives the one-time distribution of up to 10 percent from the Investment Plan account. The member returns employment with an FRS employer on May 15, 2024. The January 5, 2024, distribution is invalid since the member returned to work within six (6) calendar months of the member's retirement date.

4. Example 4: A member joined the Investment Plan effective December 1, 2010. The member is terminated by his FRS employer on April 3, 2022, for violating standards of employee conduct. The member files a grievance against the employer and requests to be reinstated with full back pay. On February 15, 2023, the member requests a total distribution from their Investment Plan account. On September 22, 2023, the member's grievance is granted, the member's termination is negated and the member is reinstated to employment as of April 3, 2022 with full back pay through September 22, 2023. The member's employment records are corrected to show the member had an employee/employer relationship from April 3, 2022 through September 22, 2023. The member's February 15, 2023, distribution is invalid since the member was not terminated from employment with an FRS employer at the time the member received the distribution.

(11) Documentation of a distribution made prior to January 1, 2010.

A member or beneficiary who requests documentation of a distribution made prior to January 1, 2010, will incur a special service charge due to the extensive resources required to retrieve and produce such documentation, if such retrieval is possible. The requestor will be advised of the amount of such charge at the time the request is made. Upon payment of the charge by the requestor, the request will be promptly processed. If the document cannot be retrieved, the payment will be reimbursed to the requestor.

Notes

Fla. Admin. Code Ann. R. 19-11.003

Rulemaking Authority 121.4501(8) FS. Law implemented 119.07(4)(d), 121.021(29), (39), 121.091(5)(j), 121.4501(20), 121.591, 121.77, 732.802 FS.

New 3-9-06, Amended 11-26-07, 5-19-09, 1-7-10, 8-7-11, 7-12-12, 12-16-12, Amended by Florida Register Volume 41, Number 241, December 15, 2015 effective 12/30/2015, Amended by Florida Register Volume 43, Number 060, March 28, 2017 effective 4/12/2017, Amended by Florida Register Volume 44, Number 020, January 30, 2018 effective 2/12/2018, Amended by Florida Register Volume 48, Number 081, April 26, 2022 effective 5/11/2022, Amended by Florida Register Volume 50, Number 070, April 9, 2024 effective 4/22/2024.

New 3-9-06, Amended 11-26-07, 5-19-09, 1-7-10, 8-7-11, 7-12-12, 12-16-12, 12-30-15, 4-12-17, 2-12-18, 5-11-22, 4-22-24.