Brooke Stearns

What’s New in the FRS and What is the DROP? Presented by Brooke Stearns Osceola County Human Resources Director

SB 2512A (Chapter 2015-227, Laws of FL) Established new employer contribution rates for the 2015-2016 plan year. Employee contributions remain the same 3%. Health Insurance Subsidy (HIS) increased from 1.26% to 1.66% The assessment to administer the FRS Investment Plan and the My FRS Financial Guidance Program remains at .04%. Gove Scott signed the bill into law on 6/23/15…effective July 1, 2015. List a few rates (handouts) Explain HIS

Financial Planners NOT Endorsed The FRS offers Self-Directed Brokerage Accounts (SDBA). Allows members to access different investment choices in addition to the IP’s funds. The FRS has a contract with Ernst and Young (EY) to provide FREE, UNBIASED financial planning and counseling. EY does not sell any investment or insurance products. Members are providing their personal financial planner authorization to trade their SDBA. This is permissible, but they are not endorsed by the FRS Be cautious providing your PIN, User ID, Password. Monitor your account for unauthorized distributions, fees from outside planners.

U.S. District Court Ruling FRS Plan Retirees and DROP participants in same sex marriages recognized in other States and Counties will have an opportunity to change their option selection. Had to choose 1 or 2, not can select 3 or 4. Must notify the FRS in writing.

Deferred Retirement Option Program or… THE DROP! Provides you with an alternative method of payment of your retirement benefits for a specified and limited period (if eligible). You stop earning service credit toward a future benefit. Your retirement benefit is calculated at the time you enter the DROP. Your monthly retirement benefits accumulate in the FRS Trust Fund earning interest while you continue to work for an FRS employer.

When am I Eligible to Retire/Enter the DROP? BEFORE JULY 1, 2011 Regular Service Class Age 62 or 30 Years of Service 6 Years Vesting Special Risk Age 55 or 25 Years of Service

Eligibility (cont.) Special Risk AFTER JULY 1, 2011 Regular Service Class Age 65 or 33 Years of Service 8 Years Vesting Special Risk Age 60 or 30 Years of Service You must go into DROP one year to the date you are age eligible or you cannot enter the DROP. They also take one month away for every year you do not enter the DROP when age appropriate. If you go by YOS, you must be age 57 or 52 for Special Risk

Paper work to enter DP11 DPELE FR11o SA1 Birth Certificate (or BVR-1) Beneficiary form for retirees All forms must be notarized and one form is signed by your County FRS Rep SA1 must be signed by spouse if you select option 1 or 2

Let’s Talk About Options You can select from 4 Options that provide a lifetime benefit for you. Options 2, 3, and 4 provide a reduced lifetime benefit for your beneficiary. (Adjustment is based on your Option 1 monthly calculated benefit). Once you make a decision and enter the DROP, it is FINAL.

Who Can Be A Beneficiary? Brooke Stearns….that’s Brooke with an “e” And S.T.E.A.R.N.S. The “a” is silent!  JUST KIDDING!!!!! See next slide…

Who Can Be A Beneficiary? Option 1 or 2 Any person, organization, trust, estate You can list more than one of the above They can be listed sequentially or jointly See upcoming slides for Options 3 and 4

Option 1 Lifetime benefit to you. Your beneficiary is refunded only the contributions paid that exceeds the amount of benefits

Option 2 Reduced benefit paid to you After retirement, if you live 10 years or more, no one receives benefits. After retirement, if you do not live 10 years, your beneficiary would receive the same monthly amount you were receiving up to the 10 years.

Option 3 Joint Annuitant Spouse Parent or Grandparent who relies on you for at least ½ of their financial support Your Child (under age 25) who is physically/mentally disabled An individual of whom you are the legal guardian and they rely on you for at least ½ of their financial support. Reduced monthly benefit for your lifetime and upon your death, the same monthly benefit for your beneficiary

Option 4 Adjusted monthly amount while you both are alive. Reduced to 2/3 upon your death. There are other rules for joint annuitants under 25

The DROP Upon termination, your DROP account is paid in one of three ways. Monthly benefits are paid to you in the amount as calculated when you entered the DROP. You cannot be in the Investment Plan to enter the DROP. Once you enter the DROP, you no longer qualify for FRS Disability. You are considered retired per the FRS. Talk about the 5 year rule and why it might be less based on then you are eligible and when you go into the program. Lump, rollover or partial. Once you complete DROP, you can do a direct rollover into the IP.

DROP Term Form You must request the DROP term form from the FRS directly. DP-PAYT Rollover form (if needed) HIS Direct Deposit Taxes Insurance paid with your FRS check

Update your information! Beneficiary forms Address

Questions? https://frs.myflorida.com Toll Free at 844-377-1888 Brooke Stearns 407-742-1200 bste@osceola.org