§ 11:1152 — Deferred Retirement Option Plan

Louisiana § 11:1152

• Jurisdiction: Louisiana
• Title 11: Consolidated Public Retirement Systems

Text

§1152. Deferred Retirement Option Plan
A. In lieu of terminating employment and accepting a service retirement allowance
pursuant to this Part, any member who is eligible for regular retirement may elect to
participate in the Deferred Retirement Option Plan and defer the receipt of benefits in
accordance with the provisions of this Section.
B. For purposes of this Section, creditable service may include service credit
reciprocally recognized under R.S. 11:142.
C. An election to participate in the plan under Subsection A of this Section may be
made only once and the duration of participation in the plan shall be specified and shall not
exceed three years. The three-year period begins within sixty calendar days after the member
reaches one of the eligibility requirements of Subsection A of this Section. The participation
period must end not more than three years and sixty calendar days from the date the member
first becomes eligible under any of the eligibility requirements of Subsection A of this
Section, and in no case may the actual participation in the plan exceed three years. A
member participating in the plan may not terminate participation prior to the end of the
selected duration without terminating employment.
D. A person may participate in the plan only once. At the time the member elects
to participate in the plan, the member shall exercise a retirement option for service retirement
under the provisions of R.S. 11:1150 and no change in the option selected shall be permitted
after it has been filed with the board. For purposes of this plan, sick and annual leave may
not be converted for purposes of establishing eligibility.
E. Upon the effective date of the commencement of participation in the plan, active
membership in the regular retirement plan of the system shall terminate, and the participant
shall be considered by the system to be in a retired status. Employee and employer
contributions to the regular retirement plan shall cease upon the effective date of the person's
commencement of participation in the plan. For purposes of this Section, average
compensation and creditable service shall remain as they existed on the effective date of
commencement of participation in the plan. Creditable service shall not include conversion
of sick and annual leave. The monthly retirement benefits that would have been payable, had
the person elected to cease employment and receive a service retirement allowance, shall be
paid into the Deferred Retirement Option Plan Fund Account which shall be a part of the
system fund. This account shall not be subject to any fees, costs, or expenses of any kind.
F. (1) A person who participates in the plan shall not be eligible to receive a
permanent benefit increase while participating and shall not be eligible for a permanent
benefit increase until the employment which made the person eligible to become a member
of the system has been terminated for at least one full calendar year.
(2) The system shall maintain subaccounts within this account reflecting the credits
attributed to each participant in the plan, but the monies in the account shall remain a part
of the fund until disbursed to a participant in accordance with the plan provisions.
(3)(a) Interest shall not be credited to a participant's subaccount during the period of
participation.
(b)With respect to any individual who was eligible to participate in the Deferred
Retirement Option Plan prior to January 1, 2004, all amounts which remain credited to the
individual's subaccount after termination of participation in the plan shall be credited with
interest at the end of each plan year at a rate equal to the realized return on the system's
portfolio for that plan year as certified by the system actuary in his actuarial valuation, less
one-half of one percent. After June 30, 2019, any person covered by the provisions of this
Paragraph may make an irrevocable election to transfer his subaccount to the self-directed
program established pursuant to Paragraph (4) of this Subsection by agreeing in writing to
the provisions of Subparagraph (4)(c) of this Subsection.
(c)With respect to any individual who becomes eligible to participate in the Deferred
Retirement Option Plan on or after January 1, 2004, and before July 1, 2019, all amounts
which remain credited to the individual's subaccount after termination of participation in the
plan shall be placed in liquid asset money market investments at the discretion of the board
of trustees. Such subaccounts may be credited with interest at the actual rate of return earned
on such subaccount investments less one-fourth of one percent per annum.
(d)(i) At the option of the board of trustees, the amounts which remain credited to
the individual's subaccount may be transferred to an account with a third-party provider
established pursuant to the provisions of Paragraph (4) of this Subsection.
(ii) As soon as practicable after June 30, 2019, the board shall transfer all individual
subaccounts established pursuant to Subparagraph (c) of this Paragraph to the stable value
fund of the third-party provider selected in accordance with the provisions of Paragraph (4)
of this Subsection.
(e) After his subaccount has been transferred to the stable value fund, any person
covered by the provisions of this Paragraph may make an irrevocable election to participate
in the self-directed portion of the program established pursuant to Paragraph (4) of this
Subsection by informing the board of his election to do so and agreeing in writing to the
provisions of Subparagraph (4)(c) of this Subsection.
(4)(a) The board of trustees shall select a third-party provider to administer a self-directed investment program for Deferred Retirement Option Plan subaccounts. As provided
in Item (3)(d)(ii) of this Subsection, the board shall transfer the existing money market
subaccounts to the third-party provider as soon as practicable after June 30, 2019.
(b) The third-party provider selected shall act as an agent of the system for the
purpose of investing the balance in the self-directed subaccount of the participant as directed
by the participant. The participant shall be given investment options that comply with federal
law for self-directed plans; however, the provider shall have as an investment option a stable
value fund that preserves the participant's principal.
(c) By participating in the self-directed portion of the program, the participant agrees
to all of the following:
(i) That he expressly waives his rights protected by the Constitution of Louisiana
relative to the interest earned by his Deferred Retirement Option Plan account.
(ii) That he and the provider shall be responsible for complying with all applicable
provisions of the Internal Revenue Code and that he and the provider, and not the state or the
system, bear the sole responsibility and liability for any violation of the Internal Revenue
Code that occurs as a result of his participation in the self-directed portion of the program.
(iii) That there shall be no liability on the part of and no cause of action of any nature
shall arise against the state, the system, or its agents or employees, for any action taken by
the participant for choices he makes in relation to the investments in which he chooses to
place his account balance.
(iv) The benefits payable to the participant are not the obligation of the state or the
system, and any returns and other rights of the plan are the sole liability and responsibility
of the participant and the provider.
(5)(a) With respect to any individual who becomes eligible to participate in the
Deferred Retirement Option Plan on or after July 1, 2019, by participating in the plan, he
expressly agrees to the provisions of Subparagraph (4)(c) of this Subsection.
(b) All amounts which remain credited to the individual's subaccount after
termination of participation in the plan shall be transferred to the stable value fund of the
third-party provider.
G. Upon termination of participation in both the plan and employment, a participant
shall:
(1) At the participant's option, receive either a lump-sum payment from the account
equal to the amount then credited to his individual subaccount; or disbursements based on
his individual subaccount in any manner approved by the board.
(2) Begin to receive regular monthly retirement benefits based on the option selected
at the time of election to participate in the plan, as adjusted pursuant to Subsection J of this
Section.
H. Upon termination of participation in the plan but not employment, credits to the
account shall cease, and no retirement benefits shall be paid to the participant until
employment is terminated. No payment shall be made based on credits in the account until
employment is terminated. Employer and employee contributions shall resume.
I. If the participant dies while still employed, his credits and benefits, if any, due
beneficiaries shall be payable as if he had retired immediately prior to death.
J. Monthly retirement benefits payable to a participant after termination of
participation in the plan and employment shall be calculated as follows:
(1) There shall be a "base benefit" which shall equal the participant's monthly credit
to the account plus conversion of sick and annual leave, if any, based on the final average
compensation rate used to calculate the monthly credit.
(2) If the participant does not continue employment after termination of participation
in the plan, his monthly retirement benefit shall equal his base benefit.
(3)(a) If the participant, whose first employment making him eligible for
membership in the system began on or before June 30, 2006, continues employment after
termination of participation in the plan for a period of less than thirty-six months, his
monthly retirement benefit shall equal his base benefit plus an amount based upon the service
credit for the additional employment, together with conversion of the net amount of sick and
annual leave accumulated during that period of employment, based upon the final average
compensation used to calculate the monthly credit.
(b) If the participant, whose first employment making him eligible for membership
in the system began on or after July 1, 2006, continues employment after termination of
participation in the plan for a period of less than sixty months, his monthly retirement benefit
shall equal his base benefit plus an amount based upon the service credit for the additional
employment, together with conversion of the net amount of sick and annual leave
accumulated during that period of employment, based upon the final average compensation
used to calculate the monthly credit.
(4)(a) If the participant, whose first employment making him eligible for
membership in the system began on or before June 30, 2006, continues employment after
termination of participation in the plan for a period of thirty-six months or more, his monthly
retirement benefit shall equal his base benefit plus an amount based upon the service credit
for the additional employment, together with conversion of the net amount of sick and annual
leave accumulated during that period of employment, based upon the higher of the final
average compensation when the member entered the plan or for the period of employment
after termination of participation in the plan.
(b) If the participant, whose first employment making him eligible for membership
in the system began on or after July 1, 2006, continues employment after termination of
participation in the plan for a period of sixty months or more, his monthly retirement benefit
shall equal his base benefit plus an amount based upon the service credit for the additional
employment, together with conversion of the net amount of sick and annual leave
accumulated during that period of employment, based upon the higher of the final average
compensation when the member entered the plan or for the period of employment after
termination of participation in the plan.
K. Once participation in the plan commences, the election to participate is
irrevocable and the term of participation may not be extended. Only one period of
participation is permitted. Final average compensation and election of option, if any, are
fixed upon commencement of participation.
L. If the participant remains employed for a period of less than thirty calendar days
after termination of participation in the plan, the participant shall not be reenrolled in the
system, contributions to the retirement system shall cease, and no additional service credit
shall be credited to the member's account.

Legislative History

Added by Acts 1991, No. 56, §1, eff. July 1, 1992. Amended by Acts 1993, No. 929, §1, eff. July 1, 1993; Acts 1995, No. 562, §1; Acts 1995, No. 1110, §1, eff. Jan. 1, 1996 (Subsec. A eff. June 30, 1995); Acts 2003, No. 651, §1; Acts 2003, No. 962, §1, eff. Jan. 1, 2004; Acts 2006, No. 563, §1, eff. June 23, 2006; Acts 2006, No. 578, §1, eff. June 23, 2006; Acts 2006, No. 579, §1, eff. June 23, 2006; Acts 2006, No. 647, §1, eff. July 1, 2006; Acts 2011, No. 368, §1, eff. July 1, 2011; Acts 2016, No. 321, §1, eff. June 30, 2016; Acts 2019, No. 78, §1, eff. June 30, 2019.