§ 11:1312.1 — Back-Deferred Retirement Option Program

Louisiana § 11:1312.1

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

Text

§1312.1. Back-Deferred Retirement Option Program
A.(1) There is hereby created an optional retirement benefit program for members
of the system called the "Back-Deferred Retirement Option Program" which shall be referred
to in this Chapter as "Back-DROP".
(2) In lieu of receiving a normal retirement benefit pursuant to R.S. 11:1307 through
1310 or 1345.4 and 1345.5, an eligible member of the system may elect to retire and have
his benefits structured, calculated, and paid as provided in this Section.
B. An active, contributing member of the system shall be eligible for Back-DROP
only if both of the following are satisfied:
(1) The member has accrued more service credit than the minimum required for
eligibility for a normal retirement benefit.
(2) The member has attained an age that is greater than the minimum required for
eligibility for a normal retirement benefit, if applicable.
C. At the time of retirement, a member who elects to receive a Back-DROP benefit
shall select a Back-DROP period to be specified in whole months. The duration of the Back-DROP period shall not exceed the lesser of thirty-six months or the number of months of
creditable service accrued after the member first attained eligibility for normal retirement.
The Back-DROP period shall be comprised of the most recent calendar days corresponding
to the member's employment for which service credit in the system accrued.
D.(1) The Back-DROP benefit shall have two portions: a monthly benefit portion
and a lump-sum portion.
(2) The member's Back-DROP monthly benefit shall be calculated pursuant to the
provisions applicable for service retirement set forth in R.S. 11:1307 through 1310 or 1345.4
and 1345.5, subject to the following conditions:
(a) For purposes of this Paragraph, creditable service shall not include service credit
reciprocally recognized pursuant to R.S. 11:142.
(b) Accrued service credit at retirement shall be reduced by the Back-DROP period.
(c) The sum of the Back-DROP period and the accrued service credit used to
calculate the member's monthly benefit shall not exceed thirty years.
(d) Final average compensation shall be calculated by excluding all earnings during
the Back-DROP period.
(e) Employer contributions received by the retirement system during the Back-DROP
period and any interest that has accrued on employer and employee contributions received
during the period shall be retained by the system and shall not be refunded to the member or
to the employer.
(f) Employee contributions received by the retirement system during the Back-DROP
period shall, at the member's election, be refunded to the member without interest or
deposited directly into the member's Back-DROP account.
(g) The member's Back-DROP monthly benefit shall be calculated based upon the
member's age and service and the system statutes and other plan provisions in effect on the
last day of creditable service before the Back-DROP period.
(h) At retirement, the member's maximum monthly retirement benefit payable as a
life annuity shall be equal to the Back-DROP monthly benefit.
(3) In addition to the monthly benefit received pursuant to Paragraph (2) of this
Subsection, the member shall be paid a lump-sum benefit equal to the Back-DROP
maximum monthly retirement benefit multiplied by the number of months selected as the
Back-DROP period.
(4) The Back-DROP lump sum shall, at the member's election, be distributed to the
member or transferred to an individual account for self-directed investments as further
provided in Subsection E of this Section.
(5) Cost-of-living adjustments shall not be payable on the member's Back-DROP
lump sum.
E.(1) In lieu of receiving a lump-sum benefit payment as provided in Paragraph
(D)(4) of this Section, the member may elect to transfer the lump-sum payment into a self-directed account managed by a third-party provider.
(2) The board may hire a third-party provider to manage the self-directed accounts
authorized by this Subsection. The third-party provider shall act as an agent of the system for
purposes of investing balances in the self-directed accounts of the participants as directed by
the participants. The participants 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.
(3) By electing to participate in the self-directed plan, the Back-DROP participant
expressly waives his rights as set forth in Article X, Section 29 of the Constitution of
Louisiana as they relate to the benefit in his Back-DROP account. Any participant who elects
to transfer the lump-sum Back-DROP payment into a self-directed account agrees to all of
the following:
(a) That the benefits payable to the participant are not the obligation of the state or
the system and that any returns and other rights of the participant in the account are the sole
liability and responsibility of the participant and the provider to which the lump sum has
been transferred.
(b) That he and the provider shall be responsible for complying with all applicable
provisions of the Internal Revenue Code.
(c) That if any violation of the Internal Revenue Code occurs as a result of the
participant's decision to transfer his Back-DROP lump-sum payment into a self-directed
account, it shall be the sole responsibility and liability of the participant and the provider and
not of the state or the system.
(4) 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 the agents or employees of the state or the system for
any action taken by the participant or for choices the participant makes in relation to the
investment options in which he chooses to place his account balance.

Legislative History

Acts 2009, No. 480, §1, eff. Oct. 1, 2009; Acts 2019, No. 78, §1, eff. June 30, 2019; Acts 2022, No. 247, §1, eff. June 30, 2022.