§ 11:1763 — Deferred Retirement Option Plan

Louisiana § 11:1763

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

Text

§1763. Deferred Retirement Option Plan
A. In lieu of terminating employment and accepting a service retirement allowance
pursuant to R.S. 11:1781 and 1782, or R.S. 11:1801 and 1802, or R.S. 11:1789.3 and 1789.4,
or 1808.3 and 1808.4, any member of Plan A who is eligible for a normal retirement pursuant
to R.S. 11:1781 or 1789.3(1), (2), or (3), or any member of Plan B who is eligible for a
normal retirement pursuant to R.S. 11:1801 or 1808.3(1), (2), or (3), 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 shall not include service credit
reciprocally recognized under R.S. 11:142.
C.(1) The duration of participation in the plan shall be specified and shall not exceed
three years, except as provided in Paragraph (E)(2) of this Section.
(2) Any person who had previously participated in the Deferred Retirement Option
Plan, who remained in service after participating in the plan and who continues to be in
service on July 1, 1993, shall be allowed to participate in the plan for one additional year
subject to the same conditions and benefit payments that existed when the person first
entered participation; written notice of the member's decision to reenter participation shall
be given to the system.
D. A person may participate in the plan only once.
E.(1) Upon the effective date of the commencement of participation in the plan,
active membership and participation in the regular retirement plan of the system shall
terminate and active membership and participation in the Deferred Retirement Option Plan
of the system shall commence. Employer contributions shall continue to be payable by the
employer during the person's membership and participation in the plan, but payment of
employee contributions shall cease upon the effective date of the person's commencement
of participation in the plan. For purposes of this Section, compensation and creditable
service shall remain as they existed on the effective date of commencement of participation
in the plan. 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
a subaccount within the Deferred Retirement Option Plan, which reflects the credits
attributed to the person in the plan, but the monies shall remain a part of the regular
retirement fund until disbursed to the person in accordance with plan provisions, and the
monies shall not be subject to state income taxation while maintained in the fund or upon
distribution therefrom.
(2) If employer contributions on behalf of a participant are suspended during the
participation period as a result of interruption of employment, benefit payments into the
participant's subaccount within the Deferred Retirement Option Plan shall be suspended until
payment of employer contributions is restored, and the member's participation period shall
be extended by the number of months his benefit payments were suspended. In such a case,
the participation period may exceed three calendar years but shall not exceed thirty-six
nonconsecutive months of participation.
F.(1) A person who participates in this plan shall not be eligible to receive a cost-of-living increase while participating, and shall not be eligible for a cost-of-living increase until
his employment which made him eligible to become a member of the system has been
terminated for at least one full year.
(2) With respect to any individual who was eligible to participate in the Deferred
Retirement Option Plan prior to January 1, 2004, after a person has terminated his
participation in the Deferred Retirement Option Plan, his individual account balance in the
plan shall earn interest at the actual rate of return earned on the funds left on deposit with the
system for the purpose of earning interest thereon as certified by the custodian of the system's
assets. Any such interest shall be credited to his individual account balance on a daily basis.
With respect to any individual who becomes eligible to participate in the Deferred
Retirement Option Plan on or after January 1, 2004, 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
account balances shall be credited with interest at the actual rate of return earned on such
account balance investments less one-fourth of one percent per annum; or at the option of
the system, the funds may be credited to subaccounts as herein established:
(a) The contributing period shall mean that time period when funds are being
credited to the participant's subaccount which is maintained by the system.
(b) After the contributing period ends, the balance of the subaccount then may be
transferred to a self-directed subaccount, which shall be known as the investment period.
Both subaccounts shall be within the Deferred Retirement Option Plan established herein.
Management of the funds shall be by the system during the contributing period. When the
funds are transferred to the self-directed subaccount for the investment period, the system is
authorized to hire a third party provider. The third party provider shall act as an agent of the
system for purposes of investing balances in the self-directed subaccounts of the participant
as directed by the participant. The participant shall be given such options that comply with
federal law for self-directed plans.
(c) The participant in the self-directed portion of this plan agrees that the benefits
payable to the participant are not the obligations of the state or the system, and that any
returns and other rights of the plan are the sole liability and responsibility of the participant
and the designated provider to which contributions have been made. Furthermore, each
participant, in accordance with this provision, shall expressly waive his rights as set forth in
Article X, Section 29(A) and (B) of the Louisiana Constitution as it relates to his subaccount
in the self-directed portion of the plan. By participating in the self-directed portion of the
plan, the participant agrees that he and the provider shall be responsible for complying with
all applicable provisions of the Internal Revenue Code. The participant also agrees that if
any violation of the Internal Revenue Code occurs as a result of the participant's participation
in the self-directed portion of the plan, it shall be the sole responsibility and liability of the
participant and the provider, not the state or the system. 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 the participant makes
in relationship to the funds in which he chooses to place his subaccount balance.
G. The deferred retirement option plan fund shall not be subject to any fees, charges,
or other similar expenses of any kind for any purpose.
H. Upon termination of employment at the end of the specified period of
participation, a participant in the plan shall receive, at his option, a lump sum payment from
the deferred retirement option plan fund equal to the payments made to that fund on his
behalf, a true annuity based upon his account in that fund, or any other method of payment
approved by the board of trustees. If a person elects to receive a true annuity or other method
of payment approved by the board of trustees, funds shall be transferred from the deferred
retirement option plan fund to the annuity reserve fund to provide for the annuity payments.
The monthly benefits that were being paid into the deferred retirement option plan fund shall
begin to be paid to the retiree.
I. If a participant dies during the period of participation in the plan, a lump sum equal
to his account balance in the plan fund shall be paid to his named beneficiary or, if none, to
his estate. If a participant terminates employment prior to the end of the specified period of
participation, he shall receive a lump sum payment from the plan fund equal to his account
in that fund, a true annuity based upon his account in that fund, or any other method of
payment approved by the board of trustees and the monthly benefits that were being paid into
the plan fund shall begin to be paid to the retiree. If a person elects to receive a true annuity
or other method of payment approved by the board of trustees, funds shall be transferred
from the plan fund to the annuity reserve fund to provide for the annuity payments.
J.(1) If employment is not terminated at the end of the period specified for
participation in the plan, payments into the plan fund shall cease and the person shall resume
active contributing membership in the system. Payments from the plan fund shall not be
made until employment is terminated, nor shall the monthly benefits which were being paid
into the plan fund during the period of participation be payable to the person until he
terminates employment. Upon termination of employment, the person shall receive a lump
sum payment from the plan fund equal to his account in that fund, a true annuity based upon
his account in that fund, or any other method of payment approved by the board of trustees.
If a person elects to receive a true annuity or other method of payment approved by the board
of trustees, funds shall be transferred from the plan fund to the annuity reserve fund to
provide for the annuity payments. Also upon termination of employment, the monthly
benefits which were being paid into the plan fund shall begin to be paid to the retiree and he
shall receive an additional benefit based on his additional service rendered since termination
of participation in the fund, using the normal method of computation of benefit, subject to
the following:
(a) If his period of additional service is less than the number of months used in the
computation of his original benefit, the average compensation figure used to calculate the
additional benefit shall be that used to calculate his original benefit.
(b) If his first employment making him eligible for membership in the system began
on or before June 30, 2006, and his period of additional service is thirty-six months or more,
the average compensation figure used to calculate the additional benefit shall be based on his
compensation during the period of additional service.
(c) If his period of additional service is equal to or more than the number of months
used in the computation of his original benefit, the average compensation figure used to
calculate the additional benefit shall be based on his compensation during the period of
additional service.
(d) In no event shall the additional benefit exceed an amount which, when combined
with the original benefit, equals one hundred percent of the monthly final compensation
figure used to compute the additional benefit.
(2) If a person dies or acquires a disability during the period of additional service,
he shall be considered as having retired on the date of death or commencement of disability.

Legislative History

Acts 1991, No. 74, §3, eff June 25, 1991; Acts 1991, No. 68, §1; Acts 1992, No. 543, §1, eff. Jan. 1, 1993; Acts 1993, No. 929, §1, eff. July 1, 1993; Acts 1995, No. 569, §1, eff. July 1, 1995; Acts 2001, No. 960, §1, eff. July 1, 2001; Acts 2003, No. 962, §1, eff. Jan. 1, 2004; Acts 2006, No. 590, §1, eff. July 1, 2006; Acts 2006, No. 780, §1, eff. June 30, 2006; Acts 2012, No. 524, §1, eff. July 1, 2012; Acts 2012, No. 720, §1, eff. July 1, 2012; Acts 2014, No. 811, §4, eff. June 23, 2014; Acts 2018, No. 111, §1, eff. July 1, 2018.