§2221. Deferred Retirement Option Plan
A. In lieu of terminating employment and accepting a service retirement allowance
under R.S. 11:2220, any member of this system who has at least twelve years of creditable
service and has attained at least age fifty-five or at least twenty years of creditable service and
who is eligible to receive a service retirement allowance 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 for eligibility purposes only shall
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
five years. However, 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 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 five calendar years but shall not exceed sixty
nonconsecutive months of participation.
(2)(a) Notwithstanding Paragraph (1) of this Subsection, any person who began
participation in the plan on or before June 30, 2024, who elected a participation period of
three years, and who is participating in the plan on July 1, 2025, may elect to extend his
participation in the plan for a total participation of not more than five years.
(b) The participant shall notify the board of trustees, in writing, of his election to
extend his participation in the plan and shall specify his new participation duration on or
before the earlier of the final participation date he specified when he originally elected to
participate in the plan or August 1, 2025.
D. A member may participate in the plan only once.
E.(1)(a) Upon the effective date of the commencement of participation in the plan,
membership in the system shall terminate and neither employee nor employer contributions
shall be payable, except that for employees who commence participation in the plan on or
after July 1, 2021, employer contributions shall continue to be payable.
(b) A participant in the plan shall be classified as a "deferred retirement option plan
participant" and, as such, shall be treated as an active member of this system, except with
respect to the following:
(i) Contributions as provided in Subparagraph (a) of this Paragraph.
(ii) The payment of survivor benefits as provided in R.S. 11:2220(B).
(iii) A deferred retirement option plan participant shall be treated as retired for
purposes of eligibility to serve in an active member position on the board of trustees.
(2) 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.
(3) The monthly retirement benefits that would have been payable, had the member
elected to cease employment and receive a service retirement allowance, shall be paid into
the deferred retirement option plan account.
(4) Upon termination of employment, deferred benefits shall be payable as provided
by Subsection H.
F. A person who participates in this plan shall not be eligible to receive a
cost-of-living adjustment while participating and shall not be eligible until his employment
which makes him eligible to be a member of this system has been terminated for at least one
full fiscal year.
G.(1) With respect to any individual who was eligible to participate in the Deferred
Retirement Option Plan prior to January 1, 2004, after a person terminates his participation
in this plan, his individual account balance in the plan shall earn interest at a rate of one-half
of one percent below the percentage rate of return of the system's investment portfolio as
certified by the actuary in his yearly valuation report, said interest to be credited to his
individual account balance on an annual basis. After June 30, 2019, any person covered by
the provisions of this Paragraph may make an irrevocable election to transfer his account 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.
(2)(a) 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, except
as provided in Subparagraph (b) of this Paragraph and Paragraph (3) of this Subsection, all
amounts which remain credited to the individual's account 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 balance may be credited with interest at the actual rate of
return earned on such account balance investments less one-fourth of one percent per annum.
(b)(i) At the option of the board of trustees, the amounts which remain credited to
the individual's account 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
accounts established pursuant to this Paragraph to the stable value fund of the third-party
provider selected in accordance with the provisions of Paragraph (4) of this Subsection.
(c) After his account 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.
NOTE: Subparagraph (G)(3)(a) terminated June 30, 2019.
(3)(a)(i) Notwithstanding any provision of Paragraph (2) of this Subsection to the
contrary, any individual who became eligible to participate in the Deferred Retirement
Option Plan on or after January 1, 2004, and before July 1, 2019, may make an irrevocable
written election to waive his rights protected by the Constitution of Louisiana relative to the
interest earned by his Deferred Retirement Option Plan account. For any person who makes
such an irrevocable election, upon termination of participation in the plan, his individual
account balance in the plan shall earn interest at a rate of one-half of one percent below the
percentage rate of return of the system's investment portfolio for each fiscal year as certified
by the system's actuary in his yearly valuation report. However, by making such an election,
the person shall expressly acknowledge that his account shall be debited in the event the
system's investment portfolio experiences a rate of return of less than a positive one-half of
one percent, including a negative earnings rate. The member shall further expressly
acknowledge his consent to having the value of his account balance permanently reduced
as a result of the devaluation of system assets caused by such a rate. As a precondition of
making this election, the member shall expressly acknowledge his understanding of the
possibility of such account reductions. If an account is required to be debited and
insufficient monies are available in the account for this purpose, the member's monthly
retirement benefit shall be suspended or reduced until such time as such debit has been
recouped in full by the system.
(ii) The provisions of this Subparagraph shall apply prospectively only, beginning
July 1, 2008, and shall terminate June 30, 2019.
(b) Any individual who does not elect to waive his rights pursuant to Subparagraph
(a) of this Paragraph shall continue to be governed by the provisions of this Subsection which
are otherwise applicable to individuals who became or become eligible to participate in the
Deferred Retirement Option Plan on or after January 1, 2004, and before July 1, 2019.
(c) The board of trustees may make, alter, amend, and promulgate rules necessary
for the implementation and administration of this Paragraph.
(d) After June 30, 2019, any person covered by the provisions of this Paragraph may
make an irrevocable election to transfer his account 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.
(4)(a) The board of trustees shall select a third-party provider to administer a self-directed investment program for Deferred Retirement Option Plan accounts. As provided
in Item (2)(b)(ii) of this Subsection, the board shall transfer the existing money market
accounts 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 account 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 account after termination
of participation in the plan shall be transferred to the stable value fund of the third-party
provider.
H. Upon termination of employment, a participant in the plan may keep his funds on
deposit until he chooses to withdraw them. When the participant elects to make a withdrawal
from his account, he shall receive, at his option, a lump-sum payment of the account balance,
a partial lump-sum payment from the account, or a true annuity based upon his account, or
he may elect any other method of payment approved by the board of trustees. The monthly
benefits that were being paid into the account during the period of participation shall begin
being paid to the retiree.
I.(1) If a participant dies, the following shall apply:
(a) If the participant's designated beneficiary of the plan account is the participant's
surviving spouse, and:
(i) The surviving spouse will not receive a monthly survivor annuity because of the
participant's death, then the surviving spouse shall receive a lump-sum payment of the
participant's account balance within ninety days of the death of the participant.
(ii) The surviving spouse will receive a monthly survivor annuity because of the
participant's death, then the surviving spouse may elect to keep the funds on deposit until the
spouse elects to withdraw the funds. Upon such election to withdraw, the surviving spouse
shall receive, at the surviving spouse's option a lump-sum payment of the participant's
account balance, a partial lump-sum payment thereof, or a true annuity based upon the
account balance, or the surviving spouse may elect any other method of payment approved
by the board of trustees as if the participant had retired on the date of death; in addition, the
normal benefits payable to the designated beneficiary under the option selected shall be
payable. The surviving spouse may designate a beneficiary, who will be required to receive
a lump-sum payment of the surviving spouse's account balance within ninety days of the
death of the surviving spouse.
(b) If the participant's designated beneficiary of the plan account is other than the
participant's surviving spouse, and:
(i) The beneficiary will not receive a monthly survivor annuity because of the
participant's death, then the beneficiary shall receive a lump-sum payment of the participant's
account balance within ninety days of the death of the participant.
(ii) The beneficiary will receive a monthly survivor annuity because of the
participant's death, then the beneficiary shall receive the participant's plan account balance
under any method that will cause a total distribution of the account over a period not to
exceed five years, whether by lump-sum payment of the participant's account balance, or
partial lump-sum payments, or other substantially equal payments. In addition, the normal
benefits payable to the designated beneficiary under the option selected shall become
payable. The designated beneficiary may designate a beneficiary, who will be required to
receive a lump-sum payment of the designated beneficiary's account balance within ninety
days of the death of the designated beneficiary.
(c) If a participant whose account is not invested with the third-party provider
pursuant to Paragraph (G)(4) of this Section dies after June 30, 2019, while participating in
the plan and the designated beneficiary of his plan account balance is not required to
withdraw that account balance in a lump-sum, the account balance shall be transferred to the
stable value fund of the self-directed program unless the beneficiary elects to invest some or
all of the account balance in the self-directed portion of the program pursuant to the
requirements set forth in Paragraph (G)(4) of this Section.
(d) If there is no designated beneficiary, a lump-sum payment of the participant's
account balance shall be paid to his estate.
(2)(a) If a participant terminates employment prior to the end of the specified period
of participation he shall receive, at his option, a lump-sum payment from the account equal
to the balance in the account or a true annuity based upon his account balance, or he may
elect any other method of payment if approved by the board of trustees.
(b) The monthly benefits that were paid into the account during the period of
participation shall begin being paid to the retiree.
J. If employment is not terminated at the end of the period specified for participation,
payments into the account shall cease. Payment from the account shall not be made until
employment is terminated; nor shall the monthly benefits being paid into the account during
the period of participation be payable to the individual until he terminates employment.
K. The following shall also apply if employment is not terminated at the end of the
period of participation:
(1) If employment is not terminated at the end of the period specified for
participation, the participant shall resume active contributing membership in the system.
(2) Upon termination of employment, the monthly benefits which were being paid
to the account shall begin to be paid to the participant. He may not change the optional
allowance which was originally selected pursuant to R.S. 11:2224 when he began
participation in the plan.
(3) Upon termination of employment, he shall receive an additional retirement benefit
based on his additional service rendered since termination of participation in the plan, using
the normal method of computation of benefit, subject to the following:
(a) If his period of additional service was shorter than his average compensation
period, the average final compensation figure used to calculate the additional benefit shall
be that used to calculate his original benefit.
(b) If his period of additional service was equal to or longer than his average final
compensation period, the average final compensation figure used to calculate the additional
benefit shall be based on his compensation during the period of additional service.
(c) The option used shall be that applicable to the original benefit, as provided in
Paragraph (2) of this Subsection.
(d) The additional benefit shall not exceed an amount which, when combined with
the original benefit, equals one hundred percent of the average final compensation figure
used to compute the additional benefit.
(4)(a) If the participant dies or acquires a disability during the period of additional
service, he shall be considered as having terminated employment on the date of death or
commencement of disability.
(b) In the event he dies, his designated beneficiary, or if none, his estate, shall receive
payment from his account in accordance with the provisions of Subsection I of this Section.
L. A retiree whose benefit has been suspended pursuant to the provisions of R.S.
11:2220(A)(2)(a) shall not be eligible to participate in the Deferred Retirement Option Plan.
M. For purposes of R.S. 17:1681 and 1681.1, any member who is killed or who
acquires a permanent disability solely as the result of injuries sustained in the course and
scope of the performance of his official duties, while participating in the Deferred Retirement
Option Plan or during continued employment after participation in the Deferred Retirement
Option Plan has ended, shall be considered as having died in service or retired for disability
purposes, provided satisfactory proof of such fatal or disabling injury is furnished to the
retirement system by the member's employing municipality.
N. The board of trustees shall promulgate rules in accordance with the
Administrative Procedure Act to approve any other methods of payment authorized by but
not expressly provided in this Section. Once promulgated, the rules shall be considered plan
provisions for purposes of compliance with requirements of the Internal Revenue Code and
associated regulations.
NOTE: Acts 2014, No. 811 changed terminology referring to persons with
disabilities throughout the La. Revised Statutes and codes of law, and included a
listing of terms that were deleted and their respective successor terms (See Acts
2014, No. 811, §36). The Act provides that it is not the intent of the legislature that
changes in terminology effected therein alter or affect in any way the substance,
interpretation, or application of any law or administrative rule; further provides that
nothing in the Act shall be construed to expand or diminish any right of or benefit for
any person provided by any law or administrative rule (See Acts 2014, No. 811,
§35(C) and (D)).
Acts 1984, No. 475, §1; Acts 1985, No. 82, §1; Acts 1985, No. 459, §1; Acts 1990,
No. 420, §1; Redesignated from R.S. 33:2375.1 by Acts 1991, No. 74, §3, eff. June 25, 1991;
Amended by Acts 1991, No. 58, §1, eff. July 1, 1991; Acts 1992, No. 496, §1, eff. July 1,
1992; Acts 1992, No. 554, §1, eff. July 1, 1992; Acts 1993, No. 862, §1, eff. June 23, 1993;
Acts 1997, No. 900, §1, eff. Jan. 1, 1997; Acts 1999, No. 1300, §1, eff. July 12, 1999; Acts
2001, No. 1161, §1, eff. June 29, 2001; Acts 2003, No. 962, §§1, 2, eff. Jan. 1, 2004; Acts
2008, No. 827, §1, eff. July 8, 2008; Acts 2013, No. 220, §3, eff. June 11, 2013; Acts 2014,
No. 811, §4, eff. June 23, 2014; Acts 2019, No. 78, §1, eff. June 30, 2019; Acts 2020, No.
124, §1, eff. July 1, 2020; Acts 2024, No. 673, §1, eff. July 1, 2024; Acts 2025, No. 45, §1,
eff. June 4, 2025.