§ 11:2257 — Deferred Retirement Option Plan

Louisiana § 11:2257

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

Text

§2257. Deferred Retirement Option Plan
A. In lieu of terminating employment and accepting a service retirement allowance
under R.S. 11:2256, any member of this system who has not less than 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 shall include service credit
reciprocally recognized under R.S. 11:142, but for eligibility purposes only.
C. The duration of participation in the plan shall be specified and except as provided
in Subsection L of this Section shall not exceed three years.
D. A member may participate in the plan only once.
E. Upon the effective date of the commencement of participation in the plan,
membership in the system shall terminate. Employee contributions shall not be payable
during participation. No employer contributions shall be payable for participation through
March 31, 2026. Employer contributions shall be payable by the employer for any
participation on or after April 1, 2026. 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 member elected to cease employment and receive a service retirement allowance, shall
be paid into the Deferred Retirement Option Plan account. Upon termination of
employment, deferred benefits shall be payable as provided by Subsection H of this Section.
F. A person who participates in this plan shall not be eligible to receive a
cost-of-living increase from the retirement system 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 year.
G.(1) For a member who was eligible to participate in the Deferred Retirement
Option Plan before January 1, 2004, after a plan participant has terminated the employment
which made him eligible to be a member of this system and prior to accepting funds as
provided by Subsection H of this Section, his individual account balance in the plan shall
earn interest at a rate equal to the percentage rate of return of the system's investment
portfolio, less the cost of merger notes, as certified by the actuary in his annual valuation
report, less the cost of administering the Deferred Retirement Option Plan to be determined
annually by the board of trustees. This interest shall be credited to the retiree's individual
account balance on an annual basis. However, if such an individual returns to employment
which makes him eligible to be a member of this system, his individual account balance in
the plan shall not earn interest while he remains so employed.
(2) For a member who becomes eligible to participate in the Deferred Retirement
Option Plan on or after January 1, 2004, all amounts that remain credited to the plan
participant's subaccount after termination of participation in the plan and prior to accepting
funds as provided by Subsection H of this Section shall be administered as follows:
(a) Unless the plan participant makes the election provided for in Subparagraph (b)
of this Paragraph, the board of trustees shall place the credited amounts in liquid asset money
market investments chosen 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.
(b)(i) Prior to the end of the specified participation period, the plan participant may
make an irrevocable written election to waive his rights as set forth in Article X, Section 29
of the Constitution of Louisiana as it relates to the interest earned by his Deferred Retirement
Option Plan account. After he has terminated the employment which made him eligible to
be a member of this system, his individual account balance in the plan shall earn interest at
a rate equal to the percentage rate of return of the system's investment portfolio, less the cost
of merger notes as certified by the actuary in his yearly valuation report, less the cost of
administering the Deferred Retirement Option Plan to be determined annually by the board
of trustees. However, as a precondition of making such an election, the plan participant shall
expressly acknowledge that his account shall be debited and the value of his account balance
may be permanently reduced if the system's investment portfolio experiences a negative
earnings rate.
(ii) The provisions of this Subparagraph shall apply prospectively only, beginning
effective July 1, 2006. Waivers executed during the 2006 calendar year shall be applicable
to interest that is posted effective on or after January 1, 2007.
(iii) Should any participant's waiver executed pursuant to the provisions of Item (i)
of this Subparagraph be declared null, void, inapplicable, or unenforceable, the participant's
individual account shall be treated as though he had not executed such waiver, and the
balance therein shall be adjusted to reflect such treatment.
(3)(a) A member who becomes eligible to participate in the Deferred Retirement
Option Plan on or after January 1, 2019, upon termination of participation in the plan, may
allocate the balance of his individual account into either or both of the subaccounts provided
for in Subparagraph (2)(a) or (b) of this Subsection or a self-directed investment account as
provided for in R.S. 11:2257.1. Prior to allocating funds to the subaccount provided for in
Subparagraph (2)(b) of this Subsection or his self-directed investment account as provided
for in R.S. 11:2257.1, the member shall comply with the requirements of Subparagraph
(2)(b) of this Subsection or R.S. 11:2257.1, as applicable.
(b) Such allocation shall be a one-time, irrevocable event. If the participant fails to
choose an allocation within the period prescribed by the board of trustees, the entire balance
of his account shall be irrevocably allocated into the subaccount provided for in
Subparagraph (2)(a) of this Subsection.
H. After termination of employment, the plan participant shall receive, at his option,
a lump sum payment from his account or accounts equal to the payments to the account or
accounts, or a true annuity based upon the balance of his account or accounts, or he may elect
any other method of payment if approved by the board of trustees. The monthly benefits that
were being paid into the fund during the period of participation shall begin being paid to the
retiree. Payment from any account shall not be made until employment is terminated. The
plan participant may not change the optional allowance selected for his original benefit
pursuant to R.S. 11:2259.
I. If a participant dies during the period of participation in the plan, a lump sum
payment equal to his account balance shall be paid to his named beneficiary or, if none, to
his estate and normal survivor's benefits shall be payable as provided in this Chapter.
J. At the end of the specified participation period, payments into the Deferred
Retirement Option Plan account shall cease.
K.(1) If employment is not terminated at the end of the period specified for
participation, the plan participant shall resume active contributing membership in the system,
and upon termination of employment, he shall receive an additional retirement 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 thirty-six months, the average
compensation figure used to calculate the additional benefit shall be that used to calculate
his original benefit.
(b) If his period of additional service is thirty-six or more months, the average
compensation figure used to calculate the additional benefit shall be based on his
compensation during the period of additional service.
(c) The optional allowance applied to the additional retirement benefit shall be the
same optional allowance selected in accordance with R.S. 11:2259 for the original benefit.
(d) In no event shall the additional benefit exceed an amount which, when combined
with the original benefit, equals one hundred percent of the average compensation figure
used to compute the additional benefit.
(2) If the plan participant 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.
L.(1) Notwithstanding the provisions of Subsection C of this Section, a member who
has earned at least twenty-eight years of service credit and who begins participation in the
plan on or after April 1, 2026, may elect a participation period of not more than five years.
(2)(a) Any person who has earned at least twenty-eight years of service credit and
who began participation in the plan prior to and is participating on April 1, 2026, may elect
to extend his participation period for a total participation of up to five years.
(b) The participant shall notify, in writing, the board of trustees of his election to
extend his participation in the Deferred Retirement Option Plan no later than thirty days
before the termination of his participation in the plan or April 1, 2026, whichever is earlier.
NOTE: See Acts 2004, No. 532, §2, relative to persons electing to have
retirement benefits deposited in his DROP account before effective date of
the Act.

Legislative History

Acts 1984, No. 450, §1; Acts 1985, No. 153, §1; Acts 1985, No. 458, §1; Redesignated from R.S. 33:2155.1 by Acts 1991, No. 74, §3, eff. June 25, 1991; Amended by Acts 1991, No. 57, §1, eff. June 25, 1991; Acts 1992, No. 496, §1, eff. July 1, 1992; Acts 2001, No. 1028, §1 ; Acts 2003, No. 962, §§1, 2, eff. Jan. 1, 2004; Acts 2004, No. 532, §1, eff. June 25, 2004; Acts 2006, No. 566, §1, eff. June 23, 2006; Acts 2014, No. 811, §4, eff. June 23, 2014; Acts 2018, No. 114, §1, eff. July 1, 2018; Acts 2025, No. 344, §1.