Alternative benefits; tax-sheltered annual leave and sick leave payments and special compensation payments.

(1) The Department of Management Services has authority to adopt tax-sheltered plans under s. 401(a) of the Internal Revenue Code for state employees who are eligible for payment for accumulated leave. The department, upon adoption of the plans, shall contract for a private vendor or vendors to administer the plans. These plans shall be limited to state employees who are over age 55 and who are: eligible for accumulated leave and special compensation payments and separating from employment with 10 years of service in accordance with the Internal Revenue Code, or who are participating in the Deferred Retirement Option Program on or after July 1, 2001. The plans must provide benefits in a manner that minimizes the tax liability of the state and participants. The plans must be funded by employer contributions of payments for accumulated leave or special compensation payments, or both, as specified by the department. The plans must have received all necessary federal and state approval as required by law, must not adversely impact the qualified status of the Florida Retirement System defined benefit or defined contribution plans or the pretax benefits program, and must comply with the provisions of s. 112.65. Adoption of any plan is contingent on: the department receiving appropriate favorable rulings from the Internal Revenue Service; the department negotiating under the provisions of chapter 447, where applicable; and the Chief Financial Officer making appropriate changes to the state payroll system. The department’s request for proposals by vendors for such plans may require that the vendors provide market-risk or volatility ratings from recognized rating agencies for each of their investment products. The department shall provide for a system of continuous quality assurance oversight to ensure that the program objectives are achieved and that the program is prudently managed.

(2) Within 30 days after termination of employment, an employee may elect to withdraw the moneys without penalty by the plan administrator. If any employee is adversely affected by payment of an excise tax or any Internal Revenue Service penalty by electing to withdraw funds within 30 days, the plan shall include a provision which will provide the employee with no less cash than if the employee had not participated in the plan.

(3) These contracts may be used by any other pay plans or personnel systems in the executive, legislative, or judicial branches of government upon approval of the appropriate administrative authority.

(4) Notwithstanding the terminal pay provisions of s. 110.122, the department may contract for a tax-sheltered plan for leave and special compensation pay for employees terminating over age 55 with 10 years of service and for employees participating in the Deferred Retirement Option Program on or after July 1, 2001, and who are over age 55. The frequency of payments into the plan shall be determined by the department or as provided in the General Appropriations Act. This plan or plans shall provide the greatest tax benefits to the employees and maximize the savings to the state.

(5) Nothing in this section shall be construed to remove plan participants from the scope of s. 110.122(5).