Optional retirement program for the State University System.

(1) OPTIONAL RETIREMENT PROGRAM ESTABLISHED.—The Department of Management Services shall establish an optional retirement program under which contracts providing retirement and death benefits may be purchased for eligible members of the State University System who elect to participate in the program. The benefits to be provided for or on behalf of participants in such optional retirement program shall be provided through individual contracts or individual certificates issued for group annuity or other contracts, which may be fixed, variable, or a combination thereof, in accordance with s. 403(b) of the Internal Revenue Code. Any individual contract or certificate shall state the annuity plan on its face page, and shall include, but not be limited to, a statement of ownership, the contract benefits, annuity income options, limitations, expense charges, and surrender charges, if any. The state shall contribute, as provided in this section, toward the purchase of such optional benefits.

(2) ELIGIBILITY FOR PARTICIPATION IN OPTIONAL PROGRAM.—

(a) Participation in the optional retirement program provided by this section shall be limited to persons who are otherwise eligible for membership or renewed membership in the Florida Retirement System and who are employed in one of the following State University System positions:

1. Positions classified as instructional and research faculty which are exempt from the career service under the provisions of s. 110.205(2)(d).

2. Positions classified as administrative and professional which are exempt from the career service under the provisions of s. 110.205(2)(d).

3. The Chancellor and the university presidents.

(b) For purposes of this section, both the appointees and employees are referred to as “employees,” and the “employer” of an appointee or employee is the individual institution within the State University System or the Board of Governors of the State University System, whichever is appropriate with respect to the particular employee or appointee.

(c) For purposes of this section, the Department of Management Services is referred to as the “department.”

(d) For purposes of this section, the authority granted to the Board of Governors of the State University System may be exercised by the Board of Governors or by the Chancellor of the State University System.

(3) ELECTION OF OPTIONAL PROGRAM.—

(a) Any eligible employee who is employed on or before March 1, 1984, may elect to participate in the optional retirement program in lieu of participation in the Florida Retirement System. Such election shall be made in writing and filed with the division and the personnel officer of the employer on or before June 1, 1984. Upon such election, participation in the optional program will take effect July 1, 1984, and election to so participate will terminate the membership of the employee in the Florida Retirement System. Any eligible employee who is employed on or before March 1, 1984, and who fails to make an election to participate in the optional program by June 1, 1984, shall be deemed to have elected to retain membership in the Florida Retirement System.

(b)1. Any employee who becomes eligible to participate in the optional retirement program by reason of initial employment commencing after March 1, 1984, but before January 1, 1993, may, within 90 days after the date of commencement of employment, elect to participate in the optional program. Such election shall be made in writing and filed with the personnel officer of the employer. The eligible employees described in this subparagraph shall be enrolled in the Florida Retirement System at the commencement of employment, with the exception of those employees who file an election with the personnel officer of the employer prior to the submission of the initial payroll for the employee. For such employees, participation will be effective on the first day of employment or on July 1, 1984, whichever is later. If an eligible employee, as described in this subparagraph, files an election to participate in the optional program within 90 days after the commencement of employment, but after the submission by the employer of the initial payroll for the employee, the employee’s participation in the optional program will not be effective until the first day of the month for which a full month’s employer contribution may be made, or until July 1, 1984, whichever is later. Any eligible employee who does not within 90 days after commencement of such employment elect to participate in the optional program shall be deemed to have elected to retain membership in the Florida Retirement System.

2. Any employee who after March 1, 1984, but before January 1, 1993, becomes eligible to participate in the optional program by reason of a change in status due to the subsequent designation of the employee’s position as one of those specified in paragraph (2)(a) or due to the employee’s appointment, promotion, transfer, or reclassification to a position specified in paragraph (2)(a) may elect to participate in the optional program. Such employee shall be notified by the employer of the change in his or her eligibility status. Such employee may, within 90 days after the date of such notification, file with the personnel officer of the employer an election in writing to participate in the optional program in lieu of participation in the Florida Retirement System. Upon such election, participation in the optional program will be effective on the first day of the month for which a full month’s employer contribution may be made or on July 1, 1984, whichever is later. Election to so participate shall terminate the membership of the employee in the Florida Retirement System. Any eligible employee who does not within 90 days after notification of his or her eligibility to participate in the optional program elect to participate in the program shall be deemed to have elected to retain membership in the Florida Retirement System.

(c) Any employee who becomes eligible to participate in the optional retirement program on or after January 1, 1993, shall be a compulsory participant of the program unless such employee elects membership in the Florida Retirement System. Such election shall be made in writing and filed with the personnel officer of the employer. Any eligible employee who fails to make such election within the prescribed time period shall be deemed to have elected to participate in the optional retirement program.

1. Any employee whose optional retirement program eligibility results from initial employment shall be enrolled in the program at the commencement of employment. If, within 90 days after commencement of employment, the employee elects membership in the Florida Retirement System, such membership shall be effective retroactive to the date of commencement of employment.

2. Any employee whose optional retirement program eligibility results from a change in status due to the subsequent designation of the employee’s position as one of those specified in paragraph (2)(a) or due to the employee’s appointment, promotion, transfer, or reclassification to a position specified in paragraph (2)(a) shall be enrolled in the optional retirement program upon such change in status and shall be notified by the employer of such action. If, within 90 days after the date of such notification, the employee elects to retain membership in the Florida Retirement System, such continuation of membership shall be retroactive to the date of the change in status.

3. Notwithstanding the provisions of this paragraph, effective July 1, 1997, any employee who is eligible to participate in the Optional Retirement Program and who fails to execute a contract with one of the approved companies and to notify the department in writing as provided in subsection (4) within 90 days after the date of eligibility shall be deemed to have elected membership in the Florida Retirement System, except as provided in s. 121.051(1)(a). This provision shall also apply to any employee who terminates employment in an eligible position before executing the required annuity contract and notifying the department. Such membership shall be retroactive to the date of eligibility, and all appropriate contributions shall be transferred to the Florida Retirement System Trust Fund and the Health Insurance Subsidy Trust Fund.

(d) Participants shall be fully and immediately vested in the optional retirement program only upon execution of a contract.

(e) The election by an eligible employee to participate in the optional retirement program shall be irrevocable for so long as the employee continues to meet the eligibility requirements specified in subsection (2), except as provided in paragraph (h) or paragraph (i). In the event that an employee participates in the optional retirement program for 90 days or more and is subsequently employed in an administrative or professional position which has been determined by the department, under subparagraph (2)(a)2., to be not otherwise eligible for participation in the optional retirement program, the employee shall continue participation in the optional program so long as the employee meets the other eligibility requirements for the program, except as provided in paragraph (h) or paragraph (i).

(f) If an employee becomes ineligible to continue participation in the optional retirement program under subsection (2), the employee shall thereafter participate in the Florida Retirement System if he or she is otherwise eligible.

(g) An eligible employee who is a member of the Florida Retirement System at the time of election to participate in the optional retirement program shall retain all retirement service credit earned under the Florida Retirement System at the rate earned. Additional service credit in the Florida Retirement System may not be earned while the employee participates in the optional program, and the employee is not eligible for disability retirement under the Florida Retirement System. An eligible employee may transfer from the Florida Retirement System to his or her accounts under the State University System Optional Retirement Program a sum representing the present value of the employee’s accumulated benefit obligation under the pension plan for any service credit accrued from the employee’s first eligible transfer date to the optional retirement program through the actual date of such transfer, if such service credit was earned from July 1, 1984, through December 31, 1992. The present value of the employee’s accumulated benefit obligation shall be calculated as described in s. 121.4501(3). Upon transfer, all service credit earned under the pension plan during this period is nullified for purposes of entitlement to a future benefit under the pension plan.

(h) A participant in the optional retirement program may not participate in more than one state-administered retirement system, plan, or class simultaneously. Except as provided in s. 121.052(6)(d), a participant who is or becomes dually employed in two or more positions covered by the Florida Retirement System, one of which is eligible for the optional program and one of which is not, may remain a member of the optional program and contributions shall be paid as required only on the salary earned in the position eligible for the optional program during the period of dual employment; or, within 90 days after becoming dually employed, he or she may elect membership in the Regular Class of the Florida Retirement System in lieu of the optional program and contributions shall be paid as required on the total salary received for all employment. At retirement, the average final compensation used to calculate any benefits for which the member becomes eligible under the Florida Retirement System must be based on all salary reported for both positions during such period of dual employment. If the member ceases to be dually employed, he or she may, within 90 days, elect to remain in the Florida Retirement System class for which he or she is eligible or to again become a participant in the optional retirement program. Failure to elect membership in the optional program within 90 days shall result in compulsory membership in the Florida Retirement System, except that a member filling a faculty position at a college that has a faculty practice plan at the University of Florida, at the Medical Center at the University of South Florida, or other state university shall again participate in the optional retirement program as required in s. 121.051(1)(a).

(i) Effective January 1, 2008, through December 31, 2008, except for an employee who is a mandatory participant of the State University System Optional Retirement Program, an employee who has elected to participate in the State University System Optional Retirement Program shall have one opportunity, at the employee’s discretion, to transfer from this program to the Florida Retirement System Pension Plan or to the investment plan, subject to the terms of the applicable contracts of the State University System Optional Retirement Program.

1. If the employee chooses to move to the investment plan, any contributions, interest, and earnings creditable to the employee under the State University System Optional Retirement Program must be retained by the employee in the State University System Optional Retirement Program, and the applicable provisions of s. 121.4501(4) shall govern the election.

2. If the employee chooses to move to the pension plan of the Florida Retirement System, the employee shall receive service credit equal to his or her years of service under the State University System Optional Retirement Program.

a. The cost for such credit must be in an amount representing the actuarial accrued liability for the affected period of service. The cost must be calculated using the discount rate and other relevant actuarial assumptions that were used to value the Florida Retirement System Pension Plan liabilities in the most recent actuarial valuation. The calculation must include any service already maintained under the pension plan in addition to the years under the State University System Optional Retirement Program. The actuarial accrued liability of any service already maintained under the pension plan must be applied as a credit to total cost resulting from the calculation. The division must ensure that the transfer sum is prepared using a formula and methodology certified by an enrolled actuary.

b. The employee must transfer from his or her State University System Optional Retirement Program account, and from other employee moneys as necessary, a sum representing the actuarial accrued liability immediately following the time of such movement, determined assuming that attained service equals the sum of service in the pension plan and service in the State University System Optional Retirement Program.

(4) CONTRIBUTIONS.—

(a)1. Through June 30, 2001, each employer shall contribute on behalf of each member of the optional retirement program an amount equal to the normal cost portion of the employer retirement contribution which would be required if the employee were a regular member of the Florida Retirement System Pension Plan, plus the portion of the contribution rate required in s. 112.363(8) that would otherwise be assigned to the Retiree Health Insurance Subsidy Trust Fund.

2. Effective July 1, 2001, through June 30, 2011, each employer shall contribute on behalf of each member of the optional retirement program an amount equal to 10.43 percent of the employee’s gross monthly compensation.

3. Effective July 1, 2011, through June 30, 2012, each member of the optional retirement program shall contribute an amount equal to the employee contribution required in s. 121.71(3). The employer shall contribute on behalf of each such member an amount equal to the difference between 10.43 percent of the employee’s gross monthly compensation and the amount equal to the employee’s required contribution based on the employee’s gross monthly compensation.

4. Effective July 1, 2012, each member of the optional retirement program shall contribute an amount equal to the employee contribution required in s. 121.71(3). The employer shall contribute on behalf of each such member an amount equal to the difference between 8.15 percent of the employee’s gross monthly compensation and the amount equal to the employee’s required contribution based on the employee’s gross monthly compensation.

5. The payment of the contributions, including contributions by the employee, shall be made by the employer to the department, which shall forward the contributions to the designated company or companies contracting for payment of benefits for members of the program. However, such contributions paid on behalf of an employee described in paragraph (3)(c) may not be forwarded to a company and do not begin to accrue interest until the employee has executed a contract and notified the department. The department shall deduct an amount from the contributions to provide for the administration of this program.

(b) Each employer shall contribute on behalf of each member of the optional retirement program an amount equal to the unfunded actuarial accrued liability portion of the employer contribution which would be required for members of the Florida Retirement System. This contribution shall be paid to the department for transfer to the Florida Retirement System Trust Fund.

(c) An Optional Retirement Program Trust Fund shall be established in the State Treasury and administered by the department to make payments to the provider companies on behalf of optional retirement program members, and to transfer the unfunded liability portion of the state optional retirement program contributions to the Florida Retirement System Trust Fund.

(d) Contributions required for social security by each employer and each employee, in the amount required for social security coverage as now or hereafter may be provided by the federal Social Security Act, shall be maintained for each member of the optional retirement program and are in addition to the retirement contributions specified in this subsection.

(e) Each member of the optional retirement program who has executed a contract may contribute by way of salary reduction or deduction a percentage amount of the employee’s gross compensation not to exceed the percentage amount contributed by the employer to the optional program, but such contribution may not exceed federal limitations. Payment of the employee’s contributions shall be made by the financial officer of the employer to the division which shall forward the contributions to the designated company or companies contracting for payment of benefits for members of the program. A member may not make, through salary reduction, any voluntary employee contributions to any other plan under s. 403(b) of the Internal Revenue Code, with the exception of a custodial account under s. 403(b)(7) of the Internal Revenue Code, until he or she has made an employee contribution to his or her optional program equal to the employer contribution. An employee is responsible for monitoring his or her individual tax-deferred income to ensure he or she does not exceed the maximum deferral amounts permitted under the Internal Revenue Code.

(f) The Optional Retirement Trust Fund may accept for deposit into member contracts contributions in the form of rollovers or direct trustee-to-trustee transfers by or on behalf of members who are reasonably determined by the department to be eligible for rollover or transfer to the optional retirement program pursuant to the Internal Revenue Code if such contributions are made in accordance with rules adopted by the department. Such contributions shall be accounted for in accordance with any applicable requirements of the Internal Revenue Code and department rules.

(g) Effective July 1, 2008, for purposes of paragraph (a) and notwithstanding s. 121.021(22)(b)1., the term “employee’s gross monthly compensation” includes salary payments made to eligible clinical faculty from a state university using funds provided by a faculty practice plan authorized by the Board of Governors of the State University System if:

1. There is no employer contribution from the state university to any other retirement program with respect to such salary payments; and

2. The employer contribution on behalf of a member of the optional retirement program with respect to such salary payments is made using funds provided by the faculty practice plan.

(5) BENEFITS.—

(a) Benefits are payable under the optional retirement program only to vested members participating in the program, or their beneficiaries as designated by the member in the contract with a provider company, and such benefits shall be paid only by the designated company in accordance with s. 403(b) of the Internal Revenue Code and the terms of the annuity contract or investment contracts applicable to the member. A benefit under the optional retirement program is a distribution requested by the member or surviving beneficiary funded in part or in whole by employer or required employee contributions, plus earnings, and includes rolling a distribution over to another qualified plan. Benefits accrue in individual accounts that are member-directed, portable, and funded by employer and employee contributions and the earnings thereon. The member must be terminated for 3 calendar months from all employment relationships with all Florida Retirement System employers to begin receiving the benefit. The department may authorize a distribution of up to 10 percent of the member’s account after being terminated from employment with all participating employers for 1 calendar month if the member has reached the normal retirement date as defined in s. 121.021. The department may adopt rules to implement this paragraph. Benefits funded by employer and required employee contributions are payable in accordance with the following terms and conditions:

1. Benefits shall be paid only to a participating member, to his or her beneficiaries, or to his or her estate, as designated by the member.

2. Benefits shall be paid by the provider company or companies in accordance with the law, the provisions of the contract, and any applicable department rule or policy.

3. In the event of a member’s death, moneys accumulated by, or on behalf of, the member, less withholding taxes remitted to the Internal Revenue Service, if any, shall be distributed to the member’s designated beneficiary or beneficiaries, or to the member’s estate, as if the member retired on the date of death, as provided in paragraph (d). No other death benefits are available to survivors of members under the optional retirement program except for such benefits, or coverage for such benefits, as are separately afforded by the employer, at the employer’s discretion.

(b) Benefits, including employee contributions, are not payable for employee hardships, unforeseeable emergencies, loans, medical expenses, educational expenses, purchase of a principal residence, payments necessary to prevent eviction or foreclosure on an employee’s principal residence, or any other reason except a requested distribution for retirement, a mandatory de minimis distribution authorized by the administrator, or a required minimum distribution provided pursuant to the Internal Revenue Code.

(c) Upon receipt by the provider company of a properly executed application for distribution of benefits, the total accumulated benefit is payable to the participating member as:

1. A lump-sum distribution to the member;

2. A lump-sum direct rollover distribution whereby all accrued benefits, plus interest and investment earnings, are paid from the member’s account directly to an eligible retirement plan, as defined in s. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the member;

3. Periodic distributions;

4. A partial lump-sum payment whereby a portion of the accrued benefit is paid to the member and the remaining amount is transferred to an eligible retirement plan, as defined in s. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the member; or

5. Such other distribution options as are provided in the member’s optional retirement program contract.

(d) Survivor benefits are payable as:

1. A lump-sum distribution payable to the beneficiaries or to the deceased member’s estate;

2. An eligible rollover distribution on behalf of the surviving spouse of a deceased member, whereby all accrued benefits, plus interest and investment earnings, are paid from the deceased member’s account directly to an eligible retirement plan, as described in s. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the surviving spouse;

3. Such other distribution options as are provided in the member’s optional retirement program contract; or

4. A partial lump-sum payment whereby a portion of the accrued benefit is paid to the deceased member’s surviving spouse or other designated beneficiaries, less withholding taxes remitted to the Internal Revenue Service, if any, and the remaining amount is transferred directly to an eligible retirement plan, as described in s. 402(c)(8)(B) of the Internal Revenue Code, on behalf of the surviving spouse. The proportions must be specified by the member or the surviving beneficiary.

This paragraph does not abrogate other applicable provisions of state or federal law providing payment of death benefits.

(e) The benefits payable to any person under the optional retirement program, and any contribution accumulated under such program, are not subject to assignment, execution, or attachment or to any legal process.

(f) A participating member who chooses to receive his or her benefits must be terminated for 3 calendar months to be eligible to receive benefits funded by employer and employee contributions. The member must notify the provider company of the date he or she wishes benefits funded by required employer and employee contributions to begin and must be terminated as defined in s. 121.021 after the initial benefit payment or distribution is received. Benefits may be deferred until the member chooses to make such application.

(g) Benefits funded by the participating member’s voluntary personal contributions may be paid out after termination from employment with all participating employers for 3 calendar months and in any form within the limits provided in the contract between the member and the provider company. The member shall notify the provider company regarding the date and provisions under which he or she wants to receive the employee-funded portion of the plan.

(h) For purposes of this section, “retiree” means a former participating member of the optional retirement program who has terminated employment and has taken a distribution as provided in this subsection, except for a mandatory distribution of a de minimis account authorized by the department.

(6) ADMINISTRATION OF PROGRAM.—

(a) The optional retirement program authorized by this section shall be administered by the department. The department shall adopt rules establishing the responsibilities of the institutions in the State University System in administering the optional retirement program. The Board of Regents shall, no more than 90 days after July 1, 1983, submit to the department its recommendations for the contracts to be offered by the companies chosen by the department. Effective July 1, 2001, the State Board of Education shall submit to the department its recommendations for the contracts to be offered by the companies chosen by the department. Effective July 1, 2007, the Board of Governors of the State University System shall submit recommendations on contracts within 90 days after request by the department. The recommendations of the board shall include the following:

1. The nature and extent of the rights and benefits in relation to the required contributions; and

2. The suitability of the rights and benefits to the needs of the participants and the interests of the institutions in the recruitment and retention of eligible employees.

(b) After receiving and considering the recommendations of the Board of Governors of the State University System, the department shall designate no more than six companies from which contracts may be purchased under the program and shall approve the form and content of the optional retirement program contracts. Any domestic company that has been designated as of July 1, 2005, shall be included in the six companies until expiration of its existing contract with the department. The domestic company may assign its contract with the department to an affiliated qualified company that is wholly owned by the domestic company’s parent company and has assumed 100 percent of the responsibility for the contracts purchased from the domestic company.

(c) Effective July 1, 1997, the State Board of Administration shall review and make recommendations to the department on the acceptability of all investment products proposed by provider companies of the optional retirement program before they are offered through annuity contracts to the participants and may advise the department of any changes necessary to ensure that the optional retirement program offers an acceptable mix of investment products. The department shall make the final determination as to whether an investment product will be approved for the program.

(d) The provisions of each contract applicable to a participant in the optional retirement program shall be contained in a written program description which shall include a report of pertinent financial and actuarial information on the solvency and actuarial soundness of the program and the benefits applicable to the participant. Such description shall be furnished by the companies to each participant in the program and to the department upon commencement of participation in the program and annually thereafter.

(e) The department shall ensure that each participant in the optional retirement program is provided an accounting of the total contribution and the annual contribution made by and on behalf of such participant.

(7) PROCUREMENT OF ADDITIONAL PROVIDERS.—If the department chooses to designate an additional provider company from which contracts may be purchased under the program as provided in paragraph (6)(b), the department shall conduct a competitive procurement and the designation of the additional provider is effective until December 31, 2014. All companies seeking a designation that is effective on or after January 1, 2015, shall participate together in a separate competitive procurement conducted by the department for the purpose of selecting the total number of provider companies authorized in paragraph (6)(b) and deemed reasonable and prudent by the department.