§1152. Deferred Retirement Option Plan

A. In lieu of terminating employment and accepting a service retirement allowance pursuant to this Part, any member who is eligible for regular retirement 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 may include service credit reciprocally recognized under R.S. 11:142.

C. An election to participate in the plan under Subsection A of this Section may be made only once and the duration of participation in the plan shall be specified and shall not exceed three years. The three-year period begins within sixty calendar days after the member reaches one of the eligibility requirements of Subsection A of this Section. The participation period must end not more than three years and sixty calendar days from the date the member first becomes eligible under any of the eligibility requirements of Subsection A of this Section, and in no case may the actual participation in the plan exceed three years. A member participating in the plan may not terminate participation prior to the end of the selected duration without terminating employment.

D. A person may participate in the plan only once. At the time the member elects to participate in the plan, the member shall exercise a retirement option for service retirement under the provisions of R.S. 11:1150 and no change in the option selected shall be permitted after it has been filed with the board. For purposes of this plan, sick and annual leave may not be converted for purposes of establishing eligibility.

E. Upon the effective date of the commencement of participation in the plan, active membership in the regular retirement plan of the system shall terminate, and the participant shall be considered by the system to be in a retired status. Employee and employer contributions to the regular retirement plan shall cease upon the effective date of the person's commencement of participation in the plan. For purposes of this Section, average compensation and creditable service shall remain as they existed on the effective date of commencement of participation in the plan. Creditable service shall not include conversion of sick and annual leave. 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 the Deferred Retirement Option Plan Fund Account which shall be a part of the system fund. This account shall not be subject to any fees, costs, or expenses of any kind.

F.(1) A person who participates in the 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 the employment which made the person eligible to become a member of the system has been terminated for at least one full calendar year.

(2) The system shall maintain subaccounts within this account reflecting the credits attributed to each participant in the plan, but the monies in the account shall remain a part of the fund until disbursed to a participant in accordance with the plan provisions.

(3) Interest shall not be credited to a participant's subaccount during the period of participation. With respect to any individual who was eligible to participate in the Deferred Retirement Option Plan prior to January 1, 2004, all amounts which remain credited to the individual's subaccount after termination of participation in the plan shall be credited with interest at the end of each plan year at a rate equal to the realized return on the system's portfolio for that plan year as certified by the system actuary in his actuarial report, less one-half of one percent. 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 subaccounts may be credited with interest at the actual rate of return earned on such subaccount 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. Upon termination of participation in both the plan and employment, a participant shall:

(1) At the participant's option, receive either a lump sum payment from the account equal to the amount then credited to his individual subaccount; or disbursements based on his individual subaccount in any manner approved by the board.

(2) Begin to receive regular monthly retirement benefits based on the option selected at the time of election to participate in the plan, as adjusted pursuant to Subsection J of this Section.

H. Upon termination of participation in the plan but not employment, credits to the account shall cease, and no retirement benefits shall be paid to the participant until employment is terminated. No payment shall be made based on credits in the account until employment is terminated. Employer and employee contributions shall resume.

I. If the participant dies while still employed, his credits and benefits, if any, due beneficiaries shall be payable as if he had retired immediately prior to death.

J. Monthly retirement benefits payable to a participant after termination of participation in the plan and employment shall be calculated as follows:

(1) There shall be a "base benefit" which shall equal the participant's monthly credit to the account plus conversion of sick and annual leave, if any, based on the final average compensation rate used to calculate the monthly credit.

(2) If the participant does not continue employment after termination of participation in the plan, his monthly retirement benefit shall equal his base benefit.

(3)(a) If the participant, whose first employment making him eligible for membership in the system began on or before June 30, 2006, continues employment after termination of participation in the plan for a period of less than thirty-six months, his monthly retirement benefit shall equal his base benefit plus an amount based upon the service credit for the additional employment, together with conversion of the net amount of sick and annual leave accumulated during that period of employment, based upon the final average compensation used to calculate the monthly credit.

(b) If the participant, whose first employment making him eligible for membership in the system began on or after July 1, 2006, continues employment after termination of participation in the plan for a period of less than sixty months, his monthly retirement benefit shall equal his base benefit plus an amount based upon the service credit for the additional employment, together with conversion of the net amount of sick and annual leave accumulated during that period of employment, based upon the final average compensation used to calculate the monthly credit.

(4)(a) If the participant, whose first employment making him eligible for membership in the system began on or before June 30, 2006, continues employment after termination of participation in the plan for a period of thirty-six months or more, his monthly retirement benefit shall equal his base benefit plus an amount based upon the service credit for the additional employment, together with conversion of the net amount of sick and annual leave accumulated during that period of employment, based upon the higher of the final average compensation when the member entered the plan or for the period of employment after termination of participation in the plan.

(b) If the participant, whose first employment making him eligible for membership in the system began on or after July 1, 2006, continues employment after termination of participation in the plan for a period of sixty months or more, his monthly retirement benefit shall equal his base benefit plus an amount based upon the service credit for the additional employment, together with conversion of the net amount of sick and annual leave accumulated during that period of employment, based upon the higher of the final average compensation when the member entered the plan or for the period of employment after termination of participation in the plan.

K. Once participation in the plan commences, the election to participate is irrevocable and the term of participation may not be extended. Only one period of participation is permitted. Final average compensation and election of option, if any, are fixed upon commencement of participation.

L. If the participant remains employed for a period of less than thirty calendar days after termination of participation in the plan, the participant shall not be reenrolled in the system, contributions to the retirement system shall cease, and no additional service credit shall be credited to the member's account.

Added by Acts 1991, No. 56, §1, eff. July 1, 1992. Amended by Acts 1993, No. 929, §1, eff. July 1, 1993; Acts 1995, No. 562, §1; Acts 1995, No. 1110, §1, eff. Jan. 1, 1996 (Subsec. A eff. June 30, 1995); Acts 2003, No. 651, §1; Acts 2003, No. 962, §1, eff. Jan. 1, 2004; Acts 2006, No. 563, §1, eff. June 23, 2006; Acts 2006, No. 578, §1, eff. June 23, 2006; Acts 2006, No. 579, §1, eff. June 23, 2006; Acts 2006, No. 647, §1, eff. July 1, 2006; Acts 2011, No. 368, §1, eff. July 1, 2011; Acts 2016, No. 321, §1, eff. June 30, 2016.

*As appears in enrolled bill.