§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. The duration of participation in the plan shall be specified and shall not exceed three years.

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.

(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.(1) A person who participates in this program shall not be eligible to receive a cost-of-living increase 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.

(2) 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 program, 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 evaluation report, said interest to be credited to his individual account balance on an annual basis. With respect to any individual who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, except as provided in Subparagraph (d) of this Paragraph, 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 account balances 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; 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.

(d)(i) Notwithstanding any provision of this Paragraph to the contrary, any individual who became or becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, may make an irrevocable written election to waive his rights as protected by the Constitution of Louisiana relative to the interest earned by his Deferred Retirement Option Plan account. For any such 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 the actuarial 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, or 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. Any member who participated in the Deferred Retirement Option Plan between January 1, 2004, and the effective date of this Subparagraph may make the election authorized by this Subparagraph only within sixty days after the effective date of this Subparagraph. Any member who becomes eligible for participation in the Deferred Retirement Option Plan after the effective date of this Subparagraph may only make the election authorized herein prior to participation in the plan.

(iii) Any individual who does not elect to waive his rights pursuant to this Subparagraph 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.

(iv) The board of trustees may make, alter, amend, and promulgate rules necessary for the implementation and administration of this Subparagraph.

G. Repealed by Acts 2003, No. 962, §2, eff. Jan. 1, 2004.

H. Upon termination of employment at the end of the specified period of participation, a participant in the program shall receive, at his option, a lump sum payment from the account equal to the payments to the account, or a true annuity based upon his account, 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.

I.(1)(a) If a participant dies during the period of participation in the program, and he selected an optional allowance designating his spouse as beneficiary, such beneficiary shall receive, at the option of the beneficiary a lump sum payment of the participant's account balance or the beneficiary 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.

(b) In the event the designated beneficiary is not the participant's spouse, and is entitled to monthly benefits under the option selected, such beneficiary shall receive, at his option, a lump sum payment of the participant's account balance or he may elect to receive the balance in the account under any method that will cause a total distribution of the account over a period not to exceed five years; in addition, the normal benefits payable to the designated beneficiary under the option selected shall become payable.

(c) 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 payments to 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 fund during the period of participation shall begin being paid to the retiree.

J.(1) 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 fund during the period of participation be payable to the individual until he terminates employment.

(2) Upon termination of employment a member shall receive, at his option, a lump sum payment from the account equal to the payments to 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.

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, he shall resume active contributing membership in the system.

(2) Upon termination of employment, the monthly benefits which were being paid to the fund shall begin to be paid to him. He may not change the option which was originally selected.

(3) 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 was less than thirty-six months, 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 thirty-six or more months, 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.

(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 he 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.

(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 under the provisions of R.S. 11:2220(A)(1)(e) 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.

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.

*As appears in enrolled bill.

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)).