| 1. |
Q: |
What is the effective date of the law?
|
| A: |
The law was effective July 1, 2005. |
| 2. |
Q: |
Who can I call to discuss my questions concerning this new opportunity
for my DROP accumulation?
|
| A: |
You can call the toll-free MyFRS Financial Guidance Line at
1-866-446-9377, Option 1, and speak to one of the unbiased financial
planners. They can answer your questions about rolling your DROP
accumulation into the FRS Investment Plan.
|
| 3. |
Q: |
Do I have to roll my DROP accumulation to the Investment Plan?
|
| A: |
No. You may rollover your accumulation to any eligible retirement
plan as defined in section 402(c)(8)(b) of the Internal Revenue Code.
(See the Division of Retirement DROP brochure for more information.).
You should carefully compare fees, penalties, investment options,
restrictions and services before choosing where to rollover your DROP
accumulation.
|
| 4. |
Q: |
Are all current and future
DROP participants eligible for the rollover?
|
| A: |
Yes. All current and future DROP participants are eligible to roll
their DROP accumulation over to the FRS Investment Plan so long as they
do not take their accumulation as a cash lump sum payment, or they
convert the cash payment to a lump sum rollover prior to the end of the
60-day rollover window after the date of their distribution check.
|
| 5. |
Q: |
Are former DROP
participants who took their DROP distribution as a
rollover prior to July 1, 2005 eligible for a rollover to the Investment
Plan?
|
| A: |
Yes. All former DROP participants are eligible to roll over their DROP
accumulation to the FRS Investment Plan. Rollovers from former DROP
participants may be transferred to the FRS Investment Plan so long as
they come into the Plan from a qualified retirement account, such as an
IRA, 403(b), 457, 401(a), 401(k), etc.
|
| 6. |
Q: |
Are former DROP participants who took their DROP distribution as a cash
lump sum payment prior to July 1, 2005 eligible for a rollover to the
Investment Plan?
|
| A: |
No. If a former participant took their DROP accumulation as a cash
lump sum payment, they are not eligible to roll the payment to the
Investment Plan.
|
| 7. |
Q: |
If I roll my DROP accumulation into the Investment Plan, will I pay
account management fees?
|
| A: |
Yes. You will pay the investment management fees for the
fund(s) in
which you choose to invest, plus a quarterly plan administrative fee of
$6 ($24 annually). These fees will be reflected on your quarterly
statement from the Investment Plan. Total fees paid in the Investment
Plan are likely to be less than those paid in other plans, but you
should review all fees carefully.
|
| 8. |
Q: |
Is there a minimum amount I can roll over to the Investment Plan?
|
| A: |
Yes. Your DROP rollover must be greater than $1,000. There is no
maximum amount that may be rolled over.
|
| 9. |
Q: |
Is there a minimum account balance I must keep in my Investment Plan
account?
|
| A: |
Yes. If your account value falls below $1,000, you will receive a
mandatory distribution of your full balance in the plan.
|
| 10. |
Q: |
If I roll my DROP accumulation into the Investment Plan, will I have to
pay any taxes?
|
| A: |
Your DROP accumulation will not be taxed at the time you roll it over to
the Investment Plan. It will only be taxed when you decide to take a
distribution from the Investment Plan, and then only on the amount you
take as a distribution.
|
| 11. |
Q: |
A portion of my DROP accumulation was based on contributions I made for
the purchase of additional service in the Pension Plan prior to entering
DROP. As such, I will be receiving two checks when I take my DROP
distribution from the Pension Plan. Can I roll over both of my
distribution amounts?
|
| A: |
No. Any DROP accumulations you receive which are based on your
after-tax personal contributions are not eligible to roll over to the
Investment Plan. These accumulations will be paid to you as a tax-free,
lump sum payment, as computed using the Simplified General Rule under
the Internal Revenue Code. Only the DROP accumulation you receive based
on pre-tax funds is eligible to be rolled over to the Investment Plan.
|
| 12. |
Q: |
If I retire from the Pension Plan, I know I will be subject to the
reemployment-after-retirement restrictions of the Pension Plan. But if
I roll my DROP accumulation into the Investment Plan, will I also be
subject to the reemployment-after-retirement restrictions of the
Investment Plan?
|
| A: |
No. You will only be subject to the reemployment-after-retirement
restrictions of the FRS Pension Plan, which may affect your monthly
Pension Plan benefit if you return to work. You will have immediate
access to your DROP accumulation from the Investment Plan whether you
are retired or return to FRS-covered employment.
|
| 13. |
Q: |
If I roll my DROP accumulation into the Investment Plan, am I eligible
to also roll other retirement monies I have from other sources to the
Investment Plan?
|
| A: |
Yes. You may roll other retirement monies into the Investment Plan if
they are from a qualified retirement plan that is an eligible plan as
provided by the IRS (includes IRA, 401(k), 401(a), 403, and 457
retirement plans, and the Federal Thrift Savings Plan). An
FRS Investment Plan Employee Rollover
Deposit Form ("IP-Rollover") must be
completed in order to facilitate the transfer. This form is available
on the MyFRS.com website under "Resources" in the "Forms" gallery or by
calling the MyFRS Financial Guidance Line and selecting Option 4.
|
| 14. |
Q: |
If I roll my DROP accumulation into the Investment Plan, will those
funds be subject to the minimum required distribution rules of the IRS
(i.e., minimum payments beginning at age 70 1/2)?
|
| A: |
Yes.
|
| 15. |
Q: |
How many funds are in the Investment Plan and what are the fees?
|
| A: |
There are 20 funds available in the Investment Plan with annual fees as
low as 0.02%. There are also three balanced funds available to make
your investing easy. You can see the funds and fees by logging on to
www.MyFRS.com and
clicking on the green "$" button in the upper right corner of the home
page. You can also call the MyFRS Financial Guidance Line toll-free at
1-866-446-9377, Option 1, and speak to one of the financial planners.
They can talk with you about all the funds and help you choose funds
you feel best fit your goals and circumstances.
|
| 16. |
Q: |
If I am completing my DROP participation prior to age 59 1/2, will I be
subject to the 10% penalty assessed by the IRS for early withdrawals?
|
| A: |
The answer is generally yes, but there are important exceptions.
Since the FRS Investment Plan is an employer sponsored plan, you
will be eligible to take distributions from the Investment Plan without
the 10% IRS early withdrawal penalty if payments are paid to you after
you separate from service with your employer during or after the year
you reach age 55, or if payments are made over your life or joint life
expectancies. You should consult your tax advisor or one of the financial
planners at the MyFRS Financial Guidance Line about your specific
circumstances. There is also additional information on taxability of
benefits at MyFRS.com under "FRS Programs", "Comparing the Plans".
|
| 17. |
Q: |
What paperwork will I have to complete in order to roll my DROP
accumulation in to the FRS Investment Plan?
|
| A: |
If you are a new or current
DROP participant, you should complete the Division of
Retirement's Deferred Retirement Option
Program Selected Payout Method, Form DP-PAYT, and send it to the
Investment Plan Administrator,
CitiStreet, who will sign and forward the completed form to the
Division of Retirement. You must also complete an
Investment Plan DROP Accumulation
Direct Rollover Form for Current DROP Members, Form IPDROP-AD-1, and send
it to the Investment Plan Administrator to set up your Investment Plan
account. CitiStreet will send you a confirmation letter and personal
PIN for accessing your account under separate cover after processing
your completed form.
If you are a former DROP
participant who received your DROP distribution as a rollover prior to
July 1, 2005, you should complete the
Investment Plan's DROP Direct Rollover Form for Former DROP Members,
IPDROP-RO-1, available on the web at
MyFRS.com, under
"Forms" and send it to the Investment Plan Administrator, CitiStreet for
processing. CitiStreet will send you a confirmation letter and personal
PIN for accessing your account under separate cover.
|
| 18. |
Q: |
If I choose to roll my DROP accumulation to the Investment Plan, but
fail to designate an investment fund for its deposit what will happen
to my money?
|
| A: |
If you do not choose one of the investment options listed on the
rollover enrollment form, your DROP accumulation will be initially
invested in the FRS Select Yield Plus Money Market Fund. After your
account has been established you will then have access to move your
money to any of the 20 available funds offered in the Investment Plan.
|
| 19. |
Q: |
How do I take a distribution from the FRS Investment Plan?
|
| A: |
To take a distribution, call the MyFRS Financial Guidance Line toll-free
at 1-866-446-9377, Option 4, and speak to a CitiStreet representative.
Be sure to have your PIN number available prior to calling. If you do
not have a PIN, you may request a PIN reminder online or by calling the
MyFRS Financial Guidance Line and selecting Option 4.
|
| 20. |
Q: |
If I roll my DROP accumulation into the Investment Plan, will the
beneficiary I named under the Pension Plan when I entered DROP
automatically become my beneficiary for my money invested into the
Investment Plan?
|
| A: |
No. The beneficiary you named to receive your DROP accumulation and
Pension Plan benefit are only applicable under that plan. If you roll
over your DROP accumulation to the Investment Plan, you will need to
name new beneficiaries to receive any benefits due at your death.
Otherwise, your benefits will be paid out according to Florida Law.
The beneficiary you named under the Pension Plan will continue in effect
for that plan.
|
| 21. |
Q: |
If I roll my DROP accumulation into the Investment Plan and later return
to FRS-covered employment as a renewed member, and join the Investment
Plan as my retirement option, can I name a different beneficiary than
the beneficiary I named for my DROP rollover?
|
| A: |
No. Your named beneficiary under the Investment Plan will pertain to
all investment accounts you have under the plan. You may, however, have
a different beneficiary named under the Pension Plan to receive any
benefits due from that plan.
|
| 22. |
Q: |
If I roll some or all of my DROP accumulation into the Investment Plan,
what services will I get from the FRS?
|
| A: |
You will continue to have access to the toll-free MyFRS Financial
Guidance Line at 1-866-446-9377, where you can talk to experienced and
unbiased financial planners from Ernst & Young. They can help you
manage your retirement benefits and help you with any financial
questions you may have. You will also have access to the MyFRS.com
website where you can log in to your account to make asset allocation
changes.
|
| 23. |
Q: |
Can the FRS Investment Plan receive rollovers from Roth IRA's?
|
| A: |
No.
|
| 24. |
Q: |
I am a Special Risk member considering rolling my DROP accumulation to the
Investment Plan. Will I be subject to a 10% early distribution tax penalty
if I take a lump sum distribution from the Investment Plan before I am age 55?
|
| A: |
Yes. You may be subject to the 10% penalty (i.e., excise tax). It will be
your responsibility to pay the 10% penalty when you file your tax return.
You will also be responsible for any other taxes you may owe for this payment
above the 20% that was withheld. Note: the 10% excise tax triggered by lump
sum distributions before you are age 59½ is applicable for distributions from
the Investment Plan, tax-deferred annuities and traditional IRAs (some
exceptions apply if you are older than age 55).
|
| 25. |
Q: |
If I am age 50 when I terminate DROP and roll my DROP accumulation to the
Investment Plan, could I be subject to the 10% tax penalty if I wait to take
a lump sum distribution at age 55?
|
| A: |
Yes. You cannot age into penalty exemptions. You are subject to the 10%
tax penalty for plans like the FRS based on your age at FRS-covered employment
termination. You would need to wait until age 59½, unless you qualify for an
exemption as defined under IRS section 72(t). For example, taking distributions
as substantial and equal periodic payments over your lifetime; this method
would allow you to avoid the 10% penalty.
|
| 26. |
Q: |
If I rollover my DROP accumulation to the Investment Plan and begin taking equal
installments over my lifetime prior to age 55, say age 54, to avoid the 10% tax
penalty, can I change my payment amount after 2 years?
|
| A: |
No. You cannot change your payment amount until the later of 5 years or age 59½.
So, the earliest you could change your payment amount if you began distributions
at age 54 would be age 59½. Should you change your payment schedule prior to the
later of 5 years or age 59½ all payments received may be retroactively charged the
10% excise tax.
|
| 27. |
Q: |
I am a 50 year old Special Risk member and I would like to take a partial
distribution from the DROP, and roll over the balance to the Investment Plan.
Is it true that Special Risk members may be able to receive distributions and
avoid the 10% excise tax?
|
| A: |
On August 17, 2006, President Bush signed into law the 2006 Pension Protection
Act ( PPA ). One of the Acts provisions was to allow qualified public safety
employees (QPSEs) to receive distributions from a qualified defined benefit
plan without 10% excise tax if separating from service after age 50 (IRC
Section 72(t)(10)). However, the IRS defines QPSEs as those who provide
police protection, fire fighting services, or emergency medical services for a
State or municipality. Not all Special Risk members meet the definition of
QPSEs.
If you are a QPSE and a Special Risk member, you would be able to take a
distribution (partial or lump sum) from the DROP without being subject to the
10% excise tax. If the DROP accumulation is rolled over to the Investment
Plan, a defined contribution plan, the 10% excise tax will apply. The PPA
did not address distributions from plans like the Investment Plan, so, if you
qualify for the exception, you must be sure to take the distribution after
terminating from DROP, but before a roll over to the Investment Plan.
|
| 28. |
Q: |
If I roll my DROP balance into the Investment Plan and the beneficiary I
named is not my spouse, how will the payments be treated if I die?
|
| A: |
If you had not begun taking distributions from the Investment Plan, the
non-spouse beneficiary has the choice of taking distributions over 5 years,
or the beneficiary can elect to take lifetime installments over the
beneficiarys life expectancy. The decision on the method of payment has to
be made within 1 year of your death. If no choice is made, the distribution
will be subject to the 5-year rule.
With the enactment of the 2006 Pension Protection Act, a non-spouse beneficiary
may now roll over a balance in the Investment Plan to an inherited IRA
(only a spouse has the ability to treat the IRA like his or her own or as
an inherited IRA). The inherited IRA is subject to the rules that apply to
any beneficiary and, as such, will not require distribution unless subject to
required minimum distribution rules.
|
| 29. |
Q: |
Are members of the Teachers Retirement System (TRS) and State County Officers
Employees Retirement System (SCOERS) eligible to roll their DROP accumulations
into the Investment Plan?
|
| A: |
Yes. Current and former TRS and SCOERS members are eligible to roll their
DROP accumulations to the Investment Plan.
|
