| 1. |
Q: |
Who can I call to get answers about rolling my DROP accumulations into the FRS Investment Plan?
|
| A: |
You can call the toll-free MyFRS Financial Guidance Line at
1-866-446-9377, Option 2 (TRS 711), and speak to one of the unbiased financial
planners.
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| 2. |
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's
DROP Brochure for more information.)
You should carefully compare fees, penalties, investment options,
restrictions and services before choosing where to rollover your DROP
accumulation.
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| 3. |
Q: |
Are all DROP participants eligible for the rollover?
|
| A: |
Yes. All 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.
|
| 4. |
Q: |
Are former DROP
participants who took their DROP distribution as a
rollover 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.
|
| 5. |
Q: |
Are former DROP participants who took their DROP distribution as a cash
lump sum payment 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.
|
| 6. |
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.
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| 7. |
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.
|
| 8. |
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.
|
| 9. |
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.
|
| 10. |
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.
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| 11. |
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.
|
| 12. |
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 also available by calling
the MyFRS Financial Guidance Line and selecting Option 4.
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| 13. |
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.
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| 14. |
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. Information on
the funds and fees
is available online or by calling the MyFRS Financial Guidance Line toll-free at 1-866-446-9377, Option 2 (TRS 711),
and speaking 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.
|
| 15. |
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 FRS 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 online on
taxability of benefits.
|
| 16. |
Q: |
What paperwork will I have to complete in order to roll my DROP
accumulation in to the FRS Investment Plan?
|
| A: |
Three months before your DROP end date, you will receive a flyer
in your DROP termination kit provided by the Division of Retirement informing you that you can roll over your DROP lump sum into the FRS
Investment Plan and the availability to receive free guidance from Ernst & Young financial planners in determining what to do with your DROP payout.
If you are a current DROP participant, you should complete the Division of
Retirement's Deferred Retirement Option
Program Selected Payout Method, Form DP-PAYT, (it will be provided to you in the DROP termination kit) and send it to the
Investment Plan Administrator, 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. The Investment Plan Administrator 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, you should complete the
Investment Plan's DROP Direct Rollover Form for Former DROP Members,
IPDROP-RO-1, and send it to the Investment Plan Administrator, for
processing. The Investment Plan Administrator will send you a confirmation letter and personal
PIN for accessing your account under separate cover.
|
| 17. |
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.
|
| 18. |
Q: |
How do I take a distribution from the FRS Investment Plan?
|
| A: |
To take a distribution, you can either log onto MyFRS.com or call the MyFRS Financial Guidance Line toll-free
at 1-866-446-9377, Option 4 (TRS 711), and speak to an Investment Plan Administrator 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. You do not need to complete any paper forms in order to request a distribution.
|
| 19. |
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.
You can designate a beneficiary(ies) for your Investment Plan account by completing and returning a
Beneficiary Designation Form (IPBEN-1).
If you do not name a beneficiary, 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.
|
| 20. |
Q: |
If I roll my DROP accumulation into the Investment Plan and later return to FRS-covered employment
as a renewed member (only applicable if you retired and were initially reemployed prior to July 1, 2010), 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.
|
| 21. |
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.
|
| 22. |
Q: |
Can the FRS Investment Plan receive rollovers from Roth IRA's?
|
| A: |
No.
|
| 23. |
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 - see the following three questions for examples).
|
| 24. |
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.
|
| 25. |
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: |
Since these payments are complicated in nature and need to be set up by a qualified professional to be considered acceptable by the IRS, please consult your tax professional or accountant. If the payments are not set up properly or altered during the period of the payments, you may be subject to tax claims by the IRS.
|
| 26. |
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 Act's 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.
Note: The FRS Investment Plan is a qualified defined contribution plan, and the PPA did not provide that distributions from such plans for QPSEs aged 50 and over would be exempt from the 10% excise tax. If you are a QPSE over the age of 50 when DROP ends, and would like to take distribution of some or all of the DROP accumulation, you will need to do so prior to rolling over the assets into the FRS Investment Plan.
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| 27. |
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 beneficiary's 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.
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, has the choice of taking distributions over 5 years, or the beneficiary can elect to take
lifetime installments over the beneficiary's 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.
|
| 28. |
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.
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