FAQs

(14) Do FRS Investment Plan funds pay dividends and interest income?

Yes, but the institutional and commingled investment funds available to you in the Investment Plan treat dividend and interest income somewhat differently than if you held a mutual fund within a taxable account.


In a taxable account, as part of the process of trading securities within a fund, there will be short and long-term capital gains generated, as well as income from interest-bearing securities, and these are distributed to the investor when paid out. In a taxable account, an investor has the ability to decide whether to have the income paid, or to use the additional dividends and interest to purchase additional shares or units of the fund. When dividends and interest are paid to the investor, it represents a loss of income for the fund, and the share price is reduced, accordingly. The investor will have to pay taxes on these distributions and they may be taxed at ordinary income tax or long-term capital gains rates.


The fund shares held by members in any of the FRS Investment Plan fund offerings, or any tax-deferred retirement savings plan, are held under a mechanism called an "omnibus account". The "owner" of the omnibus account is the FRS Investment Plan. When the funds receive income from realized gains, dividends, and interest income, this stream of income is reflected in the share or unit price on a daily basis. As opposed to a mutual fund's distribution of dividends, which has the effect of reducing the net asset value (the price per share of the fund), the pass-through of income into the FRS Investment Plan fund offerings will have the effect of increasing the unit value since income is added into the fund, rather than being distributed to investors. This increased value is reflected in the daily share price shown in the funds and in your account balance. When you take a distribution from the FRS Investment Plan at retirement, the net asset value of the fund will reflect all gains, qualified dividends, and interest income earned during the time you were invested in the fund.

(2090) How often can I change my investments under the Investment Plan?

Once contributions are in your account, you can generally change the way your account balance is invested on a daily basis, except that foreign and global investment funds are subject to a minimum holding period of 7 calendar days following any non-exempt transfers into such funds and you may be subject to trading controls on other funds in the event that you are trading excessively. More information on these restrictions is available by calling the MyFRS Financial Guidance Line or reviewing the “Excessive Fund Trading Guidelines”.

(2093) Can I contribute my own money to my Investment Plan account?

All FRS Investment Plan and Pension Plan members (except those in DROP) make 3% of pay, pretax employee contributions. You are not permitted to make any additional employee contributions above the 3%. Your employer contributes the majority of your retirement savings. The Investment Plan also accepts rollovers from other qualified retirement plans (i.e., 401(k), traditional IRA, 403(b), 457 plans, etc.). Note: Once you roll over eligible retirement monies into the FRS Investment Plan, you cannot receive any distributions of these funds (or your Investment Plan account balance) until you terminate employment for 3 calendar months. You may be eligible to withdraw up to 10% of your Investment Plan account balance one calendar month following the month of your termination if you meet the normal retirement requirements for the FRS Investment Plan.

(2207) What is the effective day of my plan choice?

Your choice becomes effective on the first day of the month after your choice is made and processed by the Plan Choice Administrator.

(2118) Is there a financial penalty if I switch to the Investment Plan and later decide to switch back to the Pension Plan?

No. There's no penalty, but you may need to "buy back" into the Pension Plan. (See the chart below.) This "buy back" cost could make transferring to the Pension Plan unaffordable. If you are an eligible employee who transferred a present-value amount to the Investment Plan as your opening account balance, the total amount you'll need to buy back into the plan is the "present value" of your accumulated benefit in the Pension Plan, assuming all your service had been in that plan. If you did not transfer an opening account balance, your "buy-back" amount will be the total cost of the benefit under the Pension Plan. Your cost to buy into the Pension Plan will be calculated as of the first day of the month following Alight Solutions's receipt of the election form. Remember, you can switch only once after you make your initial choice. The following chart shows what you can and cannot do regarding switching your choice.

If... Then...
Your total balance in the Investment Plan is greater than the "buy-back" amount... Your Investment Plan balance will be reduced by the "buy-back" amount; the rest will stay in the Investment Plan. You will have a benefit in both plans.
Your Investment Plan balance is less than the "buy-back" amount and you still want to switch back... You must make up the difference out of your own money.
(2099) If I select the Investment Plan, what's the monthly contribution that will be paid to my Plan account?

The monthly contribution depends on your employment class, as shown below.


Membership
Class
Paid by Employee Paid by Employer Total
Regular Class 3.00% 3.30% 6.30%
Special Risk
Class
3.00% 11.00% 14.00%
Special Risk
Administrative
Support Class
3.00%4.95% 7.95%
Elected Officers'
Class- (Judges)
3.00%10.23% 13.23%
Elected Officers'
Class - (Legislature/
Cabinet/Public
Defender/State Attorney)
3.00%6.38% 9.38%
Elected Officers'
Class -
(County and Local)
3.00%8.34% 11.34%
Senior Management
Service Class
3.00% 4.67%7.67%
(6001) I am a member of the Investment Plan and plan to retire in about 6 months. Will I continue to have access to the online ADVISOR SERVICE once I begin taking periodic distributions from my account?

Investment Plan members will still have access to the ADVISOR SERVICE as long as there is a balance greater than $1,000. You will also have access to the financial planners at the MyFRS Financial Guidance Line so long as you retain an account balance of $1,000 or more.

(2106) How will the present value of my current retirement benefit be determined?

First, the Division of Retirement will calculate your present value using a formula developed by the Pension Plan's actuary, in accordance with Florida law. The FRS actuary annually evaluates whether the Pension Plan is adequately funded. The formula to compute your current benefit is:


Years of Creditable Service X Percentage Value (depends on class of FRS membership) X Average Final Compensation (average of highest 8* years of salary) = Yearly Benefit at Normal Retirement Date

Then the Division projects the total yearly benefits collected during retirement over your expected lifetime (which may include a cost-of-living adjustment ). This stream of increasing annual payments is converted to a single lump sum – a "present value" (value in today's dollars) using an actuarial conversion factor. The conversion factor reflects a 7.65% interest rate and mortality tables specified by Florida Statutes. Please note that the conversion factor will increase monthly until you reach your normal retirement date and will decrease for each month after the normal retirement date.


* If you have any Pension Plan service prior to July 1, 2011, your retirement benefit will be calculated based on your 5 highest years of pay, averaged.

(55) I don't have any experience or interest in managing an investment account. If I choose the Investment Plan, are there resources that will simplify this task, or even do it for me?

Yes. The CHOICE SERVICE, available on MyFRS.com and through the MyFRS Financial Guidance Line 1-866-446-9377, offers personalized assistance in choosing your own investment portfolio. The MyFRS Financial Guidance Line also offers free one-on-one financial counseling by phone. Once you're in the Investment Plan, the ADVISOR SERVICE will help you with guidance on your portfolio. If you don't want to manage or monitor the investments in your account, the Investment Plan includes ten Retirement Date Funds. These funds invest in a diversified portfolio of other FRS Investment Plan funds and use an asset allocation concept called "target date funds." The mix of funds in each Retirement Date Fund is based on the amount of time you have before retirement, and the mix gradually changes as your retirement gets nearer. This gradual change follows a careful investment strategy called a "glide path." These funds are also low-cost. That means more of the funds' investment earnings stay in your account rather than go to the companies that manage the funds' investments. If you enroll in the Investment Plan and you do not select any investment funds, you will be automatically defaulted to an appropriate Retirement Date Fund based on your current age.

(2096) What is "normal retirement" under the Investment Plan?

Normal retirement for Investment Plan members is the later of either the date you attain normal retirement under the provisions of the Pension Plan or the date you are vested under the Investment Plan. The following chart spells out when you achieve normal retirement depending on your class of membership and first date of hire:

Investment Plan Normal Retirement

  All Classes of Membership
(except Special Risk)
Special Risk
Initially Hired after 7/1/11 Age 65 or older and 1
or more years of
Investment Plan service
Age 65 or older and 1
or more years of
combined Pension Plan
and Investment Plan service
Any age and 33
or more years of
service
Age 60 or older and 1
or more years of
Investment Plan service
Age 60 or older and 1
or more years
of combined Pension Plan
and Investment Plan service
Age 57 or older and 30
or more years of
Special Risk and
military service
Any age and 30
or more years of
Special Risk service
Initially Hired prior to 7/1/11 Age 62 or older and 1
or more years of
Investment Plan service
Age 62 or older and 1
or more years of
combined Pension Plan
and Investment Plan service
Any age and 30
or more years of
service
Age 55 or older and 1
or more years of
Investment Plan service
Age 55 or older and 1
or more years
of combined Pension Plan
and Investment Plan service
Age 52 or older and 25
or more years of
Special Risk and
military service
Any age and 25
or more years of
Special Risk service


If you have reached the normal retirement requirements of the Investment Plan for your class of membership, you may take a one-time distribution of up to 10% of your account balance after being terminated for one calendar month. You are eligible to receive the balance of your account after a total of three calendar months.


In order to be eligible for the Health Insurance Subsidy (HIS), retired Investment Plan members must meet the "normal retirement" requirements of the Pension Plan, as follows:


  • If enrolled in the FRS after July 1, 2011, age 65 and eight years of service or 33 years of service or, if Special Risk age 60 and eight years of service or 30 years of Special Risk service.
  • If enrolled in the FRS prior to July 1, 2011, age 62 and six years of service or 30 years of service or, if Special Risk age 55 and six years of service or 25 years of Special Risk service.

You own your benefit after you have achieved the one year vesting requirement, and are eligible to receive a benefit after being off FRS covered payrolls for three calendar months. At that time, you can:


  • Leave your money in the Investment Plan to grow;
  • Roll it over to an IRA or other qualified retirement program; or
  • Take a partial or total lump-sum distribution.
  • Purchase an annuity

Re-employment restrictions apply to all participants receiving an FRS benefit.


Call the MyFRS Financial Guidance Line for information about the tax implications of your retirement and benefit payments. Click here for additional information.

(2232) What is a Unit?

A "Unit" is the measurement of participation in a particular fund. It is similar to the common stock concept for a company where the number of shares held is described as a percent of the total number of outstanding shares and entitles you, the stockholder, to the equivalent portion of the net worth of the company. Likewise, the number of units held entitles the participant to the equivalent portion of the fund's value. Units are determined in the same manner as mutual funds determine their shares. The number of units you hold for each investment fund is available online in your account statement or through the automated voice response system or can be obtained by speaking to a Customer Care Representative.

(401) Can I buy individual stocks in the FRS Investment Plan?

Yes. The Self-Directed Brokerage Account (SDBA) allows you to invest in thousands of different investment options in addition to the Investment Plan's primary investment funds. To participate in the SDBA you must maintain a minimum balance of $5,000 in the Investment Plan's primary investment funds and initial and subsequent transfers into the SDBA must be at least $1,000. An SDBA is for experienced investors and is not suitable for all members. There are risks associated with many of the investments in the SDBA and you assume the full risk and responsibility for the investments you select. Additional information on SDBA’s is available online in the Investment Funds section.

(2234) Can I calculate investment performance using the unit value?

Yes, for each fund the percentage difference between unit values for a specific period is representative of the actual investment performance of the investment fund for that period.


For example, if Fund A unit value on December 7 was 10.250000 and the Fund A unit value on December 14 was 10.500000, the investment performance for the period (one week) would be 2.44%. The calculation is 10.500000 less 10.250000 is 0.250000 divided by 10.25000 equals 2.44%.


Fund performance can be obtained online on MyFRS.com within the "Investment Funds" section.

(2100) Could I lose all my retirement money if I make poor investment choices under the Investment Plan?

Based on long-term U.S. historical data, that's not likely, especially since the investment funds are diversified and the FRS monitors their performance. However, you do have risks when investing and the level of these risks will fluctuate from time to time.


The two best things to do to help reduce these risks are to diversify your money across the various asset classes and take the long-term view. Invest in different kinds of investment funds that behave differently at different points in the economic cycle. Additional information on the investment funds is available online in the Investment Funds section. Adopt a disciplined, long-term approach to investing. When you invest for the long term (ten years or longer), you have plenty of time to weather market ups and downs and still gain over time. If you have questions about selecting investment funds in the Investment Plan, call the MyFRS Financial Guidance Line at 1-866-446-9377, Option 2.

(150) What day each month will retirement contributions post to my Investment Plan account?

Your employer is required to submit employee and employer retirement contributions and accompanying payroll data to the Division of Retirement by the 5th business day of each month following the month in which the salary is paid. Upon receipt, the Division verifies that the contributions submitted are correct. If correct, the Division forwards the contributions to your Investment Plan account as soon as administratively possible. The contributions should be posted to your Investment Plan account no later than the 15th of the month. If the contributions submitted are not correct, the Division of Retirement will contact your employer and determine the correct contributions due. Once these are determined and your employer submits corrected contributions (if applicable), the contributions will be forwarded to your Investment Plan account.


If your employer does not submit retirement contributions and/or accompanying payroll data timely and they are received after the 5th business day of the month, your employer will be charged a 1% per month delinquency assessment. In addition, any contributions received after the month they were due will also be charged market losses, if any. Your pro rata share of the 1% delinquency assessment and any market losses you experienced will be deposited in your Investment Plan account to make up for the delayed contributions and any investment returns you could have gained had the money been in your account.

(2089) If I choose the Investment Plan but don't select the funds in which I want my account invested, how is my plan account invested?

Your account balance will be invested automatically in an age-appropriate retirement date fund. You may also use the EZ Enrollment Form, which has this feature. Your account balance would initially be invested in an age-appropriate retirement date fund and will remain invested until you decide to change the allocations to other funds.

(3000) How can I use Quicken or Mint to manage my account?

You can download your retirement plan account information to either of two popular personal financial management software packages - Quicken® or Mint® (Windows and Mac versions). At your command, an automated link feeds current (prior business day close), accurate data - including balances and transactions - to the program you're using. With this timesaving capability, you can plan and make decisions viewing all your investment information at once.


All you need to get started for this one-time set-up is a copy of Quicken® or an account set up on Mint.com and the following:


  • Login ID - Your Login ID for Quicken/Mint is your Social Security number, a hyphen, and "14470" (this is the company ID). For example, if your Social Security number was 123456789, the format of the Login ID would be 123456789-14470.
  • PIN - Your PIN is the 6 digit number sent to you by the FRS in your New Hire Kit (if you need a PIN reminder mailed to you, please call the MyFRS Financial Guidance Line at 1-866-446-9377, Option 4). Please note that your PIN is different than the password you use to log on to MyFRS.com.

If you have questions about set-up procedures, you can use the program's Help feature or you can call the toll-free MyFRS Financial Guidance Line at 1-866-446-9377, Option 4, to connect to the Investment Plan Administrator, Alight Solutions.

(2097) How does early retirement affect my Investment Plan benefit?

There isn't an early retirement reduction, like there is under the Pension Plan. You can start getting your benefit at any age after you are vested and have terminated FRS employment for three calendar months. (If you meet the normal retirement requirements of the Investment Plan1, you can take a one-time distribution of up to 10% of your account after one calendar month and the remainder after three months). However, the earlier you take your benefits, either as a lump-sum distribution or regular payments, the lower the benefit amount will be. That's because your balance hasn't had as much time to grow (and, in the case of regular payments, your benefit will be paid over a longer period). There may be tax implications depending on how and when you take benefit payments. See Taxability of Benefit for additional information on the tax consequences of benefit payments. Consult a tax specialist before making any decisions.


1Normal retirement for Investment Plan members is the later of either the date the member attains normal retirement under the provisions of the Pension Plan or the date the member is vested under the Investment Plan. See "(2096) What is 'normal retirement' under the Investment Plan?" for a chart that provides a detailed explanation of normal retirement.

(2087) Why doesn't the Investment Plan offer the same mutual funds I already invest in on my own?

The Investment Plan offers a wide choice of funds in many asset classes - 22 funds in all, which is about the same number of options typically offered in a large private-sector 401(k)-type plan. The investment funds offered under the Investment Plan were selected for their proven performance and their relatively low expense ratio (the percentage of assets participants pay for choosing that fund). Some of the funds are what are called institutional funds, which are funds that have been created by the investment management companies specifically for retirement plans or wealthy individuals at wholesale cost. You may not have seen these funds in your normal market place because they are not available to the retail public.


In addition, a Self-Directed Brokerage Account (SDBA) is available. The SDBA allows you to invest in thousands of different investment options in addition to the Investment Plan's primary investment funds. To participate in the SDBA you must maintain a minimum balance of $5,000 in the Investment Plan's primary investment funds and initial and subsequent transfers into the SDBA must be at least $1,000. An SDBA is for experienced investors and is not suitable for all members. There are risks associated with many of the investments in the SDBA and you assume the full risk and responsibility for the investments you select. Additional information on SDBA’s is available online in the Investment Funds section.

(2045) Does 1 calendar month mean 30 days?

One calendar month means from the 1st of the month to the last day of the month. For example, June 1 through June 30.

(69) What investment funds are offered under the Investment Plan?

The Plan offers a combination of low-cost, institutionally managed funds, and brand name mutual funds. Additional information is available online in the Investment Funds section.

(2211) Does overtime pay affect the contribution amount to my Investment Plan account?

Overtime pay is included in the definition of compensation for the Investment Plan (and Pension Plan). The percentage you and your employer contribute remains the same; however, the actual dollar amount contributed to your account is based on your higher pay for that month.

(2044) When should workers' compensation payments be reported?

Workers' compensation should be reported if the member is approved for and retires on disability retirement or returns for at least 1 calendar month to active employment in a regularly established position with an FRS-participating employer.

(2031) Is a separate monthly retirement report required for each retirement plan?

No. Agencies submit one monthly retirement report. The plan each employee participates is indicated by the FRS plan code submitted on the file.

(2035) When are the retirement contributions and retirement report data due?

Retirement contributions are due from employers by the 5th business day of the month. Retirement contributions received after the due date will be considered delinquent and a 1% delinquent fee will be assessed. Along with your retirement contributions, your report detail must be received and processed by the 5th business day of the month. Any reports received and/or not processed by the 5th business day will be considered delinquent and a 1% delinquent fee will be assessed.

(2051) Where do employers send the retirement contributions and retirement reports?

The retirement contributions and the monthly retirement reports for both Plans should be sent to the Division of Retirement.

(2095) Is the Investment Plan the same as the State's deferred compensation program?

No. The Investment Plan is completely separate and different from any deferred compensation plan in which you may be participating.

(2030) What happens if contributions are submitted late?

Pension Plan contributions not received by the due date will be charged a 1% per month delinquency assessment.

Investment Plan contributions not received by the due date will be charged a 1% per month delinquency assessment. In addition, any contributions received after the month they were due will also be charged the market loss, if any, and an administrative charge for the Plan Administrator for calculating the loss.

Investment Plan contributions not received by the due date will be charged a 1% per month delinquency assessment. In addition, any contributions received after the month they were due will also be charged the market loss, if any, and an administrative charge for the Plan Administrator for calculating the loss.

(2233) What is a Unit Value or Unit Price?

Each day the dollar value of the securities held in each fund is determined after the market closes. The total dollar value is divided by the accumulated units in the fund and the result is the "unit value" for the forthcoming day.

(2231) What is Unitized Accounting?

Unitized accounting is a recordkeeping method used in the Investment Plan. All assets of a fund are reflected as "units of ownership" in the underlying assets, such as stocks, bonds, etc. It allows the change in market value, whether from interest, dividends and/or price changes of the underlying investments or distributions, to be reflected for all participants on a daily basis. This method of reporting the value of each unit is also called net asset valuation (NAV).


Initially, when the Investment Plan started trading, each investment fund balance was converted into units. The initial unit value is arbitrary and has no correlation to the fund's share price.


For example, if fund "A" has an initial total account balance of $1,000,000. The unit value is initially established at $10.00; the fund would be broken in 100,000 units ($1,000,000/$10.00). A participant with an account balance of $5,000 would be entitled to 500 ($5,000/$10.00) of the funds 100,000 units. Then, on a daily basis the unit value is determined by dividing total market value of the fund by the total outstanding units of the fund.


Although the performance of a unitized fund will generally mirror that of the underlying investment, it will not match exactly because of adjustments for maintenance of certain levels of liquidity in the fund; fees charged to and paid from the fund; and trade activity.

(4002) What Fees Do I Pay in the Investment Plan?

As a member of the Investment Plan, you have the opportunity to choose from a variety of investment funds. Each of the available funds charges an investment management fee - the cost for managing your money. This is the only fee you pay. No hidden fees are paid to investment providers and no other administrative fees are charged to your account. (After your employment under the FRS ends, however, you will pay a quarterly plan-administration charge of $6. Members participating in the Self-Directed Brokerage Account will also be charged a $6.25 quarterly account maintenance fee.) The exact fee you pay depends on the funds you select. Fees are automatically deducted from the price of each fund before the prices are posted to your account. The daily price posted to your account is called a net asset valuation (NAV) price, meaning it is calculated after expenses. You will not see any separate billing or line item deduction for investment management fees on your quarterly statement. More information on fees is available in the Annual Fee Disclosure Statement available in the Investment Funds section on MyFRS.com.


How the FRS Helps Lower the Fees You Pay
As an FRS member, your investment fees are lower, in most cases, than they would be for a private investor. The FRS negotiates with each Investment Manager and Investment Provider to obtain the lowest management fees possible.


Determine Your Fees
Let's assume you have an account balance of $30,000 and you invest $20,000 in the FRS U.S. Stock Market Index Fund and $10,000 in the FRS U.S. Bond Enhanced Index Fund.


To calculate the annual fee as a percentage, divide the annual fee (located online on MyFRS.com within the Investment Funds Section) by $1,000. (Note that the fund fees listed below are used for example purposes and are subject to change.)


Then, multiply the dollar amount invested in each fund by the fund's percentage annual fee to determine your total annual investment management fee for that fund.


Add up the fees for each fund.


Name of Fund Amount Invested Annual Fee (%) Total Annual Fee ($)
FRS U.S. Stock Market Index Fund $20,000 $0.20/$1,000 = 0.02% $20,000 x 0.02% = $4
FRS U.S. Bond Enhanced Index Fund $10,000 $0.50/$1,000 = 0.05% $10,000 x 0.05% = $5
Total $30,000 0.03%* $4 + $5 = $9

* $9/$30,000 = 0.03% annual fee

While you shouldn't shy away from a fund because of a higher fee, you should know the amount of your investment fees so you can make informed decisions. If you have questions about your fees or the funds in the Investment Plan, call the MyFRS Financial Guidance Line at 1-866-446-9377, Option 2.

(2102) If I choose the Investment Plan, will I get a regular statement so I can track how my investments are doing?

Yes. You'll receive a quarterly statement of your Investment Plan account. You will also be able to monitor your account balance online at any time by logging into MyFRS.com, then selecting "Manage Investment".

Should you have any questions about your statement or how to access your account balance, you can call the toll-free MyFRS Financial Guidance Line 1-866-446-9377, Option 4 (TRS 711).

(8002) Does the Investment Plan charge administrative fees in addition to the management fees charged by fund managers?

Yes, but only for inactive Investment Plan members. Inactive Investment Plan participants whose account balances are over $1,000 will pay a $6 quarterly account maintenance fee. This fee addresses the administrative costs of the Investment Plan. Members participating in the Self-Directed Brokerage Account will be charged a $6.25 quarterly account maintenance fee. More information on fees is available in the Annual Fee Disclosure Statement available in the Investment Funds section on MyFRS.com .

(2086) How did the FRS choose the investment options for the Investment Plan?

The options were selected through a competitive bid process and provide highly diversified and cost-effective investment options (the FRS Funds) that allow you to choose appropriate levels of risk through asset allocation (the mix of stocks versus bonds versus cash) and specialty products (e.g., small-mid cap stock fund and a real assets fund). A copy of the Investment Plan’s Investment Policy Statement, which discusses the selection of investment options, is available on the MyFRS.com homepage under the “Plan Information/Trustee Reports” section.