Both retirement plans are funded by mandatory employee and employer contributions. Contribution rates are set by Florida law. Neither the employee nor the employer can change contribution rates.
 
Employee Contributions
Based on Florida law, employees contribute 3% of their pretax salary, beginning with their first paycheck, regardless of which FRS retirement plan they choose.
 
As required by Section 121.71(2), Florida Statutes, employee contributions are treated for tax purposes as employer-paid employee contributions (commonly called an employer pick-up) under Internal Revenue Code Section 414(h)(2).
 
Employer Contributions
Employer contributions are equal to a percentage of the member’s gross monthly salary. The percentage is based on the member’s membership class and is determined by the Florida Legislature. Employers pay the same contribution rates for Investment Plan and Pension Plan members. Employers begin paying this “blended rate” from the time the employee is reported on the monthly retirement contribution file. See Blended Rate Contributions below.
 
For information on retirement creditable wages and current contribution rates for each retirement class, refer to the FRS Pension Plan Employer Handbook, Chapter 2.
 
Blended Rate Contributions
Even though the benefits from the two FRS retirement plans are determined differently (the Investment Plan benefit is based on contributions and investment performance, and the Pension Plan benefit is based on a formula), employers pay the same contribution rate, regardless of which plan employees choose. This rate is known as the “blended rate.” The blended rate was established by the Florida Legislature to ensure that both FRS retirement plans are properly funded, to fairly distribute the costs of managing each plan, and to avoid making one plan appear less costly or more generous than the other.
 
The blended rate comprises four distinct amounts:
  • Retirement Uniform Employer Contribution Rate. This is the amount upon which plan benefits are drawn.
  • Retirement Unfunded Actuarial Liability. An unfunded liability does not mean the plan is underfunded. It is based on a projection of future benefits and, like a home mortgage, is paid down over time.
  • Administrative & Education. This amount pays for management of the Investment Plan and for education resources, which help employers and members of both plans understand and use the plans.
  • Health Insurance Subsidy. For more information about this benefit, go to Health Information Subsidy.

  • For more information, refer to the current and historical contribution rates.
     
    Employer Contributions to the Investment Plan
    Employees who enroll in the Investment Plan may see their own contribution and their employer’s contribution on each paycheck. However, some employees may only see the employer contribution amount that is actually deposited into their Investment Plan account while others may see the full amount of the employer’s total blended contribution rate, which includes the Unfunded Liability rate, the Health Insurance Subsidy and the administrative fee. Seeing the full amount may confuse employees because they are only entitled to the employer contribution amount determined by the Florida Legislature. See table below for details.
     
    New hires who elect the Investment Plan during their 1st election period will receive the retirement uniform employer contribution rate from their date of hire until their Investment Plan effective date. From the effective date forward, the employee’s paycheck will show the Investment Plan employer contribution rate shown below:
     
    Investment Plan Contributions
    Membership Class EmployeeEmployerTotal
    Regular Class3%3.30%6.30%
    Special Risk Class3%11.00%14.00%
    Special Risk Administrative Support Class3%4.95%7.95%
    Elected Officers’ Class (Judges)3%10.23%13.23%
    Elected Officers’ Class (Legislature/Cabinet/Public Defender/State Attorney) 3%6.38%9.38%
    Elected Officers’ Class (County and Local)3%8.34%11.34%
    Senior Management Service Class3%4.67%7.67%

     
    Pension Plan Benefit Transfers to the Investment Plan
    Employee and employer contributions begin with the employee’s first paycheck. All contributions are submitted as Pension Plan. If the employee elects the Pension Plan, the contributions made to date remain in the Pension Plan, and all future contributions are made to the Pension Plan. If the employee chooses the Investment Plan, any contributions made prior to the Investment Plan’s effective date will be transferred from the Pension Plan to the Investment Plan.
     
    During the first week of each month, the Division and the Investment Plan Administrator audit employee elections received in the prior month with an effective date of the 1st of the current month. The Division sends an accumulated benefit transfer file of all Investment Plan members whose effective date is the 1st of the current month to the Investment Plan Administrator. Upon receipt of the file, a final reconciliation of the accumulated benefit transfer file for each member is conducted and deposits are made to the member’s account.
     
    Pension Plan Benefit Transfers for Members with Prior FRS Service
    A rehired former employee may have an accumulated benefit in the Pension Plan based on prior FRS service. This accumulated benefit will be transferred to the Investment Plan if the rehired employee has not begun receiving a Pension Plan benefit and chooses to enroll in the Investment Plan with the 100% transfer option.
     
    When the Division and the Investment Plan Administrator audit employee elections each month (as described under Pension Plan Benefit Transfers to the Investment Plan above), they identify any members with an accumulated benefit based on prior FRS service. These amounts are included in the monthly accumulated benefit transfer file.
     
    Accumulated Benefit True-Up
    The member’s initial accumulated benefit transfer from the Pension Plan to the Investment Plan is calculated using available information regarding the member’s age, salary, membership class, and years of service. If an agency does not report current and accurate information on the member, the accumulated benefit transfer amount may need to be adjusted. This is known as a “true-up.” The true-up amount represents the difference in the estimated and the actual accumulated benefit calculation plus interest. Accumulated benefit true-ups can be a negative or positive amount. By law, the accumulated benefit true-up must be calculated within 60 days of the initial transfer. The Investment Plan member will receive a Confirmation of Benefit Transfer Adjustment letter informing the member about the adjustment.
     
    Rollover Deposits (Investment Plan Only)
    Investment Plan members, including former Investment Plan members (retirees), can deposit eligible rollover funds from other qualified plans into their Investment Plan account. If an employee asks about this option, please refer them to the MyFRS Financial Guidance Line (1-866-446-9377, Option 4) or MyFRS.com.
     
    The member must submit an Employee Rollover Deposit and appropriate documentation directly to the Investment Plan Administrator. Upon receipt of the form and funds, the Investment Plan Administrator will deposit the qualified rollover funds into the member’s account. The member can change fund allocations at any time on MyFRS.com or by calling the toll-free MyFRS Financial Guidance Line, Option 4. Rollover funds are tracked separately from a member’s other Investment Plan assets.
     
    Note: If an Investment Plan member had past membership in the State University System Optional Retirement Program (SUSORP), the State Community College System Optional Retirement Program (SCCSORP), or the Senior Management Service Optional Annuity Program (SMSOAP) and transfers any of those funds into their Investment Plan account, the member will be considered a “retiree” of the FRS the month following the transaction. Retirees initially reemployed with an FRS-participating employer on or after July 1, 2010 are not eligible for FRS membership from July 1, 2010 through June 30, 2017. Effective July 1, 2017, retirees of the Investment Plan, SUSORP, SCCSORP, and SMSOAP are eligible for renewed membership. They must be employed in an FRS-covered position on or after July 1, 2017 to gain renewed membership. However, as retirees, these renewed members are not eligible to participate in the Pension Plan or DROP, receive disability benefits or use the second election to change to the Pension Plan.
     
    DROP Member Rollover Deposits (Investment Plan Members)
    Pension Plan DROP members, including former DROP members, can roll eligible DROP funds into the Investment Plan and have immediate access to these funds, even if they return to FRS-covered employment. This option allows DROP members to take advantage of the low-cost investment options offered under the Investment Plan. DROP members receive a flyer in their DROP Termination Kit provided by the Division informing them of their ability to use the MyFRS Financial Guidance Program as well as the rollover option. See Keep Your DROP in the FRS for detailed instructions on the process and forms required to complete this rollover.
     
    Contribution Limits
    Employee contributions are limited by Section 415 of the Internal Revenue Code. The Investment Plan Administrator performs testing on a semiannual basis to ensure compliance with this limit. To properly monitor contribution limits across all eligible employer-sponsored plans in which the member participates, the Investment Plan Administrator must receive accurate, up-to-date reports from employers. See Contribution Limit Monitoring below.
     
    The Investment Plan Administrator will notify the employer when an employee appears to be reaching the allowable limits under the Internal Revenue Code.
     
    No refunds are processed from the Investment Plan. If a member exceeds the Section 415 limit in any calendar year, a refund must be taken from the member’s other qualified plans.
     
    Contribution Limit Monitoring
    The Investment Plan Administrator can only perform contribution limit calculations based on the data it receives from employers. The Division and the Investment Plan Administrator do not audit this data in any way. The Investment Plan Administrator may not be able to tell if a member exceeds the limit if it does not receive data from all of the qualified plans a member has contributed to during the year. The reporting of this data is mandatory on the monthly retirement contribution file.
     
    Refer to the FRS Pension Plan Employer Handbook, Chapter 3, for the monthly retirement file-reporting format for limit monitoring.
     
    Reporting Retirement Contributions
    Employers are required to submit one data file and one Contribution Summary Information Form containing information for both the Investment Plan and Pension Plan. For the retirement file format, refer to the FRS Pension Plan Employer Handbook, Chapter 4.
     
    Contributions and retirement report data are due from employers by the 5th business day of each month. If the Division does not receive contributions and/or data by this deadline, the employer will be sent a delinquent fee invoice equal to 1% of the total monthly retirement file.
     
    If contributions and/or data are not received within the calendar month they are due, and if that delinquency results in market losses to an Investment Plan member, the employer is responsible for reimbursing the member’s account for any market losses. The Investment Plan Administrator will calculate the market loss, and the Division will invoice the employer.
     
    All payments made to employees that meet the definition of compensation as described in Rule 60S-6.001(15)(a), Florida Administrative Code, must be reported to the Division for retirement calculation purposes. Your monthly retirement report should include only wages paid during that month.
     
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