Arkansas Administrative Code › Agency 075 - PUBLIC EMPLOYEES RETIREMENT SYSTEM › Rule 075.00.19-003 - Board rule 214- 1997- DROP Provisions

Current through Register Vol. 49, No. 6, June, 2024
214 - 1997 (5) - DROP Provisions
(as amended May
			 1999, May 2001, August 2003, November 2010, May 2011, November 2011, October
			 2017, and December 2019)
Contributions to Drop Account
For a member who has 30 or more years of actual service, the
			 contribution shall be 75% of the member's computed benefit after election of a
			 straight life or option benefit, as required by Subchapter 8 of Chapter 3 of
			 Title 24 of the Arkansas Code, and including the temporary annuity, if
			 applicable. For a member who has 28 years but less than 30 years of actual
			 service, the contribution shall 75% reduced by 0.5% for each month that the
			 DROP election precedes the date the member would complete 30 years of actual
			 service.
Contributions to the account shall be increased for COLA's and ad
			 hoc increases granted to retirees.
Interest on the Drop Account
Interest shall be credited on a monthly basis compounded annually
			 to the date of actual retirement. The Board shall reevaluate the DROP interest
			 rate annually at its regular February meeting and may modify it by a simple
			 majority vote without promulgating additional regulations.
Drop Payment Methods
Member may elect a lump sum or an annuity that concludes at the
			 completion of twenty-five (25) years. The member may select a combination of
			 lump sum, rollover and annuity, never to exceed the total amount of the DROP
			 accrual. If the member elects a lump sum, the member may request that the lump
			 sum be transferred to another qualified plan in a trustee-to trustee transfer.
			 If the member elects a monthly annuity, the monthly amount shall remain
			 constant for the 25-year term. That is, COLA's and Ad Hoc increases will not be
			 added to this monthly annuity and the balance in the account will not earn
			 interest after the effective date of retirement. Death of a Drop
			 Participant
In the event a DROP participant dies during the period of
			 participation, the benefit payable from APERS shall be determined as though the
			 participant had separated from service and been found eligible for monthly
			 benefits by the Board on the day prior to the death, with death following
			 immediately thereafter (per Act 1052). The balance in the DROP account shall be
			 paid to the designated beneficiary.
Death of a Retiree Receiving a Monthly Annuity From
			 Drop
Upon the death of a retiree who was receiving a monthly annuity
			 from the DROP, the DROP annuity will be treated as if it had been a straight
			 life benefit, and the undistributed remaining balance in the DROP account, if
			 any, will be paid to the designated beneficiary. The regular monthly retirement
			 benefit will be treated according to the election made by the retiree at
			 his/her entry into the DROP.
Failure to Terminate Covered Employment Within Seven
			 Years of Drop Entry
If a DROP participant fails to terminate employment within seven
			 years of entry into the DROP,
the participant shall forfeit the balance in the DROP account.
			 The participant's employer shall be required to pay all contributions, with
			 interest, that would have been paid on behalf of the member had he/she not
			 participated in the DROP. The employer will acknowledge this requirement on the
			 member's application for participation in the DROP. However, a DROP participant
			 also enrolled in the ATRS T-DROP due to reciprocal service credit shall be
			 permitted to keep the accrued balance on account with APERS until completion of
			 the term of the ATRS T-DROP. No interest shall be paid on such balances. COLAs
			 will continue to be paid.
Review of Provisions
The provisions of the DROP program will be reviewed at three year
			 intervals, or more frequently if necessary. Based on the actuary's review, the
			 contribution and interest rate provisions may be adjusted prospectively as the
			 Board of Trustees considers such action to be actuarially appropriate.
A member whose DROP participation has ceased shall not be
			 prohibited from thereafter seeking and taking a publicly-elected office that
			 otherwise is covered under APERS but that member shall not be eligible to
			 rejoin this system.
Deferred Retirement Option Plan (Drop) Provisions For
			 Members Called To Active Duty
Generally;
1. A DROP
		  participant who is called to active duty will provide APERS with a copy of his
		  or her Orders that will be maintained in the member's file. A copy of the
		  Orders will be utilized to verify the date that the member is called to active
		  duty.
2. The employer will continue
		  to report the DROP participant on the monthly DROP report. The Agency
		  representative will indicate that the member is on "Military Leave".
3. When the member is released from active
		  duty, he/she will submit a copy of the DD214 Form or other appropriate
		  documents to APERS to verify that the member has returned to covered employment
		  and/or been released from active duty.
Maximum Pailicipation Period:
1. A DROP participant who is on active duty
		  shall continue to receive his/her monthly DROP payment (which includes any
		  benefit enhancements awarded to eligible retirees) until the maximum allowable
		  time in the DROP has occurred or the member requests retirement and
		  distribution of his/her DROP account, whichever occurs first.
2. If the member has participated in the DROP
		  for at least five (5) years, he/she must complete a retirement application
		  packet and DROP Distribution Form(s) prior to his or her departure for active
		  duty and deliver the completed forms to the APERS Office along with a copy of
		  his/her Orders. The retirement application and DROP Distribution Forms will be
		  held and processed on the effective date indicated unless he/she returns to
		  covered employment within the seven year DROP term.
3. Should the DROP member not deliver a
		  retirement application packet and DROP Distribution Form(s) to APERS and the
		  maximum period of DROP participation (7 years) expires prior to the member
		  returning to covered employment and/or requesting retirement:
a. The monthly DROP accrual will cease on the
		  seventh anniversary of the member's beginning DROP date and no additional
		  interest will be paid;
b. The
		  monthly retirement benefit will not become effective until the member files a
		  completed retirement application and complies with applicable deadlines; and
		  the DROP account balance shall be distributed upon the member's filing of the
		  required DROP Distribution Form(s).