Oklahoma Administrative Code › Title 395 - Oklahoma Law Enforcement Retirement System › Chapter 10 - Retirement and Pension Benefit Program › Section 395:10-1-11 - Deferred Option Plan

Current through Vol. 41, No. 20, July 1, 2024
(a)
Forward DROP.
(1)
Purpose.
The Oklahoma Law Enforcement Deferred Option Plan allows an active participating member of OLERS who has not less than twenty (20) years of participating service, who is eligible to receive a service retirement pension, to make an election to participate in the OLERS Deferred Option Plan. In lieu of terminating employment and accepting a service retirement pension, the eligible member defers the receipt of benefits in accordance with Title 47 O.S.,  Section  2-305.2A,  B, C, D, E and F and the provisions of this section.
(2)
Definitions.
RESERVED
(3)
Application.
(A) The applicant must have twenty (20) years or more of participating service with OLERS to be eligible.
(B) The applicant must submit their completed application to OLERS on forms provided by OLERS.
(C) OLERS must receive the application a minimum of thirty (30) days prior to the effective date.
(D) The effective date of membership will be the first day of the month.
(E) Once the Board has approved a member's application and the member's option account has been credited with the first contribution or benefit, the member's participation in the OLERS Deferred Option Plan is irrevocable as long as the member remains employed.
(F) OLERS will provide the applicant a Plan Summary. In addition, the applicant will be asked to sign a statement acknowledging receipt and understanding of the Plan Summary.
(4)
Contributions.
(A) The final member contribution made to OLERS shall be for the last pay period prior to the first of the month in which the member becomes a participant in the OLERS Deferred Option Plan.
(B) The employer's contribution will continue to OLERS.
(C) The employer's contribution shall be credited as follows:
(i) fifty percent (50%) to the member's option account. The credit to the member's option account shall be made the same day as the monthly retirement benefit credit is made; and
(ii) fifty percent (50%) to OLERS.
(D) Neither the member nor anyone on their behalf may make any other contribution to the member's option account. Only the employer's contribution will be added to the member's option account.
(E) When a member has participated in the OLERS Deferred Option Plan for five (5) years, or if the member terminates employment prior to the end of five (5) years, contributions will no longer be credited to the member's option account.
(5)
Benefits.
(A) The monthly retirement benefit that would have been payable had the member elected to cease employment and receive a service retirement shall be credited into the member's option account.
(B) The formula for calculating the pension benefit is two and one-half percent (2 1/2%) of the final average salary multiplied by the years of creditable service including partial years of service (based on completed months of service). Final average salary is the average paid base salary of the member for the highest salaried thirty (30) consecutive months, excluding pay for any accumulated leave or uniform allowance.
(C) The amount of the member's service retirement benefit is frozen at the inception of their participation in the OLERS Deferred Option Plan. No increase will be made to that benefit due to any changes in the member's salary whether for cost of living increases, promotions or otherwise, while still actively employed with the agency. The pension benefit may be increased, however, by cost of living increases as provided by the legislature for all retired members of OLERS.
(D) The monthly retirement benefit will be credited to the member's option account the last day of the month.
(6)
Interest.
(A) The member's option account shall earn interest at a rate of two percentage (2%) points below the rate of return of the total investment portfolio of OLERS, but no less than the actuarial assumed interest rate in accordance with Title 47 O.S.,  Section  2-305.2(E)(2)   at the beginning of the fiscal year. The fiscal year is July 1 through June 30.
(B) The Fund's rate of return shall be calculated monthly and certified by the Fund's Executive Director.
(i) For the purpose of calculating earnings for a member's account, deposits and withdrawals will be deemed to have occurred at the close of business on the last day of the month in which the transaction occurred in the system.
(ii) Earnings on a member's account will be calculated on a monthly basis using two methods.
(I) Method I Earnings I = Account balance at beginning of month times (the fund actual internal rate of return (less one twelfth (1/12) of 2%)).
(II) Method II Earnings II = Account balance at beginning of month times (Actuarial assumed earnings rate (divided by three hundred sixty-five days) times (the number of days in the month)).
(iii) Earnings credited to a member's account as of the fiscal year end shall be the greater of the sum of Method I or the sum of Method II calculated earnings.
(C) The interest shall be credited to the member's option account on an annual basis which is defined as fiscal year ending June 30. The amount of the interest credited shall be calculated at simple interest. The formula for calculating the interest shall be the amount of the deposit, times the applicable interest rate, less two percentage (2%) points, divided by 365 days, times the number of days the deposit was credited to the member's option account for the fiscal year.
(D) Each member shall receive an itemized statement on an annual basis each fiscal year. If a member terminates employment, interest calculated and certified by the Fund's Executive Director will be credited no later than the end of the following month to the member's option account for the partial year, provided the rate of return is greater than the actuarial assumed interest rate established in accordance with Title 47 O.S.,  Section  2-305.2(E)(2). If the rate of return is less than such actuarial assumed rate, then the member's option account will be credited at the assumed interest rate established in accordance with Title 47 O.S.,  Section  2-305.2(E)(2).
(E) When a member has participated in the OLERS Deferred Option Plan for five (5) years, or if the member terminates employment prior to the end of the five (5) years, the member's option account ceases to earn interest.
(F) At the conclusion of a member's participation in the OLERS Deferred Option Plan, the member must terminate employment and shall start receiving the member's accrued monthly retirement benefit from OLERS. A member who terminates employment pursuant to the Deferred Option Plan will not be eligible for active participation in OLERS; provided, however that a member may be reemployed by a state agency in a position not covered under OLERS and receive in-service distributions of such member's accrued monthly retirement benefit from OLERS.
(7)
Payment.
(A) The member must make payment selection in writing.
(B) The member may select a lump sum payment, equal to the member's option account, which will be paid directly to the member by OLERS. This payment will be made no later than the end of the month following the month the last contribution has been received following termination of employment.
(C) The member may select a direct rollover of their distribution in accordance with Title 47 O.S.  Section  2305.1A.
(D) The member may select a true annuity to be provided by a third party selected by the participant. OLERS shall not be subject to any fees or charges from the annuity provider.
(E) Once the member's option account has been paid to the member as a Direct Rollover or to the member's annuity provider, the member shall not have any recourse against OLERS, its Executive Director, staff, and/or the OLERS Board.
(8)
Beneficiaries.
Upon the death of a participant, a lump sum payment equal to the member's option account balance shall be paid to the designated beneficiary of the participant or if there is no designated beneficiary or if the designated beneficiary predeceases the participant, the payment shall be paid to the estate of the participant. If the member's spouse is not designated as the sole primary beneficiary, the member's spouse must sign consent. A designated beneficiary who is a surviving spouse of a member may elect a Direct Rollover of the account balance in accordance with Title 47 O.S.  Section  2-305.1  A. A designated beneficiary who is not a surviving spouse may elect a Direct Rollover in accordance with Title 47 O.S.  Section  2-305.1A  and  Title 47 O.S.  Section  2-305.1  B.