Florida Senate - 2019 SB 402 By Senator Gruters 23-00460A-19 2019402__ 1 A bill to be entitled 2 An act relating to employment after retirement of 3 school district personnel; amending s. 121.021, F.S.; 4 revising the definition of “termination” to conform to 5 changes made by the act; amending s. 121.091, F.S.; 6 establishing an exception to reemployment after 7 retirement limitations to authorize retired 8 instructional staff to be employed as substitute 9 teachers before meeting the definition of termination; 10 prohibiting the accrual of additional retirement 11 service credit and renewed membership during such 12 period of reemployment; amending ss. 121.122, 121.591, 13 and 1012.33, F.S.; conforming provisions and a cross 14 reference to changes made by the act; requiring the 15 State Board of Administration and the Department of 16 Management Services to request a determination letter 17 and private letter ruling from the United States 18 Internal Revenue Service; providing for 19 nonapplicability of the act, or portions thereof, 20 under specified circumstances; providing effective 21 dates. 22 23 Be It Enacted by the Legislature of the State of Florida: 24 25 Section 1. Subsection (39) of section 121.021, Florida 26 Statutes, is amended to read: 27 121.021 Definitions.—The following words and phrases as 28 used in this chapter have the respective meanings set forth 29 unless a different meaning is plainly required by the context: 30 (39)(a) “Termination” occurs, except as provided in 31 paragraph (b), when a member ceases all employment relationships 32 with participating employers, however: 33 1. For retirements effective before July 1, 2010, if a 34 member is employed by any such employer within the next calendar 35 month, termination shall be deemed not to have occurred. A leave 36 of absence constitutes a continuation of the employment 37 relationship, except that a leave of absence without pay due to 38 disability may constitute termination if such member makes 39 application for and is approved for disability retirement in 40 accordance with s. 121.091(4). The department or state board may 41 require other evidence of termination as it deems necessary. 42 2. For retirements effective on or after July 1, 2010, if a 43 member is employed by any such employer within the next 6 44 calendar months, termination shall be deemed not to have 45 occurred unless the member is employed as a substitute teacher 46 following retirement in accordance with ss. 121.091(9)(g) and 47 1012.33(8)(b). A leave of absence constitutes a continuation of 48 the employment relationship, except that a leave of absence 49 without pay due to disability may constitute termination if such 50 member makes application for and is approved for disability 51 retirement in accordance with s. 121.091(4). The department or 52 state board may require other evidence of termination as it 53 deems necessary. 54 (b) “Termination” for a member electing to participate in 55 the Deferred Retirement Option Program occurs when the program 56 participant ceases all employment relationships with 57 participating employers in accordance with s. 121.091(13), 58 however: 59 1. For termination dates occurring before July 1, 2010, if 60 the member is employed by any such employer within the next 61 calendar month, termination will be deemed not to have occurred, 62 except as provided in s. 121.091(13)(b)4.c. A leave of absence 63 shall constitute a continuation of the employment relationship. 64 2. For termination dates occurring on or after July 1, 65 2010, if the member becomes employed by any such employer within 66 the next 6 calendar months, termination will be deemed not to 67 have occurred, except as provided in s. 121.091(13)(b)4.c. or if 68 the member is employed as a substitute teacher following 69 retirement in accordance with ss. 121.091(9)(g) and 70 1012.33(8)(b). A leave of absence constitutes a continuation of 71 the employment relationship. 72 (c) Effective July 1, 2011, “termination” for a member 73 receiving a refund of employee contributions occurs when a 74 member ceases all employment relationships with participating 75 employers for 3 calendar months. A leave of absence constitutes 76 a continuation of the employment relationship. 77 Section 2. Paragraphs (c) and (d) of subsection (9) of 78 section 121.091, Florida Statutes, are amended, and paragraph 79 (g) is added to that subsection, to read: 80 121.091 Benefits payable under the system.—Benefits may not 81 be paid under this section unless the member has terminated 82 employment as provided in s. 121.021(39)(a) or begun 83 participation in the Deferred Retirement Option Program as 84 provided in subsection (13), and a proper application has been 85 filed in the manner prescribed by the department. The department 86 may cancel an application for retirement benefits when the 87 member or beneficiary fails to timely provide the information 88 and documents required by this chapter and the department’s 89 rules. The department shall adopt rules establishing procedures 90 for application for retirement benefits and for the cancellation 91 of such application when the required information or documents 92 are not received. 93 (9) EMPLOYMENT AFTER RETIREMENT; LIMITATION.— 94 (c) Any person whose retirement is effective on or after 95 July 1, 2010, or whose participation in the Deferred Retirement 96 Option Program terminates on or after July 1, 2010, who is 97 retired under this chapter, except under the disability 98 retirement provisions of subsection (4) or as provided in s. 99 121.053, may be reemployed by an employer that participates in a 100 state-administered retirement system and receive retirement 101 benefits and compensation from that employer. However, a person 102 may not be reemployed by an employer participating in the 103 Florida Retirement System before meeting the definition of 104 termination in s. 121.021 and may not receive both a salary from 105 the employer and retirement benefits for 6 calendar months after 106 meeting the definition of termination, except as provided in 107 paragraph (f) or paragraph (g). However, a DROP participant 108 shall continue employment and receive a salary during the period 109 of participation in the Deferred Retirement Option Program, as 110 provided in subsection (13). 111 1. The reemployed retiree may not renew membership in the 112 Florida Retirement System, except as provided in s. 121.122. 113 2. The employer shall pay retirement contributions in an 114 amount equal to the unfunded actuarial liability portion of the 115 employer contribution that would be required for active members 116 of the Florida Retirement System in addition to the 117 contributions required by s. 121.76. 118 3. A retiree initially reemployed in violation of this 119 paragraph and an employer that employs or appoints such person 120 are jointly and severally liable for reimbursement of any 121 retirement benefits paid to the retirement trust fund from which 122 the benefits were paid, including the Florida Retirement System 123 Trust Fund and the Florida Retirement System Investment Plan 124 Trust Fund, as appropriate. The employer must have a written 125 statement from the employee that he or she is not retired from a 126 state-administered retirement system. Retirement benefits shall 127 remain suspended until repayment is made. Benefits suspended 128 beyond the end of the retiree’s 6-month reemployment limitation 129 period shall apply toward the repayment of benefits received in 130 violation of this paragraph. 131 (d) This subsection applies to retirees, as defined in s. 132 121.4501(2), of the Florida Retirement System Investment Plan, 133 subject to the following conditions: 134 1. Except as provided in subparagraph 2., a retiree may not 135 be reemployed with an employer participating in the Florida 136 Retirement System until such person has been retired for 6 137 calendar months. 138 2. A retiree may be reemployed as a substitute teacher 139 following retirement in accordance with the requirements of 140 paragraph (g) and s. 1012.33(8)(b). 141 3. A retiree employed in violation of this subsection and 142 an employer that employs or appoints such person are jointly and 143 severally liable for reimbursement of any benefits paid to the 144 retirement trust fund from which the benefits were paid. The 145 employer must have a written statement from the retiree that he 146 or she is not retired from a state-administered retirement 147 system. 148 (g) A retiree who was employed as instructional staff of a 149 school district may be reemployed as a substitute teacher 150 following retirement or DROP termination and may receive 151 compensation from the employer and retirement benefits before 152 meeting the definition of termination in s. 121.021, as 153 authorized under s. 1012.33(8)(b). Reemployed instructional 154 staff may not receive additional retirement service credit for 155 such employment and may not renew membership in the Florida 156 Retirement System during such period of employment. 157 Section 3. Subsection (6) is added to section 121.122, 158 Florida Statutes, to read: 159 121.122 Renewed membership in system.— 160 (6) If a retiree otherwise eligible for renewed membership 161 in accordance with subsections (3), (4), and (5) is reemployed 162 as a substitute teacher pursuant to ss. 121.091(9)(g) and 163 1012.33(8)(b) before meeting the definition of termination in s. 164 121.021, such retiree must cease all employment relationships, 165 including service as a substitute teacher, with participating 166 employers for 6 calendar months in order to be enrolled as a 167 renewed member if subsequently reemployed in a regularly 168 established position. 169 Section 4. Paragraph (a) of subsection (1) of section 170 121.591, Florida Statutes, is amended to read: 171 121.591 Payment of benefits.—Benefits may not be paid under 172 the Florida Retirement System Investment Plan unless the member 173 has terminated employment as provided in s. 121.021(39)(a) or is 174 deceased and a proper application has been filed as prescribed 175 by the state board or the department. Benefits, including 176 employee contributions, are not payable under the investment 177 plan for employee hardships, unforeseeable emergencies, loans, 178 medical expenses, educational expenses, purchase of a principal 179 residence, payments necessary to prevent eviction or foreclosure 180 on an employee’s principal residence, or any other reason except 181 a requested distribution for retirement, a mandatory de minimis 182 distribution authorized by the administrator, or a required 183 minimum distribution provided pursuant to the Internal Revenue 184 Code. The state board or department, as appropriate, may cancel 185 an application for retirement benefits if the member or 186 beneficiary fails to timely provide the information and 187 documents required by this chapter and the rules of the state 188 board and department. In accordance with their respective 189 responsibilities, the state board and the department shall adopt 190 rules establishing procedures for application for retirement 191 benefits and for the cancellation of such application if the 192 required information or documents are not received. The state 193 board and the department, as appropriate, are authorized to cash 194 out a de minimis account of a member who has been terminated 195 from Florida Retirement System covered employment for a minimum 196 of 6 calendar months. A de minimis account is an account 197 containing employer and employee contributions and accumulated 198 earnings of not more than $5,000 made under the provisions of 199 this chapter. Such cash-out must be a complete lump-sum 200 liquidation of the account balance, subject to the provisions of 201 the Internal Revenue Code, or a lump-sum direct rollover 202 distribution paid directly to the custodian of an eligible 203 retirement plan, as defined by the Internal Revenue Code, on 204 behalf of the member. Any nonvested accumulations and associated 205 service credit, including amounts transferred to the suspense 206 account of the Florida Retirement System Investment Plan Trust 207 Fund authorized under s. 121.4501(6), shall be forfeited upon 208 payment of any vested benefit to a member or beneficiary, except 209 for de minimis distributions or minimum required distributions 210 as provided under this section. If any financial instrument 211 issued for the payment of retirement benefits under this section 212 is not presented for payment within 180 days after the last day 213 of the month in which it was originally issued, the third-party 214 administrator or other duly authorized agent of the state board 215 shall cancel the instrument and credit the amount of the 216 instrument to the suspense account of the Florida Retirement 217 System Investment Plan Trust Fund authorized under s. 218 121.4501(6). Any amounts transferred to the suspense account are 219 payable upon a proper application, not to include earnings 220 thereon, as provided in this section, within 10 years after the 221 last day of the month in which the instrument was originally 222 issued, after which time such amounts and any earnings 223 attributable to employer contributions shall be forfeited. Any 224 forfeited amounts are assets of the trust fund and are not 225 subject to chapter 717. 226 (1) NORMAL BENEFITS.—Under the investment plan: 227 (a) Benefits in the form of vested accumulations as 228 described in s. 121.4501(6) are payable under this subsection in 229 accordance with the following terms and conditions: 230 1. Benefits are payable only to a member, an alternate 231 payee of a qualified domestic relations order, or a beneficiary. 232 2. Benefits shall be paid by the third-party administrator 233 or designated approved providers in accordance with the law, the 234 contracts, and any applicable board rule or policy. 235 3. The member must be terminated from all employment with 236 all Florida Retirement System employers, as provided in s. 237 121.021(39). 238 4. Benefit payments may not be made until the member has 239 been terminated for 3 calendar months, except that the state 240 board may authorize by rule for the distribution of up to 10 241 percent of the member’s account after being terminated for 1 242 calendar month if the member has reached the normal retirement 243 date as defined in s. 121.021. 244 5. If a member or former member of the Florida Retirement 245 System receives an invalid distribution, such person must either 246 repay the full amount within 90 days after receipt of final 247 notification by the state board or the third-party administrator 248 that the distribution was invalid, or, in lieu of repayment, the 249 member must terminate employment from all participating 250 employers. If such person fails to repay the full invalid 251 distribution within 90 days after receipt of final notification, 252 the person may be deemed retired from the investment plan by the 253 state board and is subject to s. 121.122. If such person is 254 deemed retired, any joint and several liability set out in s. 255 121.091(9)(d)3.
s. 121.091(9)(d)2.is void, and the state board, 256 the department, or the employing agency is not liable for gains 257 on payroll contributions that have not been deposited to the 258 person’s account in the investment plan, pending resolution of 259 the invalid distribution. The member or former member who has 260 been deemed retired or who has been determined by the state 261 board to have taken an invalid distribution may appeal the 262 agency decision through the complaint process as provided under 263 s. 121.4501(9)(g)3. As used in this subparagraph, the term 264 “invalid distribution” means any distribution from an account in 265 the investment plan which is taken in violation of this section, 266 s. 121.091(9), or s. 121.4501. 267 Section 5. Subsection (8) of section 1012.33, Florida 268 Statutes, is amended to read: 269 1012.33 Contracts with instructional staff, supervisors, 270 and school principals.— 271 (8) Notwithstanding any other provision of law, a retired 272 member may interrupt retirement and be reemployed in any public 273 school as: 274 (a) Instructional personnel under a 1-year probationary 275 contract as defined in s. 1012.335(1). If the retiree 276 successfully completes the probationary contract, the district 277 school board may reemploy the retiree under an annual contract 278 as defined in s. 1012.335(1). The retiree is not eligible for a 279 professional service contract. 280 (b) A substitute teacher, if employed as instructional 281 staff of a school district before retirement or termination from 282 the Deferred Retirement Option Program, and receive compensation 283 from that employer and retirement benefits. The reemployed 284 substitute teacher may not receive additional retirement service 285 credit for such employment and may not renew membership in the 286 Florida Retirement System during such period of employment. 287 Section 6. (1) Effective upon this act becoming a law, the 288 State Board of Administration and the Department of Management 289 Services shall request, as soon as practicable, a determination 290 letter and private letter ruling from the United States Internal 291 Revenue Service. If the United States Internal Revenue Service 292 refuses to act upon a request for a private letter ruling, a 293 legal opinion from a qualified tax attorney or firm may be 294 substituted for the private letter ruling. 295 (2) If the state board or the department receives 296 notification from the United States Internal Revenue Service 297 that this act or any portion of this act will cause the Florida 298 Retirement System, or a portion thereof, to be disqualified for 299 tax purposes under the Internal Revenue Code, the act or any 300 portion thereof which will cause the disqualification does not 301 apply. Upon receipt of such notice, the state board and the 302 department shall notify the presiding officers of the 303 Legislature. 304 Section 7. Except as otherwise expressly provided in this 305 act and except for this section, which shall take effect upon 306 becoming a law, this act shall take effect January 1, 2020.