(A) Eligibility.
(1) An active member shall be eligible to elect to enter DROP upon or after he or she has reached age 55 and completed 20 or more years of service, or upon or after he or she has reached age 62 with three or more years of service.
(2) Prior service purchased pursuant to this chapter shall be included for purposes of determining eligibility for the DROP to the extent provided in § 34.015.
(3) A plan member must be an active employee of the city in order to enter DROP. Members who have left city service and who have elected deferred retirement pursuant to § 34.021(A) will not be eligible to participate in the DROP provisions until and unless they return to city service covered by the General Employees Retirement System after the DROP has been adopted by the city.
(B) Each member, before electing to participate in DROP, shall be given information regarding how benefits under DROP would be calculated and a comparison of the member's anticipated benefits at retirement with and without participation in DROP. All members are advised to seek advice from professional tax and investment advisors before electing to participate in DROP.
(C) DROP election.
(1) Any member who elects to participate in the DROP shall provide the city and the board at least 30 days’ notice and make the election on a form prescribed and retained by the Board. On that form the member shall do all of the following:
(2) Members of the retirement system who entered the DROP before December 8, 2020 and members who enter the DROP on or after December 8, 2020 with less than 20 years of service on the date of DROP entry shall designate a DROP period that will not exceed 96 months of elapsed time, irrevocably agree to terminate covered employment under the system no later than the end of that designated period, and acknowledge that participation in the DROP is not a guarantee of continued employment for any period.
(3) Members of the retirement system who enter the DROP on or after December 8, 2020 who are age 55 or older with at least 20 years of service shall designate a DROP period that will not to exceed 96 months of elapsed time, irrevocably agree to terminate covered employment under the system no later than the end of that designated period, and acknowledge that participation in the DROP is not a guarantee of continued employment for any period.
(4) Members of the retirement system who are participating in the DROP on December 8, 2020 and had completed 20 years of service prior to entering the DROP may extend their DROP period up to a maximum of 96 months from the date of DROP entry. Members who elect to extend their DROP period must submit a completed DROP extension form to the city and pension board by January 31, 2021, agree to terminate city employment no later than the end of the extended DROP period, and acknowledge that participation in the DROP is not a guarantee of continued employment for any period.
Members of the retirement system who enter DROP upon or after attaining the age of 62 with at least three years of service, or members who are currently participating in DROP upon or after having attained the age of 62 with at least three years of service, may participate in the DROP for a maximum of 96 months. Members who elect to extend their DROP period must submit a completed DROP extension form to the city and pension board by January 31, 2024, agree to terminate city employment no later than the end of the extended DROP period, and acknowledge that participation in DROP is not a guarantee of continued employment for any period.
(5) Waive any claims with respect to age and other discrimination in employment laws as are required by the employer or the system.
(6) Waive the right to any disability retirement benefits from the system. This waiver shall include, but not be limited to, any rights the member may have under § 34.022.
(7) Waive the right to pre-retirement death benefits under § 34.023 if death occurs during the DROP period.
(8) Acknowledge that his or her COLA will not begin until one year after DROP participation ends, payable in accordance with § 34.038.
(9) Acknowledge that his or her election to participate in the DROP may not later be changed or modified.
(10) Make an irrevocable election as to whether the member wishes to select any optional retirement allowance pursuant to § 34.026(A), (B) or (C) and, if so, make such a selection.
(11) Designate a person or persons as beneficiaries of the balance in the member’s DROP account in the event the member dies during the DROP period. The beneficiary or beneficiaries shall be designated on a form prescribed by the board, signed by the member, and filed with the board.
(D) (1) From and after the deferred retirement calculation date, the member shall cease to accrue retirement service credit under this chapter and shall no longer be required to make member contributions in accordance with § 34.025 and, instead, shall begin to accrue benefits under the DROP pursuant to the terms of this section, which benefits shall be credited to the member's DROP account.
(2) A member's election to participate in the DROP shall be irrevocable.
(3) A member in the DROP shall have all of the rights, privileges, and benefits, and is subject to all terms and conditions of active employment including, but not limited to, seniority, accrual and use of vacation and sick leave, pay increases, and eligibility for other city benefit programs not related to retirement benefits.
(E) DROP account.
(1) A DROP account shall be established as a nominal, bookkeeping account within the system for each member. No system assets shall be separately segregated for any DROP account. A member may not have a claim on any specific assets of the system.
(2) A member's DROP account shall be credited with an amount equal to the retirement benefit (calculated in accordance with § 34.020, including a COLA if one is later included as part of the DROP) the member would have received if the member had retired for service on the deferred retirement calculation date, taking into consideration any optional form of benefit selected under § 34.026.
(3) For members who entered the DROP before December 8, 2020, on the effective date that the member enters the DROP, the city will calculate the member’s accrued sick and vacation leave payout utilizing existing payout formulas. The city will pay to the member his or her leave payout in five equal payments over the next five years, with each payment being made on the member’s DROP participation anniversary date. However, should the member terminate participation in the DROP and terminate employment with the city before the full 60 months, the remainder of the member’s leave payout shall be paid to the member upon termination.
(4) For members who enter the DROP on or after December 8, 2020, the city will calculate the member's accrued sick and vacation leave payout utilizing existing payout formulas. The city will divide to the member’s leave payout into five equal portions, and those five portions will be paid to the member over the next four years based on the following schedule: the first 2/5ths will be paid on the member’s 1st DROP anniversary date and the remaining 3/5ths will be paid in 1/5th increments that will be made on the member's 2nd, 3rd and 4th DROP participation anniversary dates. However, should the member terminate participation in the DROP and terminate city employment before the full 60 months, the remainder of the member's leave payout shall be paid to the member upon termination.
(5) Any accrued sick leave in excess of the maximum number of hours accruable for payout purposes will be carried over into the DROP. The member will continue to accrue sick and vacation leave while participating in the DROP. Leave accrual will be in accordance with the appropriate collective bargaining agreement. However, at the member’s conclusion of participating in the DROP, the member will forfeit all unused accumulated sick and annual leave and thus will not be compensated for any portion of said leave.
(6) The participant’s DROP account will be credited with interest or lose principle at the same rate as the investment earnings assumption for the pension plan. The investment earnings assumption may be adjusted up or down during an employee’s participation in the DROP, which will result in a change in the prospective interest rate credit on the employee’s DROP account.
(F) The board shall provide a statement to the member that displays the value or balance of the member's DROP account and summarizes any credits to the account or other transactions that occurred after the immediately preceding evaluation date. The statement of account shall be provided at least once annually to each member, and may be provided more often.
(G) The right of a member to benefits under the DROP is not subject to execution or any other process whatsoever, except to the extent permitted by F.S. Ch. 61 and is unassignable except as specifically provided under § 34.030. The rights of a member or his or her beneficiary/spouse under the DROP shall be subject to any applicable provisions of law or court orders relating to child support.
(H) (1) If a member dies during the DROP period, he or she shall be deemed to have terminated employment with the city on his or her date of death and his or her benefits shall be calculated as provided in divisions (H)(2) and (H)(3).
(2) If the member has elected an optional form of benefit under § 34.026(A), (B) or (C), a monthly benefit will be paid in accordance with division (K) below to the beneficiary designated by the member for this purpose.
(3) The balance in the member's DROP account shall be distributed pursuant to subsection (L)(2)(b) below to the beneficiary designated by the member for this purpose.
(I) Participation in DROP shall be completed and the member shall be entitled to benefits under the DROP upon the first occurrence of either of the following during the DROP period:
(1) Termination of the member's employment from the city, whether voluntary or involuntary.
(2) Death of the member.
(J) Upon termination of employment the DROP participant shall:
(1) Receive a distribution, in the manner prescribed in division (L), of the balance in the member's DROP account.
(2) Begin receiving a monthly retirement allowance in an amount calculated pursuant to division (K).
(K) The member's monthly allowance shall be an amount equal to the monthly allowance the member would have received if he or she had retired under normal retirement on the deferred retirement calculation date, subject to the following:
(1) The member's allowance shall be adjusted based on any election by the member made at the time he or she entered the DROP of any optional retirement allowance pursuant to § 34.026(A), (B) or (C). The adjustment shall be based on the ages of the member and, if applicable, the member's beneficiary as of the deferred retirement calculation date.
(2) The member's allowance will be adjusted with a COLA pursuant to § 34.038 effective on the first anniversary of his or her DROP termination date, payable on the following October 1, and on each October 1 thereafter.
(3) The right of a member to benefits under the DROP is not subject to execution or any other process whatsoever, except to the extent permitted by F.S. Ch. 61 and is unassignable except as specifically provided under § 34.030. The rights of a member or his or her beneficiary/spouse under the DROP shall be subject to any applicable provisions of law or court orders relating to child support.
(L) (1) The balance in the member's DROP account shall be distributed to the member in a single lump-sum payment at the time of retirement. If requested by the member, the payment may be immediately deposited into a qualified tax deferred account established by the member.
(2) Notwithstanding any other provision of this section, a member or beneficiary may not be permitted to elect a distribution under this article that does not satisfy the requirements of § 401(a)(9) of Title 26 of the United States Code, including the incidental death benefit requirements of § 401(a)(9)(G) and the regulations thereunder. The required beginning date of distributions that reflect the entire interest of the member shall be as follows:
(a) In the case of a lump-sum distribution to the member, the lump-sum payment shall be made, at the member's option, not later than April 1 of the calendar year following the latter of the calendar year in which the member attains the age of 70½ (or age determined by the Internal Revenue Service) or the calendar year in which the member terminates all employment for the employer.
(b) In the case of a benefit payable on account of the member's death, distribution shall be paid as soon as is administratively feasible, but no later than December 31 of the calendar year in which the first anniversary of the member's date of death occurs.
(M) (1) A member may change the person or persons designated as beneficiaries of the balance in the member's DROP account at any time during the DROP period. The new beneficiary or beneficiaries shall be designated on a form prescribed by the board, signed by the member, and filed with the board.
(2) Unless otherwise provided in the beneficiary designation form, each designated beneficiary shall be entitled to equal shares of the lump-sum distribution that shall be payable from the member's DROP account upon the death of the member.
(3) If the member dies without a valid beneficiary designation on file, or if no designated beneficiary survives the member, any balance remaining in the member's account shall be payable to the member's estate as provided under Florida Law.
(N) Legal challenge to DROP.
(1) If for any reason, a court of competent jurisdiction determines that the irrevocable election is not enforceable, and a member chooses to remain in the employment of the city beyond five years, the general employees' retirement benefit will be calculated as if the member had never entered the DROP, and the member will be required to make contributions to the pension fund in an amount sufficient to cover the employee and city contributions that would have been made had the member not elected to participate in the DROP, along with interest, as determined by the Board of Trustees upon the advice of the actuary. The member shall forfeit any and all rights to the funds in his or her DROP account and said funds cannot be used to satisfy the contributions required in this section.
(2) Should any person challenge the validity of the terms of the DROP, including the irrevocability of the election, or otherwise attempt to remain employed beyond the maximum DROP period provided herein, the prevailing party of such litigation shall be entitled to receive from the non-prevailing party all of its reasonable costs including reasonable attorney fees.
(3) In the event a court of competent jurisdiction determines that the irrevocable election of the DROP is not enforceable, the city may, in its sole and exclusive discretion, refuse to allow employees to enter the DROP until such time as the DROP is amended or repealed.
(O) The Board of Trustees shall have the power to make administrative rules as are necessary for the efficient implementation and operation of the DROP and to ensure its continued compliance with the tax qualification requirements of the Internal Revenue Code, and provided such administrative rules are not inconsistent or contradicted by this section.
(Ord. 2004-55, passed 7-27-04; Am. Ord. 2021-31, passed 12-8-20; Am. Ord. 2023-74, passed 9-26-23)