§ 22-206. Deferred Retirement Option Plan (DROP).

(a)

A member will be eligible to elect to enroll in the DROP at the time he or she is eligible to retire under the early retirement or normal age or service provisions of the plan and begin drawing immediate pension benefits as defined in section 22-201(a). Participation in the DROP cannot commence before the member is eligible to retire. Any member having more than 25 years of service at the time the DROP becomes available will be eligible to participate in the DROP; however, a member's combined years of service and years in the DROP cannot total more than 35 years. A member with 35 or more years of service cannot participate in the DROP. Application for participation in the DROP will be made through the POD.

(b)

Once the DROP is entered, a member will be considered "retired" for pension purposes and cannot accrue any additional benefits under the plan, and will no longer be eligible for disability or pre-retirement death benefits. Creditable service ceases and is no longer accrued once a member enters DROP. Contributions by the member and the City normal cost contributions to the applicable pension fund on behalf of the member will cease when participation in the DROP commences. Pension benefits are calculated at the time of entry into the DROP using the earnings base and creditable service as in normal retirement benefit calculations. Any future earnings while employed by the City do not have any effect on pension benefits.

(c)

When a member commences participation in the DROP, he or she shall not have the right to participate again as a contributing member of the pension plan. Election in the DROP is irrevocable once DROP payments begin. Total years of participation in the DROP shall not exceed 84 months. Once the member has completed participation in DROP, he will be separated from City employment as a firefighter; this separation shall be processed as a voluntary retirement.

(d)

Members who are actively employed firefighters of the City on the effective date of this ordinance, including those members who previously enrolled in the DROP but have not terminated employment as a firefighter, may participate in the DROP for up to 84 months.

(e)

Once the member has entered the DROP, pension payments will be transferred to the member's DROP account on a monthly basis. This transfer will occur at the same time pension payments are made to other retirees or beneficiaries.

(f)

The Board may select one third party administrator (TPA) to manage the members' DROP accounts or more than one TPA. If the Board selects more than one TPA, each DROP member will choose the TPA that they want to administer their DROP account. The Board may contract with the TPAs regarding services, fees, investment fund options, withdrawal options and other administrative matters related to DROP. The TPAs will provide statements to the members regarding the performance of their DROP accounts on at least a quarterly basis. The Board may adopt rules and procedures for the administration of the DROP including, but not limited to, the process for enrolling in the DROP, transferring between TPAs, if applicable, and processing withdrawals from the DROP at the end of the member's DROP participation. If the Board selects one or more TPAs to manage the members' DROP accounts, all existing and future DROP members' accounts shall be administered by the TPAs selected by the Board.

(g)

Unless and until the Board selects one or more TPAs to manage the members' DROP accounts, the transfer of pension funds into the member's DROP account will be an accounting function only. The funds will not physically be transferred. The DROP account will be an account in "bookkeeping" sense only until separation from employment as a firefighter and payout of the account. All DROP accounts will remain in the pension fund for investment purposes, be administered by the Board, and earn or lose interest at the rate of return on the actuarial value of assets calculated annually as reported to the division of retirement pursuant to part IV of chapter 112, State statutes (F.S. ch. 112). No further interest will accrue on the account after the month of separation. To compensate the retirement system for the expense of administering and operating the DROP, each participating member's account shall be charged an annual administrative fee of 0.25 percent of the account earnings which will be deducted from the participating member's account quarterly. The administrative fee shall be reviewed annually by the Board. The board may make reasonable increases or decreases to the administrative fee by resolution. Funds are not transferable from the pension fund into any other investment vehicles. Annual reports regarding the DROP account balance, earnings and losses will be made available to the member.

(h)

At no time during participation in the DROP will the member have access to, or be able to borrow against, any of the funds in the DROP account whether the funds remain in the pension fund or are administered by one or more TPAs.

(i)

Payments to a DROP account shall not be considered an asset of the retirement system which may be pledged against claims owed to others. Rather, these are deferred payments which have already been earned by the member and are not subject to distribution or control by the member until separation from employment as a firefighter. Except as otherwise provided by law, no amendment to the Code shall make it possible for any part of the DROP funds to be used for, or diverted to purposes other than for the exclusive benefit of persons entitled to benefits under the DROP.

(j)

All benefits payable under the DROP shall be paid only from the assets of the DROP and neither the City nor the Board shall have any duty or liability to furnish the DROP with any funds, securities, or other assets except to the extent required by any applicable law. Employees who choose to participate in the DROP will be solely responsible for their investment choices. Any losses, changes or expenses incurred as a result of the participant's investment selection or otherwise incurred shall not be made up by the City or the Board, but all of the same shall be borne exclusively and solely by the participant.

(k)

Nothing in this section shall be construed to remove DROP participants from the operation of any forfeiture provisions applicable to the retirement system. DROP participants shall be subject to forfeiture of all retirement benefits, including DROP retirement benefits.

(l)

A member's election to participate in the DROP shall make him or her ineligible to vote for member trustees or serve as a member trustee.

(m)

Upon separation of employment as a firefighter, retirement benefits shall be paid to the retiree and no longer be transferred into the DROP account. If the Board has selected one or more TPAs to manage the members' DROP accounts, the initial payment from the DROP must be approved by the Board and comply with the Internal Revenue Code. Future payments and changes in payment methods will be administered as provided in the agreement with the TPA and in compliance with the Internal Revenue Code. If a DROP participant dies while still participating in the plan or before the DROP payout is made, the designated beneficiary shall have payout options as provided in the agreement with the TPA and in compliance with the Internal Revenue Code.

If there is no third party administration of the DROP accounts and the DROP funds remain in the pension fund, the initial payment from the DROP must be approved by the Board and comply with the Internal Revenue Code. Within 60 days after the end of the calendar quarter following separation from employment as a firefighter with the City, the DROP account shall be payable, at the retiree's option, by a direct rollover of the total amount into an eligible retirement plan, by a partial lump sum payment with the remainder being directly rolled over into an eligible retirement plan, or by payment of the entire amount in a lump sum to the retiree.

Failure of the retiree to designate a payment option will result in a lump sum payout. Payouts, including lump sum payouts, will be made at the same time that regular pension payments are made to retirees. If a DROP participant dies while still participating in the plan or before the DROP payout is made, the designated beneficiary shall have the same rights to elect and receive the same payout options as were available to the participant.

(Code 1992, § 22-196; Ord. No. 343-G, § 3, 7-23-1998; Ord. No. 799-G, § 1, 1-11-2007; Ord. No. 71-H, § 1, 4-18-2013; Ord. No. 311-H, § 3, 12-7-2017)