A. In lieu of terminating employment and accepting a service retirement allowance under La. Rev. Stat. 11:2256, any member of this system who has not less than twenty years of creditable service and who is eligible to receive a service retirement allowance may elect to participate in the deferred retirement option plan and defer the receipt of benefits in accordance with the provisions of this Section.

            B. For purposes of this Section, creditable service shall include service credit reciprocally recognized under La. Rev. Stat. 11:142, but for eligibility purposes only.

            C. The duration of participation in the plan shall be specified and shall not exceed three years.

            D. A member may participate in the plan only once.

            E. Upon the effective date of the commencement of participation in the plan, membership in the system shall terminate and neither employee nor employer contributions shall be payable. For purposes of this Section, compensation and creditable service shall remain as they existed on the effective date of commencement of participation in the plan. The monthly retirement benefits that would have been payable, had the member elected to cease employment and receive a service retirement allowance, shall be paid into the Deferred Retirement Option Plan account. Upon termination of employment, deferred benefits shall be payable as provided by Subsection H of this Section.

            F. A person who participates in this plan shall not be eligible to receive a cost-of-living increase from the retirement system while participating and shall not be eligible until his employment which makes him eligible to be a member of this system has been terminated for at least one full year.

            G.(1) For a member who was eligible to participate in the Deferred Retirement Option Plan before January 1, 2004, after a plan participant has terminated the employment which made him eligible to be a member of this system and prior to accepting funds as provided by Subsection H of this Section, his individual account balance in the plan shall earn interest at a rate equal to the percentage rate of return of the system’s investment portfolio, less the cost of merger notes, as certified by the actuary in his annual valuation report, less the cost of administering the Deferred Retirement Option Plan to be determined annually by the board of trustees. This interest shall be credited to the retiree’s individual account balance on an annual basis. However, if such an individual returns to employment which makes him eligible to be a member of this system, his individual account balance in the plan shall not earn interest while he remains so employed.

            (2) For a member who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2004, all amounts that remain credited to the plan participant’s subaccount after termination of participation in the plan and prior to accepting funds as provided by Subsection H of this Section shall be administered as follows:

            (a) Unless the plan participant makes the election provided for in Subparagraph (b) of this Paragraph, the board of trustees shall place the credited amounts in liquid asset money market investments chosen at the discretion of the board of trustees. Such account balances shall be credited with interest at the actual rate of return earned on such account balance investments less one-fourth of one percent per annum.

             (b)(i) Prior to the end of the specified participation period, the plan participant may make an irrevocable written election to waive his rights as set forth in La. Const. Art. X, § 29 as it relates to the interest earned by his Deferred Retirement Option Plan account. After he has terminated the employment which made him eligible to be a member of this system, his individual account balance in the plan shall earn interest at a rate equal to the percentage rate of return of the system’s investment portfolio, less the cost of merger notes as certified by the actuary in his yearly valuation report, less the cost of administering the Deferred Retirement Option Plan to be determined annually by the board of trustees. However, as a precondition of making such an election, the plan participant shall expressly acknowledge that his account shall be debited and the value of his account balance may be permanently reduced if the system’s investment portfolio experiences a negative earnings rate.

            (ii) The provisions of this Subparagraph shall apply prospectively only, beginning effective July 1, 2006. Waivers executed during the 2006 calendar year shall be applicable to interest that is posted effective on or after January 1, 2007.

            (iii) Should any participant’s waiver executed pursuant to the provisions of Item (i) of this Subparagraph be declared null, void, inapplicable, or unenforceable, the participant’s individual account shall be treated as though he had not executed such waiver, and the balance therein shall be adjusted to reflect such treatment.

            (3)(a) A member who becomes eligible to participate in the Deferred Retirement Option Plan on or after January 1, 2019, upon termination of participation in the plan, may allocate the balance of his individual account into either or both of the subaccounts provided for in Subparagraph (2)(a) or (b) of this Subsection. Prior to allocating funds to the subaccount provided for in Subparagraph (2)(b) of this Subsection, the member shall comply with the requirements of that Subparagraph.

            (b) Such allocation shall be a one-time, irrevocable event. If the participant fails to choose an allocation within the period prescribed by the board of trustees, the entire balance of his account shall be irrevocably allocated into the subaccount provided for in Subparagraph (2)(a) of this Subsection.

            H. After termination of employment, the plan participant shall receive, at his option, a lump sum payment from his account or accounts equal to the payments to the account or accounts, or a true annuity based upon the balance of his account or accounts, or he may elect any other method of payment if approved by the board of trustees. The monthly benefits that were being paid into the fund during the period of participation shall begin being paid to the retiree. Payment from any account shall not be made until employment is terminated. The plan participant may not change the optional allowance selected for his original benefit pursuant to La. Rev. Stat. 11:2259.

            I. If a participant dies during the period of participation in the plan, a lump sum payment equal to his account balance shall be paid to his named beneficiary or, if none, to his estate and normal survivor’s benefits shall be payable as provided in this Chapter.

            J. At the end of the specified participation period, payments into the Deferred Retirement Option Plan account shall cease.

            K.(1) If employment is not terminated at the end of the period specified for participation, the plan participant shall resume active contributing membership in the system,

and upon termination of employment, he shall receive an additional retirement benefit based on his additional service rendered since termination of participation in the fund, using the normal method of computation of benefit, subject to the following:

            (a) If his period of additional service is less than thirty-six months, the average compensation figure used to calculate the additional benefit shall be that used to calculate his original benefit.

            (b) If his period of additional service is thirty-six or more months, the average compensation figure used to calculate the additional benefit shall be based on his compensation during the period of additional service.

            (c) The optional allowance applied to the additional retirement benefit shall be the same optional allowance selected in accordance with La. Rev. Stat. 11:2259 for the original benefit.

            (d) In no event shall the additional benefit exceed an amount which, when combined with the original benefit, equals one hundred percent of the average compensation figure used to compute the additional benefit.

            (2) If the plan participant dies or acquires a disability during the period of additional service, he shall be considered as having retired on the date of death or commencement of disability.

            Acts 1984, No. 450, §1; Acts 1985, No. 153, §1; Acts 1985, No. 458, §1; Redesignated from La. Rev. Stat. 33:2155.1 by Acts 1991, No. 74, §3, eff. June 25, 1991; Amended by Acts 1991, No. 57, §1, eff. June 25, 1991; Acts 1992, No. 496, §1, eff. July 1, 1992; Acts 2001, No. 1028, §1 ; Acts 2003, No. 962, §§1, 2, eff. Jan. 1, 2004; Acts 2004, No. 532, §1, eff. June 25, 2004; Acts 2006, No. 566, §1, eff. June 23, 2006; Acts 2014, No. 811, §4, eff. June 23, 2014; Acts 2018, No. 114, §1, eff. July 1, 2018.

NOTE: See Acts 2004, No. 532, §2, relative to persons electing to have retirement benefits deposited in his DROP account before effective date of the Act.