§ 21. Deferred Retirement Option Program.

(1)

Deferred Retirement Option Program—The Deferred Retirement Option Program, hereinafter referred to as the "DROP," allows any member who has elected to participate in the DROP, hereinafter referred to as a "DROP participant," to receive a lump-sum payment, or other payment, in addition to a monthly pension, upon termination of employment. No benefits shall be paid under this section unless the DROP participant has terminated employment.

(2)

DROP Eligibility—Any member may elect to participate in the DROP following the date upon which the member completes 20 years of active service as a firefighter with the City of Orlando and is eligible for a service retirement pension. A member may participate in the DROP only once.

(3)

DROP Participation—

(a)

An eligible member may participate in the Forward Drop for a period not to exceed a maximum of 60 months or, in the alternative, may participate in the Back DROP for a period not to exceed 60 months. Notwithstanding, DROP participation may not continue beyond the date when the member's combined years of credited service and time in the DROP equals 360 months.

(b)

A member may apply to participate in the DROP by submitting an application to the Board of Trustees, which shall include the following:

1.

A written election to participate in the DROP. Once submitted to the Board of Trustees, this election will be irrevocable.

2.

Selection of the DROP participation and termination dates that satisfy the limitation stated in subsection (2) and paragraph (a). Such termination date shall be in a binding letter of resignation, establishing a deferred termination date.

3.

A properly completed DROP application for a service retirement pension.

4.

A properly completed designation of named beneficiaries in the event the member dies while participating in the DROP.

5.

Any other information as may be required by the Board of Trustees.

(c)

The DROP participant shall be a retiree under the provisions of the pension plan. However, participation in the DROP does not alter the DROP participant's employment status, nor does it constitute a contract or guarantee of continued employment.

(d)

A DROP participant shall not accrue additional credited service under the pension plan after the effective date of DROP participation.

(4)

Benefits Payable Under the DROP—

(a)

Effective with the date of DROP participation, the DROP participant's initial monthly service retirement pension, including credited service and average monthly salary, shall be determined and fixed. Such service retirement pension and earnings shall be credited to the DROP participant's DROP account no less than monthly. Such earnings shall be credited as provided in subsection (7).

(b)

The effective date of DROP participation for a participant who has elected to receive benefits under the pension plan shall be the first day of the month selected by the member to begin retirement under the pension plan and participation in the DROP.

(c)

The service retirement pension and earnings thereon shall be credited to the DROP participant's DROP account periodically, as pension benefit payments would have otherwise been made.

(5)

DROP Types—A member eligible for a service retirement pension may elect a Forward DROP or a Back DROP, but not both.

(a)

Forward DROP—Under a Forward DROP, a member may retire, deferring receipt of the service retirement pension while continuing employment with the city. In that case, the deferred monthly service retirement pension shall be credited to the DROP participant's DROP account on behalf of the DROP participant, as provided in subsection (4), for the specified period of the DROP participation, as provided in subsection (3). Upon termination of employment, the DROP participant shall receive the balance of his or her DROP account and begin to receive the monthly service retirement pension.

1.

A DROP participant remains an employee and receives all the benefits of being an employee during the DROP participation period; provided, however, the DROP participant is not eligible to participate in any other city provided pension or long term disability plan. A DROP participant shall be subject to termination of employment during the DROP participation period to the same extent as he or she was prior to participating in the DROP.

2.

Effective with the start date of a DROP participant's Forward DROP participation, a member's contribution and the normal cost contribution to the pension fund by the city, on behalf of the member, shall cease.

3.

Effective with the start date of a DROP participant's Forward DROP participation, a member shall not be entitled to any change in pension benefits unless specifically provided otherwise.

(b)

Back DROP—Under a Back DROP, a member may retire with a retroactive date of retirement. A member may not select a retroactive retirement date earlier than the date upon which the member first became eligible for a service retirement pension, and in no event shall the retroactive date of retirement be more than 60 months prior to the date of Back DROP election. The monthly service retirement pension shall be determined as of the retroactive retirement date. Except for years of credited service and average monthly salary, Back DROP benefits shall be calculated pursuant to the provisions of the pension plan in effect on the date the member separates from employment as a firefighter with the City of Orlando and not as of the Back DROP participant's retroactive date of retirement. The member shall then be credited with an account balance in his or her DROP account that is equal to the account balance he or she would have had if he or she had timely elected a Forward DROP under paragraph (a) on the retroactive retirement date. Upon termination of employment, the Back DROP participant shall receive or transfer the balance of this DROP account, pursuant to subsection (10), and shall begin to receive the monthly service retirement pension adjusted to reflect the retroactive retirement date.

(c)

Eligibility exception—Notwithstanding the provisions of subsection 3(a), for 60 days after the effective date of this act, a member with more than 324 months of credited service may elect the Back DROP option and will not be subject to the combined years of credited service and DROP participation limitation of 360 months. Said member is subject to the maximum Back DROP participation period of 60 months. A member with more than 324 months of credited service as of the effective date of DROP who does not elect to participate in the DROP, as set forth herein, during this one-time window period shall forfeit the right to deviate from the conditions for participation in the DROP set forth in subsection (3).

(6)

DROP Accounts—Individual DROP accounts shall be established to account for each DROP participant's accrued DROP benefits, but there shall be no requirement that funds be segregated for any DROP participant. In the case of a member who selects the Back DROP option, the amount of that member's contributions made during the Back DROP period shall not be refunded or credited to the member.

(7)

DROP Benefits Earnings and Reporting—

(a)

A DROP participant's DROP account shall accrue earnings at 8% (eight percent) simple interest compounded annually, unless the parties otherwise agree.

(b)

A DROP account shall be adjusted to reflect earnings until such time as the DROP account is distributed in full to the DROP participant or his or her beneficiaries.

(c)

The Board of Trustees shall report to each DROP participant at least annually accrued DROP benefits in the participant's DROP account.

(8)

Cost-of-Living Increase—A DROP participant will not be eligible to participate in cost-of-living increases during the DROP period. Cost-of-living increases will be made pursuant to section 19, starting 3 years after the DROP participant's termination of employment.

(9)

Benefits Payable upon Termination of DROP—Upon the DROP participant's termination of employment, for any reason, whether by resignation, discharge, disability, or death, the monthly service retirement pension will be distributed according to the provisions of this plan and the balance of the DROP account shall be distributed to the DROP participant or, if deceased, the DROP participant's beneficiaries, as provided herein.

(10)

Payment Conditions and Options—Upon the DROP participant's termination of employment, for any reason, whether by resignation, discharge, disability, or death, the Board of Trustees shall distribute the balance of the DROP participant's DROP account, subject to the following provisions:

(a)

The Board of Trustees shall receive verification from the city that such DROP participant has terminated employment.

(b)

Following the termination of employment, the DROP participant or, if deceased, such DROP participant's beneficiaries shall elect on forms provided by the Board of Trustees to receive payment of the balance of the DROP account in accordance with one of the options listed below. For a DROP participant or beneficiaries who fail to elect a method of payment within 60 days of termination of employment, the Board of Trustees shall pay the balance of the DROP account in one lump sum as provided in subparagraph 1.

1.

Lump sum—The balance of the DROP account, less taxes remitted to the Internal Revenue Service, if any, shall be paid to the DROP participant or beneficiaries.

2.

Direct rollover—The balance of the DROP account shall be paid directly to the custodian of an eligible retirement plan pursuant to the then-applicable provisions of the Internal Revenue Code.

3.

Partial lump sum—A portion of the balance of the DROP account shall be paid to the DROP participant or beneficiaries, less taxes remitted to the Internal Revenue Service, if any, and the remaining balance of the DROP account shall be transferred directly to the custodian of an eligible retirement plan pursuant to the then-applicable provisions of the Internal Revenue Code. The proportions shall be specified by the DROP participant or beneficiaries.

4.

Other methods—The balance of the DROP account shall be paid by a method that is in compliance with the Internal Revenue Code and as adopted by the Board of Trustees.

(c)

The form of distribution selected by the DROP participant or beneficiaries complies with the minimum distribution requirements of the Internal Revenue Code.

(d)

Distributions shall comply with the then-applicable requirements of the Internal Revenue Code.

(11)

Disability—A DROP participant is not eligible to apply for a disability pension under this pension plan.

(12)

Death of a DROP Participant—

(a)

Upon the death of a DROP participant, the named DROP beneficiaries shall be entitled to apply for and receive the balance of the DROP participant's DROP account as provided in subsections (9) and (10). DROP payments to a beneficiary shall be in addition to any other retirement benefits payable to the beneficiary.

(b)

The monthly service retirement pension accrued to the DROP account during the month of the DROP participant's death shall be the final monthly service retirement pension benefit credited for such DROP participant.

(c)

Eligibility to participate in the DROP terminates upon the death of the DROP participant. If the DROP participant dies on or after the effective date of enrollment in the DROP, but prior to the first monthly service retirement pension benefit being credited to the DROP, pension plan benefits shall be paid in accordance with applicable provisions of this pension plan.

(d)

A DROP participant's beneficiaries shall not be eligible to receive survivor benefits as provided in sections 8 and 10.

(13)

A DROP participant shall not be deemed to have been reemployed after retirement as that term is used elsewhere in the plan.

(14)

Any actuarially-determined additional cost resulting from the benefits in this section shall be borne by the members of the pension plan.

(Laws of Fla. ch. 2000-448, § 4; Laws of Fla. Ch. 2009-268, § 21)

Editor's note

Prior to the reenactment of § 21 by Laws of Fla. ch. 2000-448, § 4, Laws of Fla. ch. 75-463, § 7, repealed Laws of Fla. ch. 23444(1945), § 21, from which ch. 12, art. III, § 21, providing for the reexamination of pensioners with less than 25 years' service, was derived.