La. Admin. Code tit. 58 § I-2723

Current through Register Vol. 50, No. 11, November 20, 2024

Section I-2723 - Initial Benefit Option

A. This option will be available on January 1, 1996. Only members who have not participated in DROP can select this option. Disability retirees cannot select this option.

B. This option may be selected at the time of retirement and will pay the retiree a lump sum amount at the time of retirement, and the future monthly retirement benefit will be reduced on an actuarial basis.

C. The retiree must select the retirement option first. He cannot select Option 1. He can then elect to receive part of his future retirement benefits in an actuarially reduced lump sum payment. The value of the lump sum cannot exceed 36 months of the maximum monthly retirement benefit. The retiree may elect to receive the maximum lump sum amount or any smaller amount.

D. The retiree may also elect to receive unused leave in a lump sum payment rather than converting it to retirement credit. This election must be made by the retiree before the initial benefit option can be calculated.

E. The monthly retirement benefit of both the retiree and beneficiary will be actuarially reduced to offset the cost of the initial benefit. If the retiree retires under the special provisions for wildlife agents or judges and he selects the initial benefit option, his monthly benefit will also be actuarially reduced.

F. The retiree can receive the "initial benefit" in a lump sum payment, or it can be deposited in an account like the DROP accounts. The interest earnings and withdrawals will be the same as for DROP accounts. The main difference is that it will be created at the time of retirement with a lump sum instead of accumulated over a DROP participation period. The account will begin accumulating interest at the time it is set up.

G. If a retiree selects the initial benefit and later changes, the retirement option to the maximum due to divorce or death of the beneficiary, the maximum benefit will be actuarially reduced at that time.

H. A retiree who elects this option and later returns to work will be governed by the same rehired retiree provisions as other retirees.

I. Future COLAs will be based on the amount of the monthly reduced benefit.

La. Admin. Code tit. 58, § I-2723

Promulgated by the Department of Treasury, Board of Trustees of the State Employees' Retirement System, LR 22:373 (May 1996).

AUTHORITY NOTE: Promulgated in accordance with R.S. 11:515.