(a)
(1) In lieu of terminating employment and accepting a service retirement pension under this subchapter, a police officer who is a member of a policemen's pension and relief fund who has not less than twenty (20) years of credited service and who is eligible to receive a service retirement pension may elect to participate in the Arkansas Police Officers' Deferred Retirement Option Plan and defer the receipt of benefits in accordance with the provisions of this section, provided that the board of trustees of the local policemen's pension and relief fund approves the participation in the plan.
(2) For purposes of this section, credited service includes service credit recognized pursuant to this subchapter.
(b)
(1) The duration of participation in the plan for active police officers shall not exceed five (5) years.
(2) The five-year limit may be extended if:
(A) The extension does not cause the limit to exceed ten (10) years;
(B) The extension applies to all active members and all members on the plan;
(C) The extension is approved by a majority of votes of the board of trustees of the policemen's pension and relief fund or of the Arkansas Local Police and Fire Retirement System for funds whose administrative responsibility has been assigned to the system as provided in § 24-11-406(b);
(D) The interest credited after the first five (5) years on the plan shall be two (2) percentage points below the rate of return of the investment portfolio of the fund and shall not be determined under subdivision (e)(2) of this section, but in no event shall the interest rate credited be less than zero percent (0%); and
(E) The extension is approved by a majority vote of the governing body of the sponsoring municipality.
(c)
(1) Except under subdivisions (c)(2) and (3) of this section, at the conclusion of a member's participation in the plan, the member shall terminate employment with all participating municipalities as a police officer and shall start receiving the member's accrued monthly retirement benefit from the policemen's pension and relief fund.
(2) If a member is at the conclusion of a member's participation in the plan, the member may continue employment by a municipality under the following conditions:
(A) The municipality makes continued employment available to all similarly situated members;
(B) The availability of continued employment is approved by a majority vote of the governing body of the sponsoring municipality after receiving approval for an increase in benefits under § 24-11-102;
(C) The monthly benefit that is credited to the member's plan account is discontinued and the member shall not receive a monthly benefit until the member actually ceases employment;
(D) The interest rate credited to the plan account is the same paid as under subdivision (e)(2) of this section, except that the minimum rate is zero percent (0%);
(E) The employer's matching contribution of six percent (6%) shall cease, but all other employer contributions shall continue and be credited to the policemen's pension and relief fund; and
(F) The employee contributions of six percent (6%) shall discontinue.
(3)
(A) A member may enter into employment with a participating municipality so long as the member has a break of service from his or her previous employment of at least thirty (30) days as a police officer, begins employment in a law enforcement position, and becomes a member of the Arkansas Local Police and Fire Retirement System.
(B)
(i) Subdivision (c)(3)(A) of this section applies to a member of a local policemen's pension and relief fund after the break in service regardless of the original date of hire of the member by a municipality that participates in the Arkansas Local Police and Fire Retirement System.
(ii) Retroactive application applies only if the member and employer contributions have been made under this chapter.
(d)
(1) When a member begins participation in the plan, the contribution of the police officer and the employer contribution shall continue to be paid.
(2)
(A) In a municipality having a population of over twenty thousand (20,000) persons, municipal matching contributions for employees who elect the plan shall be credited equally to the policemen's pension and relief fund and to the plan, or at the option of the local pension and relief fund board of trustees, credited in the manner provided in subdivision (d)(2)(B) of this section.
(B) In a municipality having a population of twenty thousand (20,000) persons or less, municipal matching contributions for employees who elect the plan shall be credited in full to the policemen's pension and relief fund, and the contribution of the employee shall be credited to the member's plan account.
(3) The monthly retirement benefits that would have been payable had the member elected to cease employment and receive service retirement and pension supplement payments made by the Arkansas Policemen's Pension Supplement Program shall be paid into the plan account.
(e)
(1) The member's monthly retirement benefit shall not change unless the plan receives a benefit increase.
(2)
(A) A member who participates in this plan shall earn interest at a rate of two (2) percentage points below the rate of return of the investment portfolio of the policemen's pension and relief fund as certified by the actuary under contract with the Arkansas Fire and Police Pension Review Board in accordance with generally accepted actuarial practices and § 24-11-207, but no less than the actuarial assumed interest rate as certified by the actuary.
(B) The interest shall be credited to the individual account balance of the member on an annual basis.
(f)
(1) At the option of the participant, a participant in the plan shall receive a lump-sum payment from the account equal to the payments to the account or a true annuity based upon the account of the participant or may elect any other method of payment if approved by the board of trustees.
(2) If approved by a majority vote of the governing body of the sponsoring municipality and the board of trustees, a participant in the deferred retirement option plan may defer receiving payment of the participant's account and continue with the funds deposited into the plan.
(3)
(A) Interest credited to the continuing deposit of funds in the plan under subdivision (f)(2) of this section shall be calculated in the same manner as interest under subdivision (e)(2) of this section.
(B) However, the minimum interest rate shall not be less than zero percent (0%).
(4) The payment of funds accumulated while participating in the deferred retirement option plan may be deferred only one (1) time. These funds must be distributed or annuitized by December 31 of the year a member attains age seventy and one-half (70 ½).
(g) If the participant dies during the period of participation in the plan, a lump-sum payment equal to the account balance of the participant shall be paid.
(h) A participant in the plan shall not receive any benefits under the plan unless he or she participates in the plan for a minimum of one (1) year, absent death or disability.
(i) The Arkansas Fire and Police Pension Review Board may promulgate rules to make the plan under this section comply with the requirements of this section and with the applicable portions of the Internal Revenue Code, 26 U.S.C. § 1 et seq., as it existed on January 1, 2003.
(j) Although the police officer may remain employed by the participating municipality, any member who opts to participate in the plan shall be considered to be retired for all retirement purposes, including, but not limited to, benefit increase purposes and the extension of benefits to the spouses of deceased members.