RS 783 - Selection of option for method of payment after death of member
A.(1) No optional election shall be effective when a retiree or participant in the Deferred Retirement Option Plan dies within thirty days after the effective date of retirement or the effective date of participation in the Deferred Retirement Option Plan, and such a retiree or participant in the Deferred Retirement Option Plan shall be considered as an active member at the time of death.
(2) Upon retirement or participation in the Deferred Retirement Option Plan any member may make an election which is irrevocable after the effective date of retirement or the effective date of participation in the Deferred Retirement Option Plan to receive his benefit in a retirement allowance payable throughout life, or he may make an election which is irrevocable after the effective date of retirement or the effective date of participation in the Deferred Retirement Option Plan to receive the actuarial equivalent of his retirement allowance in a reduced retirement allowance payable throughout life with the provisions that:
Option 1. If he dies before he has received in annuity payments the present value of his annuity as it was at the time of his retirement, the balance shall be paid to his succession or to any person he shall designate in a written instrument acknowledged and filed with the board of trustees.
Option 2. Upon his death, his reduced retirement allowance shall be continued throughout the life of and paid to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made; or
Option 2A. Upon his death, his reduced retirement allowance shall be continued throughout the life of and paid to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made, provided that if the designated beneficiary predeceases the retiree, the retiree's reduced benefit shall change to the maximum benefit effective on the first day of the next month following the death of the designated beneficiary.
Option 3. Upon his death, one-half of his reduced retirement allowance shall be continued throughout the life of and paid to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made; or
Option 3A. Upon his death, one-half of his reduced retirement allowance shall be continued throughout the life of and paid to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made, provided that if the designated beneficiary predeceases the retiree, the retiree's reduced benefit shall change to the maximum benefit effective on the first day of the next month following the death of the designated beneficiary.
Option 4. Upon his death, some other benefit which shall not exceed the Option 2 benefit amount, designated by him at the time the election is made, shall be paid throughout the life of and to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made, provided such other benefit, together with the reduced retirement allowance shall be certified by the actuary to be of equivalent actuarial value to his retirement allowance, and approved by the board of trustees; or
Option 4A. Upon his death, some other benefit which shall not exceed the Option 2 benefit amount, designated by him at the time the election is made shall be paid throughout the life of and to a natural person he shall irrevocably designate in a written instrument acknowledged and filed with the board of trustees at the time the election is made, provided such other benefit, together with the reduced retirement allowance, shall be certified by the actuary to be of equivalent actuarial value to his retirement allowance, and approved by the board of trustees, provided that if the designated beneficiary predeceases the retiree, the retiree's reduced benefit shall change to the maximum benefit effective on the first day of the next month following the death of the designated beneficiary.
(3) Initial Lump-Sum Benefit. (a) If a member has not participated in the Deferred Retirement Option Plan provided by the provisions of this Chapter, he shall be eligible to select an initial lump-sum benefit. The initial lump-sum benefit shall be available to any member of the system whose first employment making him eligible for membership in one of the state retirement systems occurred on or before December 31, 2010, and who has thirty years of creditable service, or is at least age fifty-five and has twenty-five years of creditable service, or is at least age sixty and has ten years of creditable service. Any member of the system whose first employment making him eligible for membership in one of the state retirement systems occurred on or after January 1, 2011, and on or before June 30, 2015, may select the initial lump-sum benefit if he is at least age sixty and has five years of service. Any member of the system whose first employment making him eligible for membership in one of the state retirement systems occurred on or after July 1, 2015, may select the initial lump-sum benefit if he is at least age sixty-two and has five years of service. If the maximum benefit, Option 2, 2A, 3, 3A, 4, or 4A above is chosen, then the member may further elect to receive a reduced retirement allowance plus an initial benefit. The creditable service referenced in this Paragraph shall not include unused accumulated sick leave and unused accumulated annual leave.
(b) The initial benefit, together with the reduced retirement allowance, shall be certified by the actuary to be actuarially equivalent to the member's maximum or optional retirement allowance and shall be approved by the board of trustees.
(c) The amount of the initial benefit, as determined by the member, shall not exceed an amount equal to the member's maximum monthly retirement allowance times thirty-six and shall, at the option of the member, be paid in accordance with plan provisions under R.S. 11:788, or as a lump-sum payment.
(d) The amount of the initial benefit shall be placed in an account in accordance with R.S. 11:788 and interest will be paid on any balance in the account in accordance with R.S. 11:788.
(e) Cost-of-living adjustments or permanent benefit increases granted by the board of trustees to retirees who select this Initial Lump-Sum Benefit shall be computed on the basis of each retiree's regular monthly retirement benefit or on the basis of each beneficiary/survivor's benefit based on the option selected as reduced and shall not be computed on the initial benefit received either as a lump-sum or paid pursuant to R.S. 11:789(A)(1).
(f) Repealed by Acts 2003, No. 193, § 2, eff. July 1, 2003.
(4) Annual Cost-of-Living Adjustment Option. In addition to any of the above options, upon application for retirement or participation in the Deferred Retirement Option Plan, any member may make an election, which is irrevocable after the effective date of retirement or the beginning date of participation in the Deferred Retirement Option Plan, to receive an actuarially reduced retirement allowance plus an annual two and one-half percent cost-of-living adjustment pursuant to R.S. 11:247.
B. Provided further, that if the beneficiary of the retiree is not the spouse of said retiree and the retiree dies with an eligible surviving minor child or children, the selection of the optional beneficiary shall be void and the minor child or children shall receive the benefits under Subsection C of R.S. 11:762.
C. Whenever a retiree who has selected Option 4 or 4A dies, the specific benefit payable to his beneficiary shall immediately be increased by the total percentage that the retiree's benefits have been increased by all of the cost-of-living adjustments or permanent benefit increases received by the retiree.
D.(1)(a) If Option 2, 2A, 3, 3A, 4, or 4A of Subsection A of this Section was selected, and the retiree's spouse was designated as the beneficiary, and a judgment of divorce is rendered with respect to the retiree and the spouse, and, in connection therewith, the spouse, irrevocably, by court order, relinquishes the spouse's survivorship rights under the option originally selected by the retiree, the originally selected option shall be considered revoked.
(b)(i) A retiree covered by Subparagraph (a) of this Paragraph shall be considered as retired under the maximum benefit, subject to the reduction set forth in this Subsection, and without affording the retiree the right to select an option under which the retiree could designate a new beneficiary.
(ii) The benefits payable to the retiree shall be increased to the amount the retiree would have received had the retiree selected the maximum benefit, adjusted for any cost-of-living adjustments or permanent benefit increases granted to the retiree, less any amount required as a result of such change in retirement status to render the new benefit to be the actuarial equivalent of the maximum benefit.
(iii) The retiree shall be required to reimburse the system, by way of a one-time deduction from the retiree's next benefit check, the reasonable costs incurred by the system to calculate any change in the retiree's benefits made pursuant to the provisions of this Paragraph.
(2) The retiree shall be required to contractually hold the system harmless in the event that the former spouse ever successfully asserts a property right relative to the provisions of this Subsection which has any adverse effect upon the system.
(3) It shall be the responsibility of the retiree to notify the system of the occurrence of the circumstances set forth in Subparagraph (1)(a) of this Subsection, and to present satisfactory evidence of same, and to request any applicable recomputation of benefits.
(4) Adjustment of benefits under this Subsection shall not be retroactive, and shall be effective on the first day of the next month following official approval of the application for recomputation of benefits.
E. If an option of Subsection A hereof was selected, and the retiree's spouse was designated as the beneficiary, and the retiree's benefit was further actuarially reduced to allow the retiree's benefit to be increased in the event that the spouse predeceased the retiree, and the marriage between the retiree and the beneficiary is invalid, the benefits payable to the retiree shall be increased to the amount the retiree would have received had the retiree selected the maximum benefit. The retiree shall be required to contractually hold the system harmless in the event that the former beneficiary ever successfully asserts a property right in the pension benefit or rights which has any adverse effect upon the system. It shall be the responsibility of the retiree to notify the system of these circumstances, to present satisfactory evidence of same, and to request the recomputation of benefits. Adjustment of benefits under this Subsection shall not be retroactive, and shall be effective on the first day of the next month following official approval of the application for recomputation of benefits. Subject to appropriate actuarial reduction of benefits, the retiree may, at the time of application for recomputation, also designate a new beneficiary.
F. Any adjustments to benefits for cost-of-living adjustments or permanent benefit increases made by formal action of the board of trustees in accordance with Subsection C of this Section shall be considered amendments to the provisions of the retirement system. If made by formal action of the board of trustees, such changes must be disclosed to members of the retirement system.
G.(1)(a) Notwithstanding any other provision of law to the contrary, if Option 2, 2A, 3, 3A, 4, 4A, or the Initial Lump-Sum Benefit of Subsection A of this Section was selected, and the retiree's designated beneficiary, who is not the spouse of the retiree, is officially certified as having a permanent disability by the State Medical Disability Board, the originally selected option shall be considered revoked.
(b)(i) A retiree covered by the provisions of Subparagraph (a) of this Paragraph shall be considered as retired under the maximum benefit, subject to reduction as set forth in this Subsection, and without affording the retiree the right to select an option under which the retiree could designate a new beneficiary.
(ii) The benefits payable to the retiree shall be increased to the amount the retiree would have received had the retiree selected the maximum benefit, adjusted for any cost-of-living adjustment or permanent benefit increase granted to the retiree, less any amount required as a result of such change in retirement status to render the new benefit to be the actuarial equivalent of the maximum benefit.
(iii) The retiree shall be required to reimburse the system, by way of a one-time deduction from the retiree's next benefit check, the reasonable costs incurred by the system to calculate any change in the retiree's benefits made pursuant to the provisions of this Paragraph and those reasonable expenses incurred under the provisions of this Section by the State Medical Disability Board.
(2) It shall be the responsibility of the retiree to notify the system of the occurrence of the circumstances set forth in Subparagraph (1)(a) of this Subsection, and to present satisfactory evidence of same, and to request the recomputation of benefits.
(3) Adjustment of benefits under this Subsection shall not be retroactive, and shall be effective on the first day of the next month following official approval of the application for recomputation of benefits.
H. If a retiree or a participant in the Deferred Retirement Option Plan dies more than thirty days after the effective date of retirement or more than thirty days after his effective date of participation in the Deferred Retirement Option Plan, but before the retirement system has received his Affidavit of Retirement Plan Election and leaves a surviving spouse, he shall be retired under Option 2 of Subsection A of this Section as of his effective date of retirement and the surviving spouse shall be paid Option 2 beneficiary benefits; however, if he does not leave a surviving spouse but does leave an eligible surviving minor child or children, only the benefits provided under R.S. 11:762(C) shall be payable; and provided that if he does not leave a surviving spouse, he shall be retired under Option 1 of Subsection A of this Section as of his effective date of retirement and his latest named beneficiary including any beneficiary named on his retirement application received by the retirement system shall be paid the Option 1 beneficiary benefit. Any benefits owed to a retiree who participated in the Deferred Retirement Option Plan shall be paid to his plan account and any benefit owed to a retiree who was not participating in the Deferred Retirement Option Plan shall be paid to his estate.
I.(1)(a) Notwithstanding any other provision of law to the contrary, if Option 2, 2A, 3, 3A, 4, 4A, or the Initial Lump-Sum Benefit of Subsection A of this Section was selected, and the retiree's designated beneficiary, who is not the spouse of the retiree, is officially certified as having an intellectual disability by the State Medical Disability Board, the originally selected option shall be considered revoked if such selection or receipt of benefits would cause the designated beneficiary to become ineligible for federal benefits of greater value.
(b)(i) A retiree covered by the provisions of Subparagraph (a) of this Paragraph shall be considered as retired under the maximum benefit, subject to reduction as set forth in this Subsection, and without affording the retiree the right to select an option under which the retiree could designate a new beneficiary.
(ii) The benefits payable to the retiree shall be increased to the amount the retiree would have received had the retiree selected the maximum benefit, adjusted for any cost-of-living adjustment or permanent benefit increase granted to the retiree, less any amount required as a result of such change in retirement status to render the new benefit to be the actuarial equivalent of the maximum benefit.
(iii) The retiree shall be required to reimburse the system, by way of a one-time deduction from the retiree's next benefit check, the reasonable costs incurred by the system to calculate any change in the retiree's benefits made pursuant to the provisions of this Paragraph and those reasonable expenses incurred under the provisions of this Section by the State Medical Disability Board.
(2) It shall be the responsibility of the retiree to notify the system of the occurrence of the circumstances set forth in Subparagraph (1)(a) of this Subsection, and to present satisfactory evidence of same, and to request the recomputation of benefits.
(3) Adjustment of benefits under this Subsection shall not be retroactive, and shall be effective on the first day of the next month following official approval of the application for recomputation of benefits.
J. Repealed by Acts 2001, No. 1174, § 3, eff. July 1, 2001.
K.(1) If both an optional benefit under Subsection A of this Section and a survivor benefit under R.S. 11:762(C) and/or (I) are applicable, only the larger benefit shall be owed and paid. Notwithstanding any other provision of law to the contrary, if one of the Options 2 through 4A of Subsection A of this Section was selected, and the retiree's designated beneficiary is not the spouse of the retiree, and the child has a total and permanent disability and the mental or physical incapacity is certified by the State Medical Disability Board, the optional benefit, when it becomes payable, shall be paid to the person having legal custody of the property of the child.
(2) However, in those cases when a trust has been created under Louisiana law by the deceased member for the benefit of the child, the terms of the instrument creating the trust so provide, and the system has been provided with a certified copy of the trust document, then the optional benefit shall be paid to the trust under the terms of the trust for addition to the trust property. In the event that the trust is contested by any party, the Teachers' Retirement System of Louisiana shall withhold all optional benefit payments or deposit them in the registry of the court if a concursus proceeding is filed, until there is a final binding legal agreement or judgment regarding the proper payment of the optional benefit. Any payments made to an optional beneficiary or trust shall constitute a release of all accrued rights of every kind and nature against the retirement system, including but not limited to any rights of a spouse or former spouse, or an heir or legatee of a spouse or former spouse.
Acts 1990, No. 1059, §1, eff. July 1, 1990. Acts 1991, No. 356, §1, eff. July 1, 1991; Acts 1991, No. 404, §1, eff. Jan. 1, 1992; Acts 1991, No. 529, §1, eff. Jan. 1, 1992; Acts 1991, No. 726, §1, eff. July 1, 1991; Redesignated from R.S. 17:641 by Acts 1991, No. 74, §§3, 5, eff. June 25, 1991; Acts 1992, No. 284, §1; Acts 1993, No. 716, §1, eff. July 1, 1993; Acts 1993, No. 338, §1, eff. July 3, 1993; Acts 1995, No. 571, §1, eff. July 1, 1995; Acts 1995, No. 592, §1, eff. July 1, 1995; Acts 1995, No. 665, §1, eff. June 21, 1995; Acts 1995, No. 1110, §1, eff. Jan.1, 1996; Acts 1997, No. 136, §1, eff. July 1, 1997; Acts 1997, No. 1394, §1; Acts 1999, No. 47, §1; Acts 2001, No. 1174, §§1 & 3, eff. July 1, 2001; Acts 2003, No. 193, §§1 & 2, eff. July 1, 2003; Acts 2003, No. 536, §1, eff. July 1, 2003; Acts 2009, No. 270, §1, eff. July 1, 2009; Acts 2010, No. 637, §1, eff. July 1, 2010; Acts 2010, No. 861, §4, eff. August 15, 2010; Acts 2011, No. 368, §1, eff. July 1, 2011; Acts 2014, No. 226, §1, eff. June 30, 2014; Acts 2014, No. 811, §4, eff. June 23, 2014.
NOTE: Subsections D and E retroactive, see §3 of Acts 404 and 529 and §2 of Act 726 of 1991.
NOTE: Acts 2014, No. 811 changed terminology referring to persons with disabilities throughout the La. Revised Statutes and codes of law, and included a listing of terms that were deleted and their respective successor terms (See Acts 2014, No. 811, §36). The Act provides that it is not the intent of the legislature that changes in terminology effected therein alter or affect in any way the substance, interpretation, or application of any law or administrative rule; further provides that nothing in the Act shall be construed to expand or diminish any right of or benefit for any person provided by any law or administrative rule (See Acts 2014, No. 811, §35(C) and (D)).