Florida Deferred Compensation

FAQ

Distribution

What options do I have once I become eligible for benefits?
  1. You have the option of choosing among a variety of payments, including lifetime, lifetime with guaranteed periods, a joint and survivor payout, and also a pre-authorized distribution.  This option will allow you to withdraw money at your discretion, when you feel it is needed, please check with your Investment Provider to see if pre-authorized withdrawals are available.  You can request the Distribution Guide from the Bureau of Deferred Compensation, which gives a detailed description of each Investment Provider's payout options.

When am I required to receive distributions from my account?
  1. The latest you must begin receiving distributions is April 1st of the calendar year following the year in which you reach age 70½.  However, if you are still employed when you turn 70½, you are not required to begin a distribution.  In fact, you can continue to make contributions into the Plan.  If you leave employment after 70½, you must begin receiving benefits within 61 days of your last official day.  Under IRS regulations you are required to take a minimum distribution from each type of retirement plan (401k, 401a, Traditional IRA, 457b). Please see your tax advisor for additional information. For 2009, the minimum distribution requirement at age 70½ is waived.

Once I terminate from employment and become eligible for benefits, what do I have to do? How quickly could I receive my benefits?
  1. If you leave employment and do not wish to start your distribution, you are not required to do so.  You may leave your account with your investment provider and continue to benefit from tax-deferred growth. FRS says that you are officially separated from service thirty-one (31) days after your last official workday.  When this time period elapses we can begin to process the distribution paperwork.  For more information and to request a Distribution Guide, please call the Bureau of Deferred Compensation and a representative will be happy to assist you.

What if I return to state employment after I have chosen a date to begin receiving benefits?
  1. If you return to work before receiving your distribution, you have the option of breaking that election date, and contributing into the same account.  If you are already receiving distributions, you can still participate in the Plan by contributing into a different account.

If I am with more than one company, do I have to begin receiving benefits from both companies at the same time?
  1. No. You may choose to have your benefits distributed at different dates and use different distribution methods for each company. 

D.R.O.P.

Does the DROP affect my Deferred Compensation contributions?
  1. No. The DROP has no effect on what you normally contribute to the Plan.

May I start receiving my Deferred Compensation benefits once I begin the DROP?
  1. No.  An employee has not broken service until 31 days from their last official workday.  You are still employed when you enter the DROP program.  It is only after you leave employment that you are considered separated from service.

If I receive my annual leave hours as a result of entering the DROP, can I put that money into Deferred Compensation?
  1. Yes. The first step is to contact your investment company. If you are not already participating in the Plan, it may be a great idea to enroll so that you may shelter some of your leave payment from Federal income taxes. Your investment provider company will send you paperwork to complete this process to be returned to them. This paperwork will include a page of instructions that  must be given to your payroll office.  You may invest only a portion of your accrued leave payment into the Plan.  You must take into account the amount you have already contributed into the Plan that year.  You may then defer an amount that does not exceed the maximum.  Because of the mandatory deductions, it is impossible to put 100% of your leave into the Plan, though you may be able to invest a large portion of it.

At the end of the DROP period, I will receive payment of my accumulated DROP benefits. May I put this into Deferred Compensation?
  1. Yes. To do this, contact your investment provider for information and the necessary forms.

Taxation

Will I be taxed 20% while taking required minimum distributions?
  1. No. You will not be taxed at 20% when taking a required minimum distribution

Will my company withhold any taxes from my distributions?
  1.  Your company will withhold the mandatory 20% for Federal income taxes for lump sum distributions, partial distributions, and those with less than 10 years payout.  You may request that additional taxes be withheld from your benefits so that you will not incur additional taxes from the IRS.  If you wish to increase the amount of your withholding, contact your investment provider company.

    There may also be a 10% penalty if you are taking a distribution from your DROP 401 (a) assets  that have been rolled into the 457b plan if you are under the age of 59 ½. Exceptions to this 10% penalty are for:   

     1) Separation from service in or after the year you turn 55 (or age 50 for eligible public safety employees)

                                                              OR   

     2) Distributions that are made at any age as part of substantially equal periodic payments (made at least annually) until you reach 59 ½, at which time you may change distribution methods. Please see your tax advisor or call the FRS Guidance Line at 1-866-446-9377, option 2.

Beneficiaries

What happens if I die after I have begun receiving distributions from my account?
  1. Your beneficiary will be paid in the same manner that distributions were being paid to you.  Many of the payout options available to you through this Plan offer a guarantee of income for a beneficiary after your death.  If the benefit option you chose was a ‘lifetime payment for yourself only’, then payments will cease upon your death.  If you do not designate a beneficiary, the balance of your account will go to your estate.

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(888) 393-7272

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This website is intended to provide information about the State of Florida's Government Employees Deferred Compensation Plan. It is not intended as investment, legal, or accounting advice. If investment advice or other expert assistance is required, the services of a competent professional should be sought. For changes to your account, go to your investment provider('s) website and log in using the ID and password you created for that investment company.

Department of Financial Services  |   Division of Treasury  |   Bureau of Deferred Compensation

Florida Department of Financial Services · Division of Treasury · Bureau of Deferred Compensation
850-413-3162 (phone) · 850-488-7186 (fax) · DeferredCompensation@myfloridacfo.com
200 East Gaines Street · Tallahassee, Florida 32399-0343