The FRS Investment Plan option started in 2002. The Investment Plan is
a defined contribution plan in which employer contributions are a set
amount as defined by law. The period of time in which the Investment Plan
monies actually become yours or vest is only one year. The 3% employee
contribution is still required but those monies go directly to your own
personal Investment Plan account rather than to the general FRS fund.
The amount of your retirement income depends directly on the performance
of your Investment Plan account balance. Unlike the FRS Pension Plan,
there is no fixed benefit level at retirement with the Investment Plan.
The Investment Plan is funded through defined employer contribution rates
based upon your salary and your FRS membership class. The contribution
rates are currently at 6.3% for regular class and 11% for special risk
class. These contributions are made every pay period to your own personal
Investment Plan account. Prior to July 1, 2012, these contributions were
30% higher but this reduction occurred to level the Investment Plan benefits
with prior cuts that were made in 2011 to the FRS Pension Plan benefits.
Regardless, it is disappointing to have any cuts to contribution rates
especially in this time of stagnant salaries.
The Investment Plan contributions are sent to your personal account within
the FRS Investment Plan. Within this account, there are only 21 different
investment choices (10 of which are target date funds) to invest your
contributions. While these choices are somewhat limited in number, there
are some worthwhile investment options. We monitor daily the performance
of the investment options we recommend within the FRS Investment Plan
and let you know if any changes are warranted through our regular correspondence.
Remember the overall balance in one’s FRS Investment Plan account
is solely dependent on how your underlying investments perform.
In summary, the Investment Plan provides you an option to personally control
your retirement monies. Your years of FRS service are represented entirely
in a cash value lump sum. The beneficiaries of this lump sum can be your
spouse or children when you pass. However, this lump sum must be used
to generate your retirement income. It does not come with any guaranteed
benefit like the Pension Plan. For a more complete description of the
FRS Investment Plan, please refer to the Summary Plan Description of the
FRS Investment Plan prepared by the State of Florida Division of Retirement
For a complete comparison of the advantages and disadvantages of these
FRS options, please refer to FRS Plans Advantages and Disadvantages prepared
by the State of Florida Division of Retirement at
www.myfrs.com. In addition, we are here to meet with state employees at any time at
no charge to discuss these options.
Where indicated, market data and performance represents past performance
which is no guarantee of future results. Individual results may vary and
values do fluctuate in any investment. This booklet contains our most
current understanding of the Florida Retirement System and U.S. tax laws
as of October, 2016. This booklet is intended to detail complicated retirement
topics but is not a complete discussion as each individual’s situation
is different and various exceptions exist. Nelson Financial Planning offers
securities through Nelson Ivest Brokerage Services, Inc., a member of
FINRA/SIPC. Please note that the information provided in this document
has not been approved or endorsed by the State of Florida or the Florida