Florida FRS Early Withdrawal Penalties: Understanding the Costs
The Florida Retirement System, or FRS, provides retirement benefits to government employees at the state and local level. FRS is a public retirement system and funding comes from employer contributions. There are two FRS plans, the investment plan and the pension plan, both providing plans for retirement. Withdrawal from either plan before retirement age comes with a variety of penalties.
Investment Plan
According to the Florida Retirement System, withdrawal from the investment plan before the one year vestment time frame causes loss of all benefits. If withdrawing from the plan after becoming vested, payout is available in a lump sum, or benefits can be rolled over to a tax-deferred investment plan. Withdrawal from the plan causes loss of future enrollment in the retirement system regardless of circumstance.
Pension Plan
The Florida Retirement System states that withdrawal from its pension plan before fully vested, which occurs with six years of service, results in loss of benefits, as vesting in the pension plan must be achieved to receive benefits. After becoming fully vested in the pension plan, a lump sum can not be taken, but benefits will be paid out upon retirement age.
Withdrawal after becoming fully vested will lead to a frozen benefit that will not grow or keep up with inflation. If withdrawing from the system after the age of 42, there is eligibility for immediate payment at a reduced rate. As with the investment plan, withdrawal from the pension plan is irrevocable regardless of circumstance.
Other Considerations
According to the Florida Retirement System, withdrawal from any FRS plan causes loss of disability retirement benefits from any Florida retirement plan. Membership in any state-based retirement plan is revoked in conjunction with withdrawal from an FRS-based plan. After withdrawal from the Florida retirement system there is no possibility of re-enrollment, even when hired in a new position that offers Florida retirement benefits.
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