The 2nd Election: You Only Get One
Every FRS member has one opportunity to change between the Pension Plan and the Investment Plan during an entire career. Many members do not know the election exists. Others do not know whether they have already used it. And very few are told how the decision interacts with DROP.
What the 2nd Election is
Florida Retirement System members participate in one of two retirement plans.
The Pension Plan provides a lifetime monthly retirement benefit determined by a formula based on service, age and average final compensation.
The Investment Plan provides an account balance that the member directs among available investment options and eventually draws from.
Current FRS materials describe one opportunity to change from one plan to the other during an FRS career. That opportunity is commonly called the 2nd Election.
The election is only available while working
This is the requirement that most often removes the option before a member has decided.
Current FRS materials state that to use the 2nd Election a member must be an actively employed FRS-covered member receiving salary payments.
- A member on unpaid leave is generally not eligible
- A member who has terminated FRS-covered employment is generally not eligible
- The election must be made before termination, with enough time for it to be received and processed
What happens to the money
Pension Plan to Investment Plan
Current FRS materials state that the present value of the member's accumulated Pension Plan benefit becomes the opening Investment Plan account balance.
The accrued pension benefit is converted to a single present-value figure, and that figure begins the account.
Investment Plan to Pension Plan
This direction requires a buy-in.
| Member situation | Buy-in amount described by current FRS materials |
|---|---|
| Has prior Pension Plan service | The present value of the accumulated Pension Plan benefit |
| Has no prior Pension Plan service | The actuarial accrued liability, described as the total cost of the benefit being purchased |
The Hybrid Option
Current FRS materials also describe a Hybrid Option, in which a member moves forward in the Investment Plan while leaving the accumulated Pension Plan benefit frozen in the Pension Plan.
How the election interacts with DROP
For a firefighter, this is frequently the part of the decision that matters most, and it is often absent from a conversation framed around investment returns.
Moving to the Investment Plan is therefore not only a change in how a retirement benefit is calculated. It ends DROP eligibility.
The restriction also runs the other way.
A member weighing both decisions should resolve the plan question before entering DROP. After DROP entry, the plan choice is settled.
Members who intend to use DROP as part of their exit from the fire service should understand both restrictions before using the election. How FRS DROP works covers the mechanics, participation limits and distribution choices.
Confirm whether the election is still available
Before spending time on the decision itself, a member should establish two facts.
Which Plan Am I In?
Some members are uncertain which FRS plan currently applies to them, particularly after a change of employer within the FRS.
Have I Already Used It?
A member may have used the 2nd Election years earlier. Others assume it has been used when it has not.
Both can be confirmed by logging in at MyFRS.com or by contacting the MyFRS Financial Guidance Line.
Questions to answer before using the 2nd Election
- Which FRS plan am I in now, and is my 2nd Election still available?
- Do I intend to participate in DROP, and would switching plans end that option?
- How many years of creditable service do I have, and how close am I to normal retirement?
- If I am considering a move toward the Pension Plan, what is the buy-in amount?
- If the buy-in exceeds my Investment Plan balance, can I cover the difference?
- What other retirement assets do I have, including a governmental 457(b)?
- How much of my essential monthly spending would a lifetime pension cover?
- What level of investment risk am I prepared to accept, and for how long?
- What does each plan provide to my spouse or beneficiaries?
- What is my family health and longevity history?
- Have I reviewed this with FRS and with an appropriate professional?
Frequently asked questions
What is the FRS 2nd Election?
The 2nd Election is a one-time opportunity to change between the FRS Pension Plan and the FRS Investment Plan during an FRS career. Current FRS materials state the election may be used only while the member is actively employed in an FRS-covered position and receiving salary payments.
How many times can an FRS member switch plans?
Current FRS materials describe one opportunity to change plans during an FRS career. Once the 2nd Election has been used, a member generally cannot switch again.
Can the 2nd Election be used after leaving employment?
No. Current FRS materials state that a member must be actively employed and receiving salary payments. Members on unpaid leave or who have terminated FRS-covered employment are not eligible, and the election must be made before termination so it can be received and processed.
What happens to the pension value when a member switches to the Investment Plan?
Current FRS materials state that the present value of the member's accumulated Pension Plan benefit becomes the opening Investment Plan account balance.
What does it cost to move from the Investment Plan back to the Pension Plan?
Current FRS materials describe a buy-in. With prior Pension Plan service, the amount is the present value of the accumulated Pension benefit. Without prior Pension service, it is the actuarial accrued liability of the benefit being purchased. If the Investment Plan balance is less than the buy-in amount, the member must cover the difference from personal funds.
Can the 2nd Election be used after entering DROP?
No. Once a member has entered DROP, the 2nd Election is no longer available. Members weighing both decisions should resolve the plan question before entering DROP, and should confirm their individual situation with FRS.
Can FRS Investment Plan members participate in DROP?
No. Current FRS materials state that DROP is available to eligible members of the FRS Pension Plan. Investment Plan members do not participate in DROP.
This material is for general educational and informational purposes only. It is not individualized investment, insurance, legal, tax or Florida Retirement System advice.
FRS rules, Florida law, federal tax law, election procedures and plan administrative requirements can change.
Members should verify current FRS rules, their current plan, their remaining 2nd Election, any applicable buy-in amount, forms and deadlines directly with the Florida Retirement System before acting.
Mark Buckley is not affiliated with, endorsed by, or acting on behalf of the Florida Retirement System or the Florida Department of Management Services.
Tax consequences vary by individual circumstances. Consult an appropriate tax professional regarding individual tax matters.
Investing involves risk, including possible loss of principal.