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Choosing An FRS Retirement Plan

Choosing between the FRS Pension Plan and the FRS Investment Plan can be a very difficult decision, and can make a very large impact on the shape and style of your retirement plan. Both plans have their positives and drawbacks, but ultimately the decision is very individual, as we all have different goals and ideas of the ideal retirement plan. Below are a few highlights of both plans, and a few considerations when choosing a plan, or making a 2nd election.

FRS Investment Plan

  • Flexible retirement benefit
  • 100% of account value left to beneficiaries at any time once vested (after 1 year of service)
  • Ability to choose one's investments themself
  • Lump sum benefit at retirement to draw income from, rollover, etc.

FRS Pension Plan

  • Fixed accumulation formula and fixed monthly benefit in retirement
  • DROP option available once eligible

Every FRS member has the option to make a 2nd election while they are still working for an FRS covered employer. This allows the member to switch from their current plan, to the other while they are still working. This is a very important decision, because once a member exercises their 2nd election, they will be unable to swap back at a later time. Let's look at the process for a member to switch from each plan.

Pension Plan swap to Investment Plan

The member either views swap amount online inside of their account, or calls the FRS hotline and requests swap amount to switch from the pension plan to the investment plan. Member then completes the 2nd election form. At the end of the month in which the 2nd election was submitted the member is moved to the Investment Plan. At the end of the following month, the funds are then added to the member's Investment Plan account.

Investment Plan swap to Pension Plan

The member calls or requests the 2nd election buy-back amount for the FRS Pension Plan. This process typically takes 2-3 weeks. The member will then receive a packet in the mail which contains the buy-back information. This can go one of 2 ways. If the member's buy back amount costs more than the Investment Planaccount balance, the member would have to pay out-of-pocket the difference to the FRS to buy back into the pension plan. If the member's Investment Plan balance exceeds the buy-back amount the member can swap to the Pension plan and keep the excess within their Investment Plan account.

For many FRS members, this decision can be the most difficult decision in their retirement income planning process. If you are unsure if a 2nd election is appropriate for your future retirement goals, we would be happy to help answer any questions you have. Schedule a meeting at the link below to have one of our financial professionals reach out and help you answer your FRS retirement plan questions.