The FRS Investment Plan is a defined contribution plan for plan members. The plan works by both...
HB5007, Added Benefits for FRS Members
July 1st of 2022 marked the beginning of a new benefit for FRS Investment Plan members. This is the date that HB5007 went into effect. HB5007 is a new bill that increases employer contributions to Investment Plan member's accounts by 3% across the board. This takes standard risk contributions up from 3.3% to 6.3%, and 11% up to 14% for special risk class members. This is a big step for investment plan members, as we have not seen an employer contribution increase for FRS members like this before.
The goal of the bill was to help FRS members contributions fall in line with traditional guidelines and recommendations that individuals with employer sponsored retirement plans should save roughly 10% of their income towards retirement. With FRS member's all contributing 3% of their income already, this new bill brings the total annual contribution for standard risk members up to 9.3%. This new law helps fill the gap for investment plan members without coming out of the member's pocket.
The FRS Investment Plan is a defined contribution plan that takes these contributions from both employers and members and typically invests those contributions into a mutual fund portfolio that the member chooses when they enter the plan. There are many fund portfolios for FRS investment plan members to choose from, but many members have questions about how the investment funds work, or what their options are. We've mentioned this before, but for many FRS members, how your funds are invested can make up the largest portion of your total retirement account balance when you separate from your employer. This means that understanding your investment fund portfolio, and having a plan can be one of the most important parts of your investment plan. If you aren't familiar with your investment fund choices in your FRS investment plan account, you can schedule a meeting with one of our representatives at the link below and we will be happy to answer your questions.
Another thing worth noting is that HB5007 made changes to the DROP timeline for Special Risk class law enforcement officers. Allowing them to increase their DROP timeline from 5 to 8 years. If you have questions about DROP, you can schedule a meeting with one of our representatives, or learn more about DROP at the link below.