If you are in the FRS Investment Plan — or trying to decide whether the Investment Plan or the Pension Plan fits your situation — this guide walks through how the plan works, the choices you may face during your career, and what happens to your balance at retirement.
Independent fiduciary guidance · Educational planning · Not affiliated with or endorsed by FRS
The FRS Investment Plan is a meaningfully different retirement vehicle from the FRS Pension Plan. Instead of a defined monthly benefit calculated by a formula, the Investment Plan is a defined contribution account that you direct, that grows based on investment performance, and that ultimately becomes your retirement balance to manage. Whether you’re an active employee thinking about your allocation, weighing whether to use your one-time second election, or approaching retirement and wondering what to do with your balance, the planning questions are real and worth thinking through carefully.
This guide is educational. FRS rules, the Investment Plan fund menu, fees, vesting requirements, and the Choice and Second Election processes are governed by the State Board of Administration and the Florida Division of Retirement, and the official sources should be consulted for current details. MyFRS offers free guidance through its Financial Guidance Line and online Choice Service. Benowitz Wealth Management is not affiliated with FRS or MyFRS — we provide independent fiduciary planning to help members organize the broader retirement picture.
The FRS Investment Plan is a defined contribution retirement plan administered by the State Board of Administration of Florida. Unlike the FRS Pension Plan — which pays a monthly benefit calculated using a formula based on years of service, final average compensation, and membership class — the Investment Plan accumulates a balance in an account that belongs to you, grows based on investment performance, and becomes available to you when you separate from FRS-covered employment.
Contributions to the Investment Plan come from both employer and employee sources, in accordance with current FRS rules. Those contributions are invested in the funds you select from the MyFRS Investment Plan menu. Your balance reflects what has been contributed plus any investment gains, minus any losses and fees.
One distinction worth understanding upfront: the Investment Plan is portable in a way the Pension Plan generally is not. If you leave FRS-covered employment before retirement, your vested Investment Plan balance is yours — you can leave it in the plan, roll it to another eligible retirement account, or take a distribution (with the associated tax implications). The Pension Plan, by contrast, generally provides a future monthly benefit based on the formula at the time you stop working in an FRS-covered job, not a portable account balance.
FRS members generally fall into one of two main plans: the Pension Plan or the Investment Plan. Both are valid retirement vehicles, and neither is universally better than the other. They are structured differently, and the right fit depends on the individual member’s situation.
At a high level:
The two plans handle the same retirement question — how to provide income in retirement — through fundamentally different mechanics. Understanding which one fits your situation is one of the more consequential FRS decisions a member makes.
Under current FRS rules, eligible members generally have a one-time Second Election opportunity to switch between the Pension Plan and the Investment Plan during their career. The mechanics, eligibility, and cost of that election are governed by FRS rules and should be reviewed directly with MyFRS before any decision is made.
There is no universally correct answer to the switch question. The factors that generally come into the conversation include:
MyFRS offers a free Choice Service and access to the MyFRS Financial Guidance Line to help members run the comparison under their specific situation. We help clients think through the broader retirement picture — how the plan choice fits with the rest of their financial life — but the final plan election is the member’s, made through the official FRS process.
For active employees, the Investment Plan operates similarly to a 401(k) in many respects. Contributions go in on each pay cycle based on the current contribution structure. The balance is invested according to the member’s elections in the MyFRS fund menu. Members can change their fund allocations periodically, subject to plan rules around frequency and excessive trading.
A few features distinguish it from a typical private-sector retirement account:
Because the Investment Plan balance is directly affected by how it is invested, allocation decisions matter. There is no single correct allocation for every member — the right mix depends on factors specific to the individual.
Common factors that come into an allocation conversation include:
Target-date funds — the all-in-one funds that adjust their allocation automatically as a chosen retirement year approaches — are a common starting point for many Investment Plan members. They are not the only approach, and members who want a more customized allocation may build one from the core menu. The choice between approaches is personal and depends on the member’s preferences and the rest of the plan.
At a high level, the MyFRS Investment Plan fund menu generally offers options across a few categories:
Specific fund names, expense ratios, and the exact menu lineup are set by the State Board of Administration and published by MyFRS, and they can change. The categories above are intended to give a conceptual sense of what is typically available.
When you separate from FRS-covered employment, your vested Investment Plan balance becomes available for distribution. Unlike the Pension Plan — where the retirement decision is largely about which option to elect for a monthly benefit — the Investment Plan retirement decision is about what to do with an account balance.
The general options at separation include:
Each option has different tax, planning, and income implications. The right choice is personal and depends on the rest of the member’s retirement picture.
The at-retirement decision for an Investment Plan member is often one of the more consequential financial decisions of their life. A balance that has accumulated over decades is suddenly available, and the structural choice — keep it invested, roll it over, take income from it, or some combination — shapes the next phase of retirement income.
A rollover to an IRA is one common path. It generally preserves tax-deferred status, gives the member broader investment options outside the MyFRS menu, and provides flexibility around withdrawals. It also generally moves the balance to an environment where the member (often with an advisor) is responsible for ongoing investment decisions. Whether to roll over should be reviewed based on investment options, fees, withdrawal flexibility, beneficiary considerations, and the member’s broader plan — a rollover is not automatically the right choice.
The lifetime income option, where available, generally converts all or part of the balance into a guaranteed monthly income stream. The tradeoff is predictability in exchange for giving up the ability to access the underlying balance. For some members, that tradeoff is attractive — particularly when the rest of the plan doesn’t already include lifetime income. For others, flexibility matters more. The specifics of any lifetime income option should be confirmed with MyFRS, including the income rate, survivor structure, and inflation features.
A lump-sum distribution delivers the balance to the member, with the taxable portion treated as ordinary income in the year received. The tax impact of a large lump-sum distribution can be substantial, can affect Medicare premium calculations through IRMAA, and may interact with other income-based determinations. Members considering this option generally benefit from coordinating with a qualified tax professional before finalizing the decision.
Combination approaches are also possible — for example, using part of the balance for a lifetime income option, rolling part to an IRA for flexibility, and leaving part in the Investment Plan. The combinations that are available depend on current plan rules.
An introductory conversation is a no-pressure way to look at how your Investment Plan fits with the rest of your retirement picture.
For most Investment Plan members, the plan is one of several retirement resources. Social Security, a 457(b) or 403(b) account, IRAs, personal savings, and a spouse’s retirement may all play roles. The Investment Plan balance — whether it stays in the plan, rolls to an IRA, becomes a lifetime income stream, or gets used as a lump sum — needs to coordinate with those other resources.
Common coordination questions include:
A common misconception is that the FRS Health Insurance Subsidy (HIS) is only available to Pension Plan retirees. In fact, HIS is generally available to eligible Investment Plan retirees as well, provided they meet the service and coverage requirements set out in FRS rules.
Like other FRS retirees, Investment Plan members must apply for HIS — it is not automatic. The application process, eligibility requirements, and current monthly amount are governed by FRS rules and should be reviewed with the Florida Division of Retirement at retirement. For Investment Plan members, HIS is one more piece of the retirement income picture that’s worth knowing about and planning for, alongside the Investment Plan balance itself, Social Security, and any other resources.
In planning conversations with Investment Plan members, certain themes come up repeatedly. A few of the recurring ones:
Educational planning support for Florida public employees in the FRS Investment Plan, before and at retirement.
Review whether your current fund selection still fits your time horizon and goals.
Walk through the factors typically weighed in the Pension Plan vs. Investment Plan decision.
Understand how vesting works and what happens to your account if you leave FRS-covered work.
Review the considerations involved in any rollover decision when you separate.
Think through whether converting part of your balance to lifetime income fits your plan.
Coordinate your Investment Plan balance with Social Security, 457(b)/403(b), and other accounts.
Make sure HIS is on your radar and accounted for in your retirement income plan.
Review beneficiary designations on your Investment Plan account and other retirement assets.
Common questions from FRS Investment Plan members, before and at retirement.
The FRS Investment Plan is a defined contribution retirement plan administered by the State Board of Administration of Florida. Contributions from employer and employee sources are invested in funds the member selects from the MyFRS menu. The member’s balance reflects what has been contributed plus investment performance, less fees. The balance is generally portable on separation from FRS-covered employment.
The Pension Plan pays a defined monthly benefit calculated by a formula, generally for life. The Investment Plan is a defined contribution account whose value depends on investment performance and that the member converts into retirement income at retirement. The two plans handle the same problem — providing retirement income — through different mechanics. Neither is universally better; the right fit is personal.
FRS rules generally provide a one-time Second Election opportunity to switch between the two plans during a member’s career. Eligibility, cost, and procedural details are governed by FRS rules and should be reviewed directly with MyFRS before any decision is made. We help clients think through the broader planning context, but the formal election is made through the FRS process.
There is no universally correct answer. The factors typically considered include expected years of FRS service, salary trajectory, time horizon to retirement, risk tolerance, survivor goals, and other retirement resources. MyFRS offers a free Choice Service to help members run the comparison under their specific situation. We help clients organize the broader retirement picture so the decision is made with full context.
Members select from the MyFRS fund menu, which generally includes target-date funds, U.S. and international stock funds, bond funds, stable value or money-market options, and inflation-protected options. Target-date funds are a common starting point for members who prefer an all-in-one diversified approach. The right allocation depends on time horizon, risk tolerance, and other circumstances. A periodic review is generally worthwhile.
If you are vested, the balance is generally yours. You may leave it in the Investment Plan, roll it to an eligible retirement account such as an IRA, or take a distribution (with the associated tax implications). If you are not yet vested, specific rules apply to the employer-contributed portion; current vesting rules should be confirmed with MyFRS.
A rollover is not automatically the right choice. The decision should be reviewed based on investment options, fees, withdrawal flexibility, beneficiary considerations, and the member’s overall plan. In some cases, leaving the balance in the Investment Plan or using a lifetime income option may make more sense than a rollover. We help clients review the considerations so the decision is made intentionally.
The Investment Plan has historically offered a way to convert all or part of a balance into a guaranteed monthly income stream — sometimes called an annuity or lifetime income option. The tradeoff is predictability in exchange for giving up direct access to the underlying balance. Availability, current rates, and structural features are set by the plan and should be confirmed with MyFRS before any decision is made.
Yes, HIS is generally available to eligible Investment Plan retirees who meet the service and coverage requirements set out in FRS rules. The application process and current amount are governed by FRS rules. HIS is not automatic — Investment Plan retirees, like Pension Plan retirees, must apply.
No. Benowitz Wealth Management does not provide tax advice. Investment Plan distribution decisions can have meaningful tax implications, particularly lump-sum distributions, and members generally benefit from coordinating with a qualified tax professional before finalizing a decision.
No. Benowitz Wealth Management is an independent registered investment adviser. We are not affiliated with, endorsed by, or sponsored by MyFRS, the State Board of Administration, the Florida Retirement System, the State of Florida, or any public employer. MyFRS provides its own free guidance through the MyFRS Financial Guidance Line and Choice Service.
Use the contact form or scheduling button on this page, or email info@benowitzwealth.com. The initial conversation is intended to help us understand your situation and determine whether we are a good fit.
This checklist is designed to help Florida public employees organize key questions around FRS benefits, DROP, pension income, retirement accounts, taxes, healthcare, Social Security, Medicare, and long-term retirement planning.
Related planning resources for FRS members and Florida public employees.
For members in the FRS Pension Plan and DROP — pension, DROP, payout, and rollover decisions.
Coordinate your Investment Plan balance with Social Security and other retirement income.
Review supplemental retirement accounts alongside your FRS Investment Plan balance.
Organize tax, beneficiary, and estate questions around Investment Plan decisions.
Plan Medicare, HIS, and retiree health coverage as an Investment Plan member.
Planning considerations specific to Special Risk law enforcement members.
Planning considerations specific to Special Risk fire service members.
Planning considerations for Florida educators with FRS and 403(b) accounts.
Retirement planning considerations for Florida state employees.
Independent fiduciary planning for Florida public employees in the FRS Investment Plan. Educational conversations. No pressure.
Disclaimer: Benowitz Wealth Management is an independent registered investment adviser. This content is for educational purposes only and should not be considered personalized investment, tax, insurance, or legal advice. Benowitz Wealth Management is not affiliated with, endorsed by, or sponsored by the Florida Retirement System, the State of Florida, any county government, city government, school district, public employer, or public agency. FRS rules, benefits, and retirement options may change. Please consult the appropriate agency, tax professional, insurance professional, or legal professional before making decisions regarding your benefits or retirement plan.
