Can a Person Borrow Money From Her Own FRS Investment Plan?

The FRS investment plan does not provide for cost-of-living adjustments after retirement.

The FRS investment plan does not provide for cost-of-living adjustments after retirement.

If you are a state employee in Florida, you may qualify for retirement benefits through FRS. The Florida Retirement System, or FRS, is the state-operated retirement plan for almost all Florida state employees. The FRS offers a pension plan that provides a monthly retirement benefit based upon a number of factors, including years of service and average compensation for the five highest years of a person's salary. The FRS also offers an investment plan that allows employees to control an investment account funded by employer contributions. This account earns interest and dividends like any investment account, and the final worth of the account is dependent on investment strategies and market growth. Benefits from the investment plan are only available at retirement or due to loss of employment, and employees may not borrow money from their own FRS investment plans to be paid back at a later time.

FRS Investment Plan

The FRS investment plan is a defined-contribution plan. This means that your employer makes contributions, but you control the investment of those funds. The investment is funded by employer contributions that are determined by what class of employee you are in the Florida state system. Employees are not permitted to make individual contributions to this investment fund, but employees control the investment of the funds. At the time you retire, you are eligible to collect the full value of your FRS investment plan.

How Your Investments Grow

Unlike a traditional pension plan, the FRS investment plan does not have a defined amount of money you will receive at retirement. Rather, the retirement funds you receive are based on the performance of your investments. Just like the regular investment market, it is possible that your FRS investment plan may not reach the same value as a traditional pension plan. Also unlike a traditional pension plan, with an FRS investment plan you earn benefits equally over the course of your career instead of earning few benefits at the beginning of your career and more benefits as you get closer to retirement. This means that if you're a short-term Florida state employee, a FRS investment plan could help you grow your retirement savings faster than a traditional pension plan.

Withdrawing Your FRS Investments

Because FRS investment plans are intended to help you save for retirement, you may face penalties if you attempt to withdraw your money before age 59 ½. Once you have reached 59 ½, you can elect to receive the full balance of your FRS investment when your employment as a Florida state employee ends, or you may choose to take periodic withdrawals. These withdrawals can either be on an as-needed basis or on a set schedule. In the event that you pass away before your retirement, your FRS investment will pay out to your estate.


About the Author

Bea is a personal finance and legal writer based in Texas.

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