1. (a)

   1. (1) In lieu of electing a lump-sum distribution of his or her T-DROP account balance, a plan participant may elect to transfer all or a part of his or her T-DROP account balance into a CBA.
   2. (2) If a plan participant elects to have only a part of his or her T-DROP account balance transferred into a CBA, the remaining balance of the T-DROP account shall be annuitized under the Arkansas Teacher Retirement System or paid as a lump-sum distribution.
   3. (3) A CBA shall be credited monthly with T-DROP Cash Balance Account interest and debited monthly for withdrawals and distributions beginning on the month immediately following the establishment of the CBA.
2. (b) A CBA established on or after July 1, 2021, shall be credited with T-DROP Cash Balance Account interest as follows:

   T-DROP Cash Balance Account Program Years of Participation	Interest Rate
   First fiscal year of participation	Two and one-half percent (2.5%)
   Two (2) fiscal years of participation	Two and seventy-five hundredths percent (2.75%)
   Three (3) fiscal years of participation	Three percent (3.00%)
   Four (4) fiscal years of participation	Three and twenty-five hundredths percent (3.25%)
   Five (5) fiscal years of participation	Three and one-half percent (3.50%)
   Six (6) or more fiscal years of participation	Four percent (4.00%)

3. (c) The Board of Trustees of the Arkansas Teacher Retirement System may:

   1. (1) Increase the T-DROP Cash Balance Account interest rate for future fiscal years and on an ad hoc basis;
   2. (2) Consider current market conditions, competing financial offerings to plan participants, bank rates for certificates of deposits, the status of the system’s return on investments, and the current state of participation in the T-DROP Cash Balance Account program when determining the T-DROP Cash Balance Account interest rate;
   3. (3) By resolution periodically authorize a special ad hoc incentive payment for CBAs if the board determines that payment of the special ad hoc incentive is likely to encourage continued participation and increase future participation in the T-DROP Cash Balance Account program; and
   4. (4) By resolution adopt a new T-DROP Cash Balance Account Interest Schedule (schedule) for future CBAs.

4. (d) An ad hoc increase may be:

   1. (1) Set as a single amount to be applied to each CBA; or
   2. (2) Computed as a graduated amount based on the length of time the CBA has existed.

5. (e)

   1. (1) The T-DROP Cash Balance Account interest rate shall remain in effect until the board adopts a new schedule with lower interest rates for future CBA accounts established by the end of the first quarter of the fiscal year in which the interest rate shall apply.
   2. (2) A CBA established before the effective date of a board resolution adopting a new schedule for future CBAs shall not be subject to the provisions of the new schedule.
6. (f) If a plan participant dies with a CBA balance, the CBA balance shall be paid as provided under Arkansas Code § 24-7-1310.

7. (g)

   1. (1) If a plan participant’s CBA has a balance, a plan participant may withdraw funds from his or her CBA up to six (6) times per quarter by using forms approved by the system.
   2. (2) A plan participant may make more than six (6) withdrawals in a quarter with the approval of the Executive Director of the Arkansas Teacher Retirement System.
   3. (3) A plan participant may request a recurring monthly distribution of a set amount from his or her CBA until the CBA balance is depleted or the plan participant withdraws his or her request.

   4. (4)

      1. (A) Minimum distributions made to a plan participant shall comply with Arkansas Code § 24-7-730 and the Internal Revenue Code of 1986, 26 U.S.C. § 1 et seq.
      2. (B) A retiree who attains the required minimum distribution age and does not cease to be active in the system shall not have required minimum distributions deducted from his or her CBA if the retiree:

8. (i) Either is a rehired retiree or has continued to work for a covered employer without a break in service; and

   1. (ii) The retiree’s covered employer reports the retiree to the system and pays employer contributions for the retiree.

Codification Notes: “T-DROP” means Teacher Deferred Retirement Option Plan.