Guiding public service employees through the Florida Retirement System
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Deferred Retirement Option Program
The Deferred Retirement Option Program (DROP), implemented on July 1, 1998, is a program that allows you to retire without terminating your employment for up to 5 years (8 years for teachers under certain circumstances) while your retirement benefits accumulate and earn interest compounded monthly at an effective annual rate of 6.5% (if your DROP participation began prior to July 1, 2011) or 1.3% (if your DROP participation began on or after July 1, 2011). This program is available to eligible members of the Florida Retirement System who are in the FRS Pension Plan; it is also available to eligible members of the Teachers' Retirement System (TRS) and the State and County Officers and Employees' Retirement System (SCOERS) — defined benefit plans that were closed to new members when the FRS was created in December 1970. To be eligible to participate, you must be an active member of one of these plans. (FRS renewed members and members of the various optional retirement programs available under the FRS are not eligible to participate in DROP.) .
Your participation in DROP does not change your conditions of employment. When your DROP period ends, you must terminate employment (special provisions apply to elected officers). At that time, you will receive your accumulated DROP benefits and begin receiving your monthly retirement benefit (as calculated when you retired and entered DROP, plus any applicable cost-of-living increases).
Eligibility – As an eligible member of the FRS Pension Plan, TRS, or SCOERS, you may participate in DROP when you are vested and have reached your normal retirement date. Your "normal retirement date" is the earliest date at which you become eligible for full, unreduced benefits based upon your age and/or service.
If you enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with at least 6 years of service or 30 years of service, regardless of age. For Special Risk Class members, normal retirement is age 55 with at least 6 years of Special Risk service, or 25 years of Special Risk service, regardless of age, or age 52 with 25 years of Special Risk service and military service.
If you enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with at least 8 years of service or 33 years of service, regardless of age. For Special Risk Class members, normal retirement is age 60 with at least 8 years of Special Risk service, or 30 years of Special Risk service, regardless of age, or age 57 with 30 years of Special Risk service and military service.
Election – If you wish to participate in DROP, you may make your election up to 6 months before the date you plan to begin participation, but the Division of Retirement must receive your election no later than the month you wish to begin DROP. You must make your election within a 12-month election window that begins when you first reach your normal retirement date unless you are eligible to defer your election as described below. If you do not apply within your prescribed election window, you will lose your eligibility to participate.
Deferred Election – You may defer your DROP election under the following circumstances:
- If you complete 30 years of service (if you enrolled in the FRS prior to July 1, 2011) or 33 years of service (if you enrolled in the FRS on or after July 1, 2011) before you reach age 57, you may defer your DROP election and may elect to begin DROP participation at anytime between completing 30 or 33 years of service and reaching age 57 (FRS special risk members who complete 25 years of Special Risk Class service (if you enrolled in the FRS prior to July 1, 2011) or 30 years of Special Risk Class service (if you enrolled in the FRS on or after July 1, 2011) before age 52 may defer DROP to age 52).
- If you are an elected officer participating in the FRS Elected Officers' Class (EOC), you may defer DROP until your next succeeding term of office after first reaching your normal retirement date and may participate for the lesser of 5 years or the length of that term.
- If you have covered employment in the FRS Special Risk Class as well as other employment covered by a different FRS membership class or plan, you may elect to participate in DROP when you reach your normal retirement date for either class.
-If your employer considers you "instructional personnel" in grades K-12 as defined in s. 1012.01(2), F.S., you may choose to participate in DROP at any time after reaching your normal retirement date and you will still be entitled to elect to participate for a full 60 months (96 months under certain circumstances).
Optional Service Credit – When determining your normal retirement date for purposes of establishing your DROP eligibility or participation period, you may choose to include or exclude any optional service credit you have purchased (for example, any credit you purchased for a leave of absence). Regardless of your choice, any optional service credit you buy will be included in your benefit calculation.
Participation Limit – If you enter DROP when you first become eligible, or anytime thereafter through your deferred eligibility date as described above, you may participate in DROP for a maximum of 60 months (96 months for teachers under certain circumstances). If you initially elect to participate in DROP for fewer than the maximum 60 months, you may extend your DROP participation up to the maximum 60 months, but only with the approval of your employer. (Your employer's approval is not required for you to end your DROP participation earlier than originally planned.) Your DROP eligibility begins the first month you reach your normal retirement date or your deferred eligibility date (if deferral is an option for you). If you don't qualify as "instructional personnel" and you apply for DROP after your ultimate DROP eligibility period has begun, your maximum 60-month DROP participation period will be reduced for each month your application is delayed.
If you fail to terminate employment at the end of your DROP period, both your retirement and your DROP participation will be voided, and your employer (or employers if you are dually employed) must pay any additional contributions that may be required to establish FRS service credit for the time you were in DROP.
However, if you are a DROP participant holding an elective office covered by the Elected Officers' Class when your DROP participation ends, you may continue to serve in office without voiding your DROP or retirement as long as you continue in that term of office or in successive terms of office. Under this provision, you would not accrue additional retirement benefits after your 60-month DROP participation period ends, but your account would continue to earn interest until termination. Any DROP participant who began DROP before July 1, 2002, and who is holding an elective office covered by the EOC when his/her DROP participation ends is not subject to termination requirements and would be automatically enrolled as a renewed member of the FRS at the end of his/her DROP participation period.
DROP Benefits – DROP accounts earn interest compounded monthly at an effective annual rate of 6.5% (if your DROP participation began prior to July 1, 2011) or 1.3% (if your DROP participation began on or after July 1, 2011). Your retirement benefits paid into DROP are also increased by the 3% annual cost-of-living adjustment (COLA) each July 1 (adjustment only applicable for FRS service earned prior to July 1, 2011). (If you are in DROP for less than a full year on July 1, your first COLA will be a prorated percentage based upon the number of months you were in DROP before July 1.) When you terminate employment, the proceeds of your DROP account will be distributed to you in one of three ways:
-By a lump-sum payment;
-By a direct rollover; or
-By a combined partial lump sum payment and rollover.
Death and Disability Benefits – If you should die while in DROP, your designated beneficiary would be eligible to receive your accumulated DROP benefits. Depending on the benefit option you selected, your beneficiary may also be eligible to receive a continuing monthly benefit. Or, if your beneficiary does not qualify for a continuing benefit, and the benefits deposited in your DROP account add up to less than any employee contributions you may have made (including amounts you may have paid to upgrade service or buy service credit), your beneficiary may receive a refund of the difference. However, because you retired when you entered DROP, you are not eligible for disability benefits.
Retirement and HIS Benefits, Reemployment Limitations, and Renewed Membership – At the conclusion of DROP, participants will be eligible to begin receiving the Health Insurance Subsidy, and will be subject to the same reemployment limitations and renewed membership provisions that are applicable to other FRS retirees.
Source: http://www.myfrs.com/FRSPro_Pension_Drop.htm
Need help exiting DROP? Do you want to make sure your DROP Rollover isn't a taxable event? Find out about the DROP BONUS program!
MyFRSGuide.com is in no way affiliated with the Florida Retirement System or the Florida Division of Retirement. This site is simply a resource for participants to understand their benefits. We are an independent advocate for FRS participants to help them make the best choices for their retirement.
