Deferred Retirement Option Program
|DROP Rollover to the FRS Investment Plan Permitted
DROP participants (former and current) are permitted to rollover their DROP accumulation
into the FRS Investment Plan. This
option allows you to take advantage of the low cost investment products
offered in the Investment Plan. When you decide to take a distribution of
your accumulated funds from the Investment Plan, you have multiple
distribution options: a low cost fixed or variable annuity (much like your
Pension Plan benefit), periodic payments (quarterly, semiannually, or
annually), lump sum payout of your account balance, or a rollover of your
account balance to another plan.
Review Questions and Answers.
|Summary of FRS 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).
Further details on DROP are available in the following sections. Continue
reading or use the links below to jump to a topic of interest to you.
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
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.
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.
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
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 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.
More Information Further details on the Deferred Retirement Option Program or DROP are available in the DROP Guide.
Deferred Retirement Option Program (DROP) links:
- DROP Guide,
(PDF) This pamphlet describes the FRS program known as the Deferred Retirement Option Program. It
discusses potential advantages and disadvantages of participating in this program, explains program eligibility and participation requirements, answers commonly asked questions, and provides examples. It is recommended for FRS
Pension Plan members nearing retirement age.
- Preparing to Terminate DROP (PDF)
This paper explains what to expect when you terminate DROP (the forms to submit,
when you will begin receiving monthly benefits, etc.). It also includes a
special notice providing tax information affecting DROP payouts to help
you decide how to receive your DROP benefits.
- Frequently asked DROP questions - Document that provides answers to questions frequently asked by participants of the FRS Deferred Retirement Option Program.
The forms required to enroll in DROP are available from your personnel office and from
section of this Web site.