DROP allows you to effectively retire under the Florida Retirement System (FRS) Pension Plan. You begin accumulating your retirement benefits while delaying your termination for up to 60 months from the date you first reach your normal retirement date or your eligible deferral date
As a DROP participant, you simultaneously earn a salary while your monthly retirement benefits are held in the FRS Trust Fund on your behalf. Before you participate in DROP, you earn one month of retirement service credit for each month you work.
When you enter DROP, you are considered to be retired and you stop earning retirement service credit. While participating in DROP, your monthly retirement benefits accumulate in the FRS Trust Fund, earning tax-deferred interest while you continue to work for an FRS employer. Tax-deferred interest means that you pay any taxes owed when you receive the interest instead of when the interest was earned.
When your DROP participation ends, you receive your DROP payout and begin receiving your monthly retirement benefit in the same amount determined at retirement, plus annual cost-of-living increases.
The longer you participate in DROP, the greater your financial gain. However, even short periods of DROP participation can offer enough financial advantages to make participation the right choice for you.
For many, DROP offers the best of both worlds by providing the financial security of a guaranteed lifetime monthly benefit and an opportunity to accumulate additional savings, while you are working.
Who is Eligible?
As a member of FRS, the Teacher Retirement System, or the State and County Employers’ Retirement System, you may participate in DROP for up to 60 months. However, you must also be eligible for your normal retirement to enter into DROP.
In FRS, you are eligible for normal retirement if you have 10 years of service and attained age 62, or have 30 years of service at any age. Your decision to participate in drop must be made within 12 months of your normal retirement date.
When you terminate your employment with all Florida Retirement System (FRS) employers, upon verification, you’ll begin to receive your FRS benefits and your DROP account must be distributed.
Your DROP account may be distributed in several ways, including:
- A direct rollover to an IRA
- A taxable partial lump-sum payment and IRA rollover combination.
- A taxable lump sum payment, less 20% withholding tax
At the conclusion of DROP, we can provide you with an excellent strategy that provides you with a paycheck for life! We will design a customized plan for you that can meet your income and retirement needs. We help you avoid a taxable distribution by designing a creative IRA rollover solution.
If you would like to set up an initial appointment to discuss your options or you need more information, please call 682-230-2201 or 954-909-4094 or e-mail DROP Advisory Council.
To schedule a meeting or if you have any questions, please contact the DROP Advisory Council by filling in the form below.