What is DROP?
The Deferred Retirement Option Program (DROP), exclusively for Pension Plan participants, becomes accessible once you are vested and have reached your standard retirement age. It enables you to retire while still working for an FRS employer for a maximum of 96 months (or 120 months under specific conditions if classified as "instructional personnel" according to s. 1012.01(2)(a)-(d), Florida Statutes). You have the flexibility to enroll in DROP at any point after becoming vested and reaching your standard retirement age.
Who is Eligible?
- FRS Pension Plan: Eligible for DROP.
- DROP offers an alternative method for receiving retirement benefits, where participants stop earning service credit but continue working, with their retirement benefits calculated at the start of DROP participation. During DROP, retirement benefits accumulate in the FRS trust fund while participants work. Upon termination, participants receive their accumulated DROP account. Eligibility for DROP starts at the normal retirement date, determined by age and/or service. For those enrolled before July 1, 2011, normal retirement is age 62 with specific service requirements. For those enrolled after, it's age 65 with different service requirements. At the end of DROP, participants receive their accumulated benefits and can choose how to receive them, including as a lump sum or rollover into another qualified plan, such as the FRS Investment Plan.
- FRS Investment Plan: Not eligible for DROP.
When can I begin DROP participation?
DROP participation can commence either in the month of reaching your normal retirement date based on age or the following month determined by years of service. Vesting is required, with six years for those enrolled in the FRS before July 1, 2011, and eight years for those enrolled after. Normal retirement date criteria based on age and service differ for pre-2011 enrollees, where reaching age 62 with at least six years but less than 30 years of service or any age with 30 years of service qualifies, while post-2011 enrollees must reach age 65 with at least eight years but less than 33 years of service, or any age with 33 years of service. Similar criteria apply to Special Risk Administrative Support Class members. Special Risk Class members can retire at age 55 with at least six years but fewer than 25 years of service, any age before 55 with 25 years of service, or age 52 with a combined total of 25 years of service and up to four years of purchased wartime military service. The normal retirement date varies for Teachers’ Retirement System members based on membership date, class, and plan, prompting individuals to contact the Division of Retirement for specifics.
When should I apply for DROP?
Once vested, you can join DROP after reaching your normal retirement date, with applications accepted six months prior. Submission must be made by the last working day of the intended participation month. Early application is encouraged, aided by Member Annual Statements and service history accessible via your FRS Online account, assisting in tracking retirement eligibility and benefit estimates.
How can I estimate the value of my DROP account?
Estimate your monthly benefit by multiplying your Years of Service by the Percentage Value and Average Final Compensation. Find your service credit percentage on FRS Online. Use the Create Estimate tool in your FRS Online account for accurate projections.
What about my lump-sum annual leave payment?
You can opt for a lump-sum payment of your accrued annual leave when you enter DROP or after your DROP participation. If taken at entry, up to 500 hours can count toward your benefit calculation. If your employer reports the amount on your monthly payroll report when you start DROP, it's included in your retirement benefits. If received at the end of DROP, it won't affect your retirement benefits.
What happens when my DROP participation ends?
To receive your DROP and monthly pension benefits, you must end all employment with FRS employers. After DROP termination, retirees can join FRS employer volunteer programs for civic or charitable work within the first year. Submit the DROP Termination Notification Form (DP-Term) for verification, and once confirmed, you'll receive monthly benefits on the last working day. Your DROP payout, distributed after termination, can be a lump sum with taxes withheld, a direct rollover, or a combination. Certain employee contributions may yield tax-free lump sums based on the Simplified Method. If no distribution method is chosen within 60 days post-DROP, a lump sum is issued with 20% withheld for taxes, sent to your registered address.
How will my DROP benefits be taxed?
If you transfer your DROP accumulation to another eligible retirement plan, you won't owe taxes until withdrawal. Lump-sum payments are taxed as income, with 20% withheld for taxes by the IRS. Additional taxes may apply if you withdraw early, depending on your age. Consult IRS or a tax advisor for details.
What forms must I complete?
To participate in DROP: Get forms from the division’s website, HR office, or contact them. You need employer-signed forms, which you submit. For DROP participation, complete the Notice of Election to Participate in the DROP and Resignation of Employment Form (DP-ELE). Modify it if needed, with employer and division approval. Other forms include Application for Service Retirement and the Deferred Retirement Option Program Form (DP-11), Retired Member and DROP Participant Beneficiary Designation Form (FST-12), Option Selection Form (FRS-11o), and Spousal Acknowledgement Form (SA-1). TRS members complete similar forms with TRS-specific codes. K-12 instructional and administrative personnel may extend DROP participation for up to 24 months, ending at the school year's conclusion. Eligible individuals must complete the Extension of Deferred Retirement Option Program (DROP) for Specified K-12 Personnel Form (DP-EXT) and receive employer authorization before their initial 96-month period ends.
To terminate my DROP participation: You need to submit the DROP Termination Notification Form (DP-TERM) to confirm employment termination and the DROP Selected Payout Method Form (DP-PAYT) to choose how your accumulated benefits are paid out. For Option 4 benefits, provide DROP Joint Annuitant Verification (Form DP-JOINT). Three months before your scheduled termination, you'll receive a packet with these forms. If you terminate earlier, inform the Division of Retirement to receive the packet. Your new termination date must be within your authorized DROP participation period.
