The Deferred Retirement Option Program (DROP), effective July 1, 1998, is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of FRS, TRS, and SCOERS. Under this program, you may retire and have your FRS benefits accumulate in the FRS Trust Fund, earning interest, while you continue to work for an FRS employer. Your participation in DROP does not change your conditions of employment. When the DROP period ends, you must terminate employment. At that time, you will receive payment of the accumulated DROP benefits, and begin receiving your FRS monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of-living increases).

Eligibility – You are eligible to participate in the DROP when you are vested and have reached your normal retirement date. Normal retirement date for most members is either when you are vested and reach age 62, or when you complete 30 years of service (age 55 or 25 years of service for special risk members). You may make your election to participate in DROP up to 6 months prior to the date you plan to begin participation, and you must elect DROP participation within 12 months after you first reach your normal retirement date, unless you are eligible to defer as follows. If you complete 30 years of service before age 57, you may defer DROP and elect to begin participation at anytime between completing 30 years and reaching age 57 (special risk members who complete 25 years before age 52 may defer DROP to age 52). Elected officers may defer DROP until their next succeeding term of office after first reaching normal retirement and may participate for the lesser of 5 years or the length of that term. When determining your normal retirement date for DROP eligibility or participation period, you may include or exclude any optional service you have purchased, such as refunded service; although optional service will always be used in your benefit calculation. If you reached your normal retirement date before July 1, 1998, you have 12 months from July 1, 1998, to elect DROP, unless you are eligible for a deferral.

Participation Limit – You may participate for a maximum of 60 months following the date on which you become eligible for DROP. Members who reached normal retirement date before July 1, 1998 are eligible to participate for a full 60 months beginning July 1, 1998. Special risk members who reached normal retirement date before July 1, 1998 and whose total accrued value exceeds 75% of AFC may participate for only 36 months. Your 60 months of DROP eligibility begin the first month you reach your first normal retirement date, or a deferred date as described in the paragraph above. If you delay your decision to participate, your total months of participation will be reduced by that number of months. Failure to terminate at the conclusion of the DROP period will result in retroactive cancellation of both retirement and the DROP, and your employer, or employers if dually employed, must pay any additional contributions required for FRS service credit.

DROP Benefits - DROP accounts earn interest compounded monthly at an effective annual rate of 6.5%. Retirement benefits paid into the DROP are increased by the 3% cost-of-living adjustment each July 1. DROP accounts will be distributed when you terminate employment, in one of three ways: a lump sum payment, a direct rollover, or a combined partial lump sum payment and rollover.

Death and Disability Benefits - The participant’s FRS designated beneficiary is eligible to receive all accumulated DROP benefits and, depending on the benefit option selected, monthly FRS benefits. DROP participants are not eligible for FRS disability benefits and their survivors are not eligible for FRS in-line-of-duty death benefits.

Reemployment, Renewed Membership and HIS - At the conclusion of DROP, DROP participants will begin receiving the Health Insurance Subsidy, and will be subject to reemployment limitations and renewed membership provisions.

Estimate the Value of Your DROP Account - The following table illustrates the estimated value of a DROP account. To estimate how much your DROP account will be worth, find your estimated monthly retirement benefit on the left side of the table. Next, find the number of years you plan to participate in DROP. The amount at the intersection of the selected row and column is the estimated value of your DROP account. For example, if your estimated monthly benefit is $800 and you want to participate in DROP for 3 years, the estimated value of your DROP account in 3 years will be $32,534.