For Florida Retirement System (FRS) participants, the Deferred Retirement Option Program (DROP) offers a valuable opportunity to begin accumulating retirement benefits while still working. While the program itself can provide financial advantages, the enrollment process comes with important decisions and deadlines that require attention.
Simplifying DROP enrollment process starts with understanding how the program works, what decisions you need to make, and how those choices fit into your overall retirement strategy. Here’s what you need to know before you sign up.
Who is Eligible for DROP?
Before enrolling, you must confirm your eligibility. DROP is available to FRS Pension Plan members who:
- Are vested in the FRS Pension Plan.
- Have reached their normal retirement date (based on age or years of service).
- Are actively employed by an FRS-covered employer.
Eligibility dates can vary depending on your specific employment classification, so it’s important to check your personal retirement projection through the FRS online portal or with your employer.
Key Enrollment Steps for DROP
- Determine Your Eligibility Date
Knowing when you qualify to enter DROP is essential, as there are strict deadlines for applying. Missing the window could delay your entry or reduce your participation period.
- Some FRS employees have a 12-month enrollment window beginning with their normal retirement date.
- For members of the Special Risk Class, the window can open earlier based on years of service.
- Request Your Benefit Estimate
Before enrolling, request a personalized benefit estimate from the Division of Retirement. This estimate will show:
- Your monthly pension amount.
- Your projected DROP accumulation.
- Pension payment options that you’ll need to select when you enroll.
- Choose Your Pension Payment Option
One of the most important enrollment decisions is selecting your pension payment option. This choice determines how much your monthly benefit will be and whether your spouse or beneficiary will receive survivor benefits after your passing.
- Option 1: Maximum lifetime monthly benefit with no survivor benefit.
- Option 2: Reduced monthly benefit with a 10-year guarantee to beneficiaries if you pass away within 10 years.
- Option 3: Reduced monthly benefit with lifetime benefits for a surviving joint annuitant.
- Option 4: Reduced monthly benefit with two-thirds of the benefit continuing for your joint annuitant after your passing.
This decision cannot be changed after you retire, so it’s essential to review your options carefully.
Understand What Happens During DROP
Once you enroll, your monthly retirement benefits will start accruing in your DROP account — but you’ll continue working and receiving your regular salary. Your DROP account earns interest while you’re in the program.
- Your DROP period can last up to 96 months (eight years), depending on when you enter the program.
- Once you exit DROP, you’ll receive your accumulated DROP balance and begin receiving monthly pension payments directly.
Enrollment Paperwork and Deadlines
The paperwork required to enroll in DROP includes:
- FRS Application for the Deferred Retirement Option Program (DROP).
- Pension Option Selection Form.
- Beneficiary Designation Form (if applicable).
Key Financial Decisions When Enrolling
- Planning for Your DROP Payout
Before you enter DROP, it’s important to start thinking about how you’ll handle your eventual payout. Options include:
- Rolling the payout into a qualified retirement account for continued tax-deferred growth.
- Taking a lump sum distribution (subject to taxes).
- Splitting the payout between a rollover and a lump sum.
- Coordinating with Social Security
For some participants, DROP enrollment occurs well before Social Security eligibility. Understanding how your DROP benefits, pension, and personal savings will cover expenses before Social Security starts can help you create a more comprehensive retirement income plan.
- Healthcare Planning
If you plan to retire after DROP but before Medicare eligibility (age 65), consider how you’ll cover health insurance. Options might include:
- Employer retiree health coverage (if offered).
- COBRA continuation coverage.
- Individual health plans through the federal marketplace.
Simplifying the Enrollment Process
- Start Early
The earlier you review your eligibility date, benefit estimates, and enrollment forms, the less stressful the process will be. Starting at least 6 to 12 months before your normal retirement date can help you avoid last-minute decisions.
- Review Pension Options with Your Spouse
If you’re married, choosing a pension option is a joint decision. Review how each option affects your monthly income and the financial protection available to your spouse.
- Work with a Financial Professional
A financial professional who understands DROP can help you evaluate:
- How your DROP benefits fit into your overall retirement plan.
- How to manage your DROP payout and pension income for tax efficiency.
- How to coordinate DROP with other retirement accounts and Social Security.
How BENCOR Supports DROP Enrollment
BENCOR has nearly 30 years of experience helping Florida public employees navigate DROP enrollment and retirement planning. Whether you’re reviewing your pension options, planning for your payout, or preparing for life after DROP, BENCOR offers personalized guidance to help simplify the enrollment process and align your choices with your financial goals.
Final Thoughts on Simplifying DROP Enrollment Process
Enrolling in DROP is a major step toward retirement — and making informed decisions before you sign up helps ensure your benefits align with your long-term goals. By understanding the key steps, deadlines, and financial decisions involved, you can simplify the process and feel confident about your future.
If you’re approaching your DROP enrollment window, contact BENCOR for personalized guidance and tools designed to help Florida Retirement System participants plan for their retirement. Schedule a free consultation with our team at BENCOR DROP support today!