Plan and Retire

What You Need to Know About DROP in Florida

Erin Palmer

July 15, 2019

Planning and Discussing- Retirement Plan

Public sector employees often have the option to choose a deferred retirement option program (DROP). There are a lot of potential benefits to DROP in Florida. Here’s everything you need to know:

What is the Deferred Retirement Option Program (DROP)?

The deferred retirement option program (or plan) allows public sector employees to work for a longer period of time while still accruing retirement benefits.

The specifics of how DROP works and what the program offers varies from state to state.

How Does DROP Work in Florida?

The Florida Retirement System (FRS) lets eligible employees continue to work for up to five years after retirement (or eight years for teachers in select circumstances). During this time, employees continue to earn retirement benefits each month.

The benefits go into an FRS Trust Fund as they accumulate and compound interest. FRS will send a DROP termination kit about 90 days before the employee’s employment ends. Then the employee has to decide what payout method to take.

The options are:

  1. Lump-sum payment
  2. Direct rollover
  3. Combined partial lump sum and rollover

The DROP payout gets processed the month after employment ends. If a payout method is not selected within 60 days after termination, a lump sum payment may be issued with 20% withheld for federal income tax.

How to Make the Most Out of DROP Funds

Once you’re officially retired, make your retirement funds work you! Rollover your DROP funds into a short- or long-term savings account so your savings can continue to grow.

If you rollover your DROP funds into a qualified retirement plan, you may be able to defer taxation until you withdraw your funds.

Rolling over your DROP funds lets you maintain control of your money and take advantage of tax benefits. You can still access your money, but your savings will also accrue interest over time.

Help your retirement funds support you for years to come with a savvy savings plan from a financial institution you trust.

Investment growth

Want a Complimentary DROP Consultation? Suncoast Trust and Investment Services is happy to help! Call 1 (866) 300-9382 or reach out to us online.


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