Q: What is the Deferred Retirement Option Plan (DROP)?
A: The Deferred Retirement Option Plan (DROP) is an optional retirement method that allows the member to defer his or her retirement benefit for a maximum period of 36 months while he or she continues to work. While participating in DROP, the member continues state employment and has all the rights and responsibilities of other employees except for those relating to retirement. The member will continue to earn a regular salary and accrue annual and sick leave. Any deductions for taxes, insurance, deferred compensation, etc. continue during DROP participation. The member is eligible to be considered for raises, promotions, demotions, termination, etc. while participating in DROP and while working after DROP. The member can also change agencies while participating in DROP or while working after DROP, as long as there is no break in service.
Q: Does a member pay contributions while participating in DROP?
A: Neither the agency nor the member pay contributions to LASERS while the member is in DROP; therefore, the member does not earn service credit during the participation period.
Q: How is the DROP benefit amount calculated?
A: The DROP benefit is the same amount that the member would have received as a monthly benefit had he or she retired.
Q: When is the DROP benefit amount deposited?
A: The monthly DROP benefit will be deposited into the member’s DROP account on the last day of each
month.
Q: How long can a member participate in DROP?
A: Members may participate in DROP only once and for no more than 36 months. Each member must specify the length of participation on the DROP application. A member must designate:
• To participate for the MAXIMUM months allowed (36 months)
- OR -
• To participate for less than the maximum (36 months) allowed. If this option is chosen, the member is required to designate the number of months he or she chooses to participate.
Q: What happens when the DROP participation period ends?
A: Approximately two months prior to a member’s DROP end date, an End of DROP notification letter is mailed to the member and agency. This letter directs the member to contact the agency’s Human Resources Personnel Officer to make one of the following choices:
- Terminate employment on his or her DROP end date. The member will begin receiving monthly
retirement benefits from LASERS. If a member terminates employment prior to his or her DROP end date, the member would be required to retire immediately following the termination date. The member will forfeit any remaining DROP participation time and subsequent DROP deposits. - Continue to work after DROP. In this case, the member will begin paying employee contributions to LASERS and will begin accruing service credit. Upon retirement, the member may receive a supplemental benefit for the time worked after DROP.
Q: What is the window to enter DROP?
A: Members can participate in DROP for up to 36 months and have a 60-day grace period to begin participating. In order to participate for the full 36-month period, members must begin DROP participation within 60 days of their first eligible date for retirement (excluding members of the Wildlife Agents 2 Plan who must enter DROP within 60 days of their first eligible date for DROP.)
- Members who apply to enter DROP before or during the 60-day grace period can participate in
DROP for the full 36 months. - Members who apply to enter DROP after the 60-day grace period has expired will not have the
full 36-month period to participate in DROP. In other words, if the member enters DROP later
than 60 days after he or she was first eligible, then the 36-month participation period is reduced.
The member’s participation period cannot be extended beyond 36 months and 60 days.