Page 7 - 2018 How to Retire from Florida

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Question #4:

Should I go into DROP? How should

I invest my DROP when I retire?

Another decision you have to make How can you invest your DROP?
is about your Deferred Retirement DROP is one It is important to protect your DROP
Option Plan (DROP). of the most amount from excess taxes. That is

important why you want to avoid a lump-sum
Should you go into the DROP? retirement payment. Since it is qualified money,
The answer is it depends. If you are decisions you you can defer taxes on the account by
age 62 or you have 30 years of will every rolling your DROP account into a
service, you are eligible to participate make. DROP IRA or another qualified plan.
in DROP. Special-class employees You also could have the option of
have different eligibility criteria. taking a partial lump sum.

DROP is an alternative method for Some of the IRA choices include:
payment of your retirement benefits • Fixed Annuities
for a specified and limited period if • Indexed Fixed Annuities with guaranteed
you are an eligible FRS member. income riders
Once you enter into DROP, you • Variable Annuities
stop earning service credit toward a • Mutual Funds and Investment Accounts
future benefit and your retirement
benefit is calculated at the time your
DROP participation begins. It is important to select IRAs that offer short-term
liquidity and long-term growth. You may want to

While you are in the DROP, your use several IRAs for your DROP money.
monthly retirement benefits
accumulate in the FRS Trust Fund We also can design your DROP IRA to provide you
earning interest while you continue to with income for life that you cannot outlive.
work for an FRS employer.

Upon termination, your DROP
account is paid to you as a lump
sum payment, a rollover or a
combination partial lump sum
payment and rollover.

Monthly benefits are paid to you in
the amount as calculated upon entry
into DROP, plus any applicable cost-
of-living adjustments for intervening
years. When you apply to retire and
enroll in DROP, you must choose a
termination date, typically 60 months.