Home ::
Prior to Jan. 1, 2006, the Deferred Retirement Option Plan (DROP) was available to active TRS members with at least 25 years of service credit in the system who met the requirement for retirement with an unreduced annuity.
The DROP allows eligible school employees to continue to work while building a nest egg by accumulating funds through the retirement system that may be withdrawn at retirement as a lump sum or in installment payouts. Upon entering the DROP, the member’s retirement annuity is calculated and “frozen” (i.e., service during the one- to five-year DROP period is not included in calculating the annuity), and monthly payments are deposited into an account for the member. If a member chooses to remain in school employment after the DROP period is completed, a separate annuity amount based on that salary and additional years is calculated and added to the previously calculated annuity upon retirement.
The original law creating the DROP program required that 79 percent of a member’s standard annuity be deposited to the DROP account monthly. This “payout” was reduced to 60 percent in 1999. DROP participants who entered the plan prior to Sept. 1, 1999, will continue to receive the 79 percent payout; the 60 percent is applicable only to those entering on or after Sept. 1, 1999. The DROP account earns 5 percent interest per year during the selected DROP period.
Upon retirement, a DROP participant receives the DROP funds in a lump sum or in installment payments and also begins receiving his/her standard monthly annuity.
DROP was closed to new enrollees after Dec. 31, 2005.
