| Deferred Retirement Option Plan (DROP) |
WHAT IS DROP? |
The Deferred Retirement Option Program (DROP) allows you to retire under the City of Lakeland Employee Pension Plan and begin accumulating your retirement benefits, without terminating employment, for up to 60 months.
While participating in DROP, your monthly retirement benefits accumulate in the Employee Pension Plan, earning tax-deferred interest, while you continue to work without earning additional service credit for retirement. Your benefit will be calculated based upon years of service at the time DROP participation begins. In other words, when you enter the program you are considered to be retired and you stop earning retirement service credit.
When DROP participation ends, you must terminate all employment with the City of Lakeland. At that time, you will receive payment of your accumulated DROP account and begin receiving your monthly retirement benefit, in the same amount determined at retirement, plus annual cost-of-living increases, if awarded to retirees. The longer you participate in DROP the greater the financial gain; however, even short periods of program participation can offer sufficient financial advantages to justify serious consideration. For many, DROP is the best of both worlds, providing both a guaranteed lifetime benefit with financial security and an opportunity to accumulate additional savings while continuing your career.
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Who is eligible to join DROP? |
| The earliest you may begin participation in DROP is the date you reach your normal retirement date or 30 years of service. For Non-Union Sworn Police Officers and Certified Firefighters, age 52 or 25 years of service. |
When should I apply for DROP? |
| You may apply within 6 months of reaching eligibility. To maximize your time in the program, the Department of Civil Service and Retirement must receive your DROP application and election form no later than the last working day of the pay period before you intend to enroll in the program. You are encouraged to send in your DROP application as early as possible. |
How much interest will my DROP account earn? |
| DROP accounts earn interest compounded monthly at an effective annual rate of 6.5%. No interest is earned on benefits on deposit for less than one month or after the month in which you terminate employment. |
What about annual leave and sick leave payout? |
If a lump-sum is paid to you at the time you enter DROP, up to 60 days of your lump-sum annual leave payment will be eligible to be included in your retirement benefit calculation and will increase the benefit accumulating in your DROP account.
If a lump-sum is paid to you after your DROP participation ends, your lump-sum annual leave payment will not be included in your retirement benefit calculation.
If the sick leave used in your lump-sum payment when you enter DROP is less than the maximum allowed, you may receive a second lump-sum payment. At termination you would be eligible to receive the difference between the hours initially paid and the maximum allowable hours. However, this additional payment will not change your Employee Pension Plan benefit.
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POINTS TO REMEMBER: |
Election to enter DROP is irrevocable.
During DROP, employees are considered active employees for all other benefits/personnel policies.
Retirement benefit is fixed upon entry into the DROP program.
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Special Tax Notice |
| Please click here for the Special Tax Notice regarding plan payments. |
