Deferred Retirement Option Program (DROP)
The DROP is available at an actively employed Plan Member's normal retirement date, which is the first day of the month following either attainment of age 55
completion of 30 years of service regardless of age, whichever comes first.
The DROP allows an eligible member the opportunity to retire for pension purposes and continue employment with the City for up to 36 months. Upon entry into the DROP, retirement benefits are calculated and frozen as of the DROP entry date and then the monthly retirement benefit payments are credited pre-tax to a DROP account until termination of employment. After termination of employment the DROP account proceeds will be issued and the direct payment of retirement benefits will commence.
The following important restrictions apply to the DROP:
The maximum participation period is limited to 36 months after eligibility first begins, not the actual enrollment date into the DROP. Enrollment into the DROP can occur after the normal retirement date but the 36 month participation period must be reduced accordingly.
Members enrolling into the DROP will enter into an irrevocable agreement to terminate employment with the City of Fort Lauderdale at the end of the DROP period.
Applications to enter the DROP must be submitted at least 3 months in advance of the normal retirement date. Applications may be submitted after the 3 month window but any delay in submitting the application will result in a corresponding deduction from the 36 month participation period.
As of January 14, 2004, the DROP Plan was terminated for members of the City’s Teamster's bargaining unit. However, the DROP Plan is still available to the City’s Management, Confidential, Non-Classified and Affiliated Agency employees.
The DROP account balance may be either withdrawn in a lump-sum, rolled over into another tax deferred vehicle (IRA, 457, 403(b), 401(k), etc.) or some combination of the two alternatives. DROP proceeds are taxable income and and the distribution method will determine whether the funds are subject to a mandatory (20%) Federal Tax withholding and possibly a 10% early withdrawal penalty. The tax implications are addressed within the Special Tax Notice available online or from the Pension Office.
DROP Entry Process:
Actively employed Plan Members interested in the DROP should schedule an appointment with the Pension Office at least 4 months before their expected DROP entry date to discuss the DROP, investigate optional spousal survivorship benefits and receive a calculation of their estimated pension benefits.
An Application must be submitted to the Pension Office to start the DROP entry process. The Application should be submitted at least 3 months in advance of the DROP entry date in order to maximize DROP participation. The Application is available Online or from the Pension Office.
Below are links to additional information:
Normal & Early Retirement
Vested Deferred Retirement
Optional Survivorship Benefits