What Is DROP? A Plain-English Guide to the FRS Deferred Retirement Option Program

If you are a Florida teacher, firefighter, deputy, nurse, or other public employee and you are in the FRS Pension Plan, you have probably heard coworkers talk about “going into DROP.” It is one of the biggest financial decisions of a public career, and it is easy to feel rushed or confused. This guide explains what DROP is, how it works, and the questions worth asking before you sign anything. Florida Pension Planners walks FRS members through this process step by step and, when you need it, connects you with an advisor or other professional.

DROP in one sentence

DROP lets an eligible FRS Pension Plan member retire on paper but keep working for a set period, while the monthly pension builds up in a separate account that earns interest and is paid out when DROP ends.

What DROP is

The Deferred Retirement Option Program (DROP) is a voluntary program available only to FRS Pension Plan members who have reached normal retirement. In DROP, you effectively retire on paper while you keep working. You keep earning your salary, and your monthly retirement benefit is deposited into a DROP account held in the FRS Trust Fund on your behalf instead of being paid to you.

When your DROP period ends, you stop working for your FRS employer, and you receive two things: the balance that built up in your DROP account, and your monthly pension going forward.

Members of the FRS Investment Plan are not eligible for DROP. DROP is a Pension Plan feature (members of the older Teachers’ Retirement System who qualify can also participate).

How DROP works, step by step

1. You reach normal retirement under the Pension Plan. That depends on your class (Regular, Special Risk, and so on) and when you were first enrolled.
2. You apply and choose your DROP begin and end dates (Form DP-ELE). Your employer has to sign off on those dates.
3. Your benefit is fixed as of DROP entry. You choose a payment option (1 through 4), and you stop earning service credit.
4. Each month your benefit goes into your DROP account instead of to you, earning interest. If you are eligible for a cost-of-living adjustment (COLA), it is applied each July even while you are in DROP.
5. You keep working and keep your paycheck.
6. At your end date you must leave all FRS employment. Your DROP balance is paid out (lump sum, rollover, or partial), and your monthly pension starts being paid to you.

Who can join DROP

You generally must have reached your normal retirement date under the Pension Plan. Normal retirement depends on your membership class and when you were first enrolled. For example, Regular Class members first enrolled on or after July 1, 2011 generally reach normal retirement at age 65 with at least 8 years of service, or at 33 years of service regardless of age. Members enrolled before July 1, 2011, and Special Risk members, have different thresholds.

You can enter DROP any time after you reach normal retirement, and FRS’s DROP guide says there is no penalty for waiting. Because your exact dates depend on your history, request a DROP estimate through FRS Online before deciding.

How long you can stay in DROP

Under current law, most participants can stay in DROP for up to 96 calendar months from the date participation begins.

Certain K-12 instructional and administrative personnel can extend further. Eligible instructional staff employed by a district school board, a charter school, the Florida School for the Deaf and the Blind, or a developmental research school may extend DROP by up to 24 more months, for a total of up to 120 months, with employer authorization and FRS approval. The extension must end on the last day of the school year, and you must stay in an eligible position. Eligible K-12 administrators may be allowed to extend to reach the end of the school year.

You may hear older numbers, such as a 60-month limit or a 96-month cap for teachers. Those were the rules before the 2023 changes. If a coworker’s advice is based on the old limits, double-check it against current FRS materials.

What your DROP account earns

Your DROP account earns tax-deferred interest, compounded monthly. For DROP participation on or after July 1, 2023, the effective annual rate is 4.0%. Participants whose DROP began between July 1, 2011 and June 30, 2023 earned 1.3% for months before July 1, 2023, and 4.0% for months from that date on. The rate is set by law, and the legislature can change it.

While you are in DROP, raises and extra years of work no longer increase your pension; the benefit is locked in when you enter. If you are eligible for a COLA, it is still added each July. How much COLA you get depends on how much of your service was before July 1, 2011 (service after that date earns 0% COLA, with a minimum for some Special Risk members).

What you gain and what you give up

What you gain

• A lump of money at the end of DROP from accumulated benefits plus interest
• Your paycheck and your pension building up at the same time
• A set exit date, which makes planning easier

What you give up

• No more service credit; salary increases no longer raise your pension
• Your payment option (1–4) and type of retirement are final once DROP begins
• The FRS Health Insurance Subsidy (HIS) is not paid during DROP and you earn no extra HIS credit for DROP years. You apply with Form HIS-1 after DROP ends.
• A firm end date and strict reemployment rules afterward

What happens when DROP ends

When your DROP period ends, you must terminate employment with all FRS employers, and you choose how to receive your DROP balance. The main options are:

• Lump sum. Paid directly to you. Federal tax withholding applies, and a large payment can push you into a higher tax bracket.
• Rollover. Move the money to an eligible retirement account such as an IRA to defer taxes. Where it goes, what it is invested in, and what it costs all matter.
• Partial lump sum and partial rollover. Take some cash and roll over the rest.

See FRS DROP payout options for a side-by-side comparison and Leaving DROP in Florida for the step-by-step exit timeline. About three months before your end date, FRS sends your exit packet (DP-TERM, DP-PAYT, and DP-JOINT if you chose Option 4).

There are deadlines for choosing, and missing one can lead to a default payout you did not plan for. Read your DROP termination packet carefully and note every date.

Rules people often miss

• Reemployment. After DROP ends, there are limits on going back to work for an FRS employer, and breaking those rules can mean repaying benefits. Check the reemployment rules before you accept any return-to-work offer.
• Your option choice. Option 1 is the largest lifetime benefit to you only. Option 2 is a reduced benefit with a 10-year guarantee. Option 3 continues the same amount to your joint annuitant. Option 4 is a joint-and-survivor benefit that drops to two-thirds after the first death. The choice is permanent.
• Health insurance. Your health coverage, the FRS Health Insurance Subsidy, and Medicare timing are separate decisions that deserve their own attention.

Questions worth asking before you enter DROP

• What is my normal retirement date, and when does my DROP election window close?
• How long can I participate, and do I qualify for the K-12 extension?
• Which payment option fits my household?
• When DROP ends, how will I take the balance, and what are the tax effects?
• What will my health coverage look like?

Is DROP right for you?

DROP often fits members who plan to keep working in their FRS job and want a lump sum at the end. It may be less attractive if big raises would still increase your pension, if you might leave soon anyway, or if the permanent choices haven’t been thought through. Start with an official estimate in FRS Online or call the Division of Retirement at 850-907-6500. FRS also offers the free MyFRS Financial Guidance Line at 1-866-446-9377, Option 2.

Related: FRS Special Risk retirement · Retiring from a Florida public school · FRS retirement for government employees

Why the details matter

Many FRS decisions are final once they are processed. These are real examples from FRS’s own materials:

• Your benefit option is permanent. You pick one of four payment options before you retire or enter DROP. Once you cash or deposit any benefit payment, or the first payment is credited to DROP, you can’t change that option, add service credit, change your type of retirement, or cancel your retirement.¹²
• DROP can’t be cancelled once it starts. After your DROP application is final and your first month of participation passes, you can’t cancel DROP.³ You may be able to move your DROP end date within the maximum allowed, but only with a revised Form DP-ELE filed before your current end date and approved by your employer and the Division.⁴
• Working too soon can void your retirement. For the first six calendar months after your DROP end date (or retirement date), you can’t work for or provide services to any FRS employer, paid or unpaid, even as a contractor. If you do, your retirement can be voided, and you and the employer can be held liable for repaying benefits, including your DROP payout. FRS says there are no exceptions.³⁵
• Miss the DROP payout deadline and FRS chooses for you. If Form DP-PAYT isn’t received within 60 days of your DROP termination date, FRS is required by law to pay your DROP balance as a lump sum with 20% federal tax withheld, which can mean a large, unplanned tax bill.⁶
• You get only one second election. During your active FRS career you get one chance to switch between the Pension Plan and the Investment Plan, and it isn’t available after you retire, enter DROP, or leave FRS-covered employment.⁷

We walk you through every form and every date before anything is filed, so these mistakes are easier to avoid. Final decisions on your benefits are made by FRS, so always confirm your own dates with the Division of Retirement or MyFRS.

Book your free review

With FRS, timing is everything. One wrong form, or the right form filed at the wrong time, can lock in a result that can’t be reversed. Book a free, one-on-one review and we’ll go through your dates, your forms, and your deadlines with you, so you know what to file and when. It usually takes about 30 minutes, and there is no pressure. If you need help beyond the FRS process, such as investment or tax decisions, we can connect you with a licensed professional.

Book your free review · Call (850) 296-8828 · Email frshelp@floridapensionplanners.com · Office: 301 N Pine Meadow Dr, DeBary · Contact us

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Disclaimer: Florida Pension Planners is an independent educational service and is not affiliated with, endorsed by, or acting on behalf of the Florida Retirement System, the State Board of Administration, the Division of Retirement, or any school district. This page is general education, not individual tax, legal, or investment advice. FRS rules change; confirm your own benefits and deadlines with the FRS Division of Retirement (frs.fl.gov) or MyFRS (myfrs.com) before making decisions. Rollover and investment choices carry risk, and no outcome or return is promised. Florida Pension Planners provides educational guidance and referrals. We do not provide investment, tax, or legal advice. Any financial advisor or other professional we connect you with is independent and is solely responsible for their own advice and services.

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Sources (verified Oct 12, 2026)

• FRS, Deferred Retirement Option Program guide: https://frs.fl.gov/forms/drop_guide.pdf (eligibility incl. TRS, entry any time after normal retirement, 96-month period, K-12 24-month extension through June 30, 2029, COLA during DROP, HIS not paid during DROP, payout choices, 60-day lump-sum default). Spot-checked Oct 15, 2026.
• FRS, DROP extension form DP-EXT: https://frs.fl.gov/forms/dp-ext.pdf (up to 120 months total; end on the last day of the school year; employer authorization)
• FRS Employer Handbook, Ch. 9 Service Retirement: https://frs.fl.gov/forms/EH_ch09.pdf (4.00% from July 1, 2023; 1.3% for July 1, 2011–June 30, 2023)
• MyFRS, Pension Plan normal retirement: https://www.myfrs.com/ (age 65/8 years or 33 years for Regular Class enrolled on/after July 1, 2011).