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W.M. Durham Associates LLC

2010 Raymond Diehl Rd., Ste. 102

Tallahassee, FL 32308

Ph:  850-385-3578

Toll Free:  800-396-3420

Fax::  800-372-3220

Email:  info@wmdallc.com

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W.M. Durham Associates LLC is an independent financial services firm that creates retirement strategies using a variety of investment and insurance products.  Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Any references to protection benefits or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.  WM Durham Associates LLC nor any of its employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

 

W.M. Durham Associates LLC is not affiliated with or endorsed by any government agency, including the Florida Retirement System (FRS).

All material should be regarded as general information.​​
 

2019 W.M. Durham Associates LLC

DROP Frequently Asked Questions

Frequently Asked Questions*

​​Application
What forms must I complete to participate in DROP?
You must complete Form DP-ELE, Notice of Election to Participate in the DROP and
Resignation of Employment. If you are a Florida Retirement System (FRS) member, you
must also complete Form DP-11, Application for Service Retirement and the DROP. If
you are a Teachers’ Retirement System (TRS) member, you must also complete
Form DT-11, Application for Service Retirement and DROP. If you are a State and
County Officers’ and Employees’ Retirement System (SCOERS) member, you must also
complete Form DS-11, Application for Service Retirement and DROP. Your completed
forms must be filed through your employer's human resource office.


When should I submit my application for DROP?
The division must receive your DROP application and election form no later than the last
working day of the month you intend to enroll in DROP. You may send in these forms up
to six months before your DROP begin date which is your retirement date. If you submit
these forms after your final 60-month participation period has begun, your DROP
participation period will be reduced for each month your application was not in our office.
You must submit Form DP-ELE before 12 months has elapsed from the beginning of the
final 60-month participation period or you will no longer be eligible to participate in
DROP.


Changing Employers
May I change employers while in DROP?
Yes. However, if you are not employed for any one calendar month while changing
employers, your DROP participation will be terminated.


If I change employers, what forms must I complete and how long can I participate
in DROP?

You must complete a new Form DP-ELE showing the dates of DROP participation with
the new employer. Your overall DROP participation with all employers cannot exceed
the 60-month limitation from the first time your DROP began.


Contributions
Am I required to pay any employee contributions on my salary while I am
participating in the DROP?

No, you are not required to pay employee contributions on salary earned while
participating in the DROP.

Cost-of-Living Adjustment (COLA)

Will my monthly benefit in DROP be increased by a cost-of-living adjustment while
I am still working?

Yes. Retirement benefits that accumulate in DROP will be increased by a cost-of-living
adjustment each July 1 (or a prorated amount if you have been retired less than
12 calendar months). The cost-of-living increase is 3 percent for FRS Pension Plan
retirements effective prior to Aug. 1, 2011. The cost-of-living increase for FRS Pension
Plan retirements effective on or after Aug. 1, 2011, with service earned in July 2011 or
later will be the sum of their pre-July 2011 service credit divided by the total service
credit at retirement multiplied by 3 percent.


Eligibility
Who is eligible to participate in DROP?
All vested members of the FRS Pension Plan, Teachers' Retirement System (TRS), or
State and County Officers' and Employees' Retirement System (SCOERS) who have
reached normal retirement age or date, provided election to participate is made within
the appropriate time periods as described below.


When can I begin DROP?
You can begin DROP when you are vested and have reached your normal retirement
date as follows:


If you were initially enrolled in the FRS before July 1, 2011:
For all FRS membership classes except the Special Risk Class, your normal
retirement date is either when you are vested and reach age 62, or after you
complete 30 years of service, whichever comes first. If you become vested after
age 62, your normal retirement date is the month following the month you complete
six years of service. For Special Risk Class members, your normal retirement date is
when you have at least six years of Special Risk Class service and are age 55, or
25 years of Special Risk Class service, whichever comes first; or age 52 and a total
of 25 years of Special Risk Class service and active duty wartime military service. If
you reach six years of Special Risk Class service after age 55, your normal
retirement date is the month following the month you completed six years of Special
Risk Class service.


If you were initially enrolled in the FRS on or after July 1, 2011:
For all FRS membership classes except the Special Risk Class, your normal
retirement date is either when you are vested and reach age 65, or after you
complete 33 years of service, whichever comes first. If you become vested after
age 65, your normal retirement date is the month following the month you complete
eight years of service. For Special Risk Class members, your normal retirement date
is when you have at least eight years of Special Risk Class service and are age 60,
or after 30 years of Special Risk Class service, whichever comes first; or age 57 and
a total of 30 years of Special Risk Class service that include up to four years of
purchased active duty wartime military service. If you reach eight years of Special
Risk Class service after age 60, your normal retirement date is the month following
the month you completed eight years of Special Risk Class service.

Can I enroll in DROP if I am on leave of absence or on Workers' Compensation?
Yes, you can join DROP on or after reaching your normal retirement date (as long as
you apply within the 12-month limitation period or within 12 months of your deferral
election period) while on leave of absence or on Workers’ Compensation. However,
once you return to work you cannot have any additional salary or service credit added to
your retirement benefit.


How long can I participate in DROP?
You may participate for a maximum of 60 months if you begin DROP participation when
you first reach your normal retirement date or your maximum deferral date. If you initially
elect to participate in DROP for less than the maximum 60 months allowable, you may
extend your DROP participation up to the 60-month maximum if approved by your
employer.


Can I defer starting DROP?
You must elect DROP participation within 12 months after you first reach your normal
retirement date unless you are eligible to defer as follows:

 

  • If you were initially enrolled in the FRS before July 1, 2011, and complete

30 years of service before age 57, you may defer DROP and elect to begin
participation at any time between completing 30 years and reaching age 57.
Special Risk members who complete 25 years of Special Risk service before
age 52 may defer to age 52.

 

  •  If you were initially enrolled in the FRS on or after July 1, 2011, and complete

33 years of service before age 57, you may defer DROP and elect to begin
participation at any time between completing 33 years and reaching age 57.
Special Risk members who complete 30 years of Special Risk service before
age 52 may defer to age 52.

 

  • Elected officers who reach normal retirement while holding an elected office may

defer DROP until their next succeeding term of office and may participate for the
lesser of five years or the length of that term.

 

  • Members in instructional positions defined by section 1012.01(2), Florida

Statutes, may begin DROP at any time after reaching normal retirement.
If you begin DROP participation after the later of your normal retirement date or your
maximum deferral date but within the 12-month election period, you will lose a month of
DROP participation for each month you delay joining DROP.


Extension

How can specified K-12 Instructional Personnel extend DROP participation for up
to an additional 36 months?

If you work for a district school board, the Florida School for the Deaf and the Blind, or a
developmental research school, and you are employed in an instructional position as
defined in section 1012.01(2)(a)-(d), Florida Statutes, you may be permitted to extend
your DROP participation. This extension may be up to an additional 36 months with
authorization from your employer and approval by the division, provided you are
employed in an eligible position at the time you complete your initial 60-month eligibility
period and remain in an eligible position during your extended DROP participation.
To extend your DROP participation, you must obtain authorization from the appropriate
authority at your employer and the division must receive your completed Form DP-EXT
 prior to the end of your initial period of DROP participation.

 

Your employer may grant extensions for any period of time up to 36 months (i.e., year-by-year

or for the entire 36 month period at one time). Deferred Retirement Option Program extensions

are granted at the discretion of each school district’s superintendent. Deferred Retirement
Option Program extensions for the Florida School for the Deaf and the Blind and
developmental research schools are granted at the discretion of the school’s director.


Health Insurance Subsidy (HIS)

Will I receive the Health Insurance Subsidy (HIS) while I am participating in DROP?
No. However, you may apply to receive the HIS benefits after your DROP employment
termination is verified and your name has been added to the retired payroll to receive
monthly benefits. An application for HIS will be sent to you after your name has been
added to the retired payroll. It is your responsibility to apply for the HIS benefit and
provide certification of your health insurance coverage.


Miscellaneous
What is the Deferred Retirement Option Program (DROP)?
The DROP is a program under which you may retire while you continue to work. Your
monthly retirement benefits remain in the FRS Trust Fund instead of being paid directly
to you or deposited in your bank. Your benefits will earn interest for you, tax deferred, for
as long as you participate in DROP. In the meantime you continue to work for your FRS
employer for a specified and limited period up to the date you pre-selected to stop
participation in DROP. When the DROP period ends, you must terminate employment
with all FRS employers and provide verification of your termination. When your
termination is verified and your payout election form has been received, you will receive
payment of the accumulated DROP benefits, and begin receiving your FRS monthly
retirement benefit (in the same amount as determined at retirement, plus annual cost-ofliving
increases).


Does enrolling in DROP require my employer to keep me employed for the
participation period that I choose?

No, your employment status is not changed by DROP. You may quit or your employer
may terminate you in the same manner as before DROP participation.


Can I change my option or purchase additional service credit while participating in
DROP?

No, once your participation in DROP begins your retirement is final and you cannot
change your option or add service credit.


When is my DROP retirement final?
Your DROP retirement is final on the last day of the effective month your DROP
participation began as long as all your necessary paperwork has been submitted and
approved. Once your DROP retirement is final you cannot add service credit, change
options, change your type of retirement, elect Investment Plan membership, or cancel
your DROP retirement.


Will I continue to earn service credit while I am participating in the DROP?
Deferred Retirement Option Program participants are retired and no service credit will be
earned during your DROP participation.


How much interest will my DROP account earn?
Deferred Retirement Option Program accounts earn interest compounded monthly at an
effective annual rate of 1.30 percent for DROP participation beginning on or after
July 1, 2011. The annual interest rate for DROP participation beginning before
July 1, 2011, is 6.50 percent. Interest is earned through the month of DROP employment
termination or death. No interest is earned on benefits on deposit for less than one
month.


Should I join DROP or stay in the FRS?
One of the most important decisions you will have to make is whether you should join
DROP or remain in the FRS. To assist in this decision, the division will provide estimates
of the benefits you will receive if you retire and participate in DROP and if you retire
without participating in DROP. Upon receipt of these estimates, you should meet with
your accountant or financial planner to review your total financial situation, including FRS
and/or DROP benefits, personal investments, and Social Security benefits, to determine
which choice will be the best decision for your future.


Am I covered for Social Security while participating in DROP?
Yes, provided your retirement plan included Social Security prior to your participation in
DROP. If you plan to work and participate in DROP past age 65, ask your human
resource officer if you need to enroll in Medicare when you first turn age 65 even though
you will not begin receiving Social Security benefits until you terminate employment. If
you enroll in Medicare late, you may have to pay higher premiums.


What if I become disabled while participating in DROP?
You will not be eligible to change your type of retirement from a DROP retirement to a
disability retirement. If you become disabled while in DROP, terminate your employment
and verify your termination, you will begin to receive your monthly retirement benefit the
month following your DROP termination. The monthly benefit will be the amount that was
determined when you started the DROP, including any cost of living increases, plus your
DROP accumulation up to the point of your DROP termination.


Reemployment
What happens if I go back to work after I conclude my DROP participation?
Deferred Retirement Option Program participants are considered to be retired even
though they continue to work for a specified period of time. Once you terminate from
DROP, you are fully retired and subject to termination requirements and reemployment
restrictions with FRS participating employers.


After you retire under the FRS, you can work for any private employer, for any public
employer not participating in the FRS, or for any employer in another state, without
affecting your FRS benefits.


There are, however, certain termination requirements and reemployment limitations that
affect your retirement benefit if you are employed with FRS-participating employers
during the first 12 calendar months after your effective retirement date without DROP
participation or after your DROP termination date.


The termination requirements and reemployment limitations with FRS-participating
employers are:
If you return to work during the first six calendar months of your retirement or after your
DROP termination date, you are not retired. Your retirement application is voided and all
retirement benefits, including any funds accumulated during your DROP participation,
must be repaid, by you, to the FRS Trust Fund. This restriction applies even if the
particular position you hold is not covered by the FRS. This restriction also applies to
employment with the same employer if your agency withdrew from the FRS effective
Jan. 1, 1996, for newly hired employees. You cannot become a newly hired employee
until after you meet the definition of termination by remaining unemployed for six
calendar months.


You may not receive both a salary and a retirement benefit in the same month during the
seventh through twelfth calendar months of your retirement or after your DROP
termination date. There are no exceptions to this reemployment limitation during this
period. This restriction applies even if the particular position you hold is not covered by
the FRS. You must inform us if you work for an FRS employer during the reemployment
limitation period.


Your retirement benefits are forfeited for the months you are employed by an FRS
employer during the reemployment limitation period. You and your employing agency
are jointly and severally liable for repaying any retirement benefits you receive while
working during this period.


There are no limits on working for an FRS employer after you have been retired for
12 calendar months.


If you are reemployed with a participating employer, you will be required to sign a
statement that your reemployment does not violate these provisions.
Note: Employment with an FRS employer includes any full-time, part-time,
temporary, other personal services (OPS), contractual services or noncontractual
services with your previous employer or any other FRS employer.


Survivor Benefits
Who is entitled to my DROP benefits if I should die while participating in DROP?
Your FRS designated beneficiary is eligible to receive all accumulated DROP benefits
and, depending on the benefit option you selected, monthly FRS benefits. Survivors are
not eligible for FRS in-line-of-duty death benefits. If your named joint annuitant dies
during your DROP participation, you will be eligible to name a beneficiary to receive the
accumulated DROP benefits.


Termination/Payouts
What happens if I do not terminate employment as specified on my Form DP-ELE?
If you fail to terminate by the date specified on your Form DP-ELE, you will lose your
accumulated DROP accrual, your retirement will be canceled, and your FRS
membership will be reestablished retroactive to the date you began DROP. Your
employer must pay any additional contributions required to reestablish your FRS service
credit.


What forms must I complete to verify my DROP termination and to select my
DROP payout method?

You must complete Form DP-TERM, Deferred Retirement Option Program Termination
Notification to certify that you have terminated your FRS employment. Form DP-PAYT,
Deferred Retirement Option Program Selected Payout Method is provided for you to
choose your DROP payout option. Even though you may submit Forms DP-TERM and
DP-PAYT to the division before your terminate employment, the DROP funds cannot be
paid (rolled over or lump sum) until the month following your DROP termination. If you
do not select a distribution method within 60 days of your termination date, you may be
issued a lump-sum payment with 20 percent withheld for federal income taxes.


How do I receive my DROP account money?
Your accumulated DROP benefits may be paid to you after your DROP employment
termination is verified and you select your DROP payout method. Deferred Retirement
Option Program accounts are paid to you in one of three ways; a direct rollover to an
eligible retirement plan, a lump sum payment, or a combined partial lump sum payment
and rollover.


If I decide to roll over my DROP account, what are my rollover options?
The law states that rollovers from the FRS Pension Plan must be paid directly to the
custodian of an eligible retirement plan as defined in section 402(c)(8)(B) of the Internal
Revenue Code (IRC). An eligible retirement plan includes the following plans:

 

  •  An Individual Retirement Account as described in section 408(a), IRC, which

includes a non-designated ROTH IRA.

  • An Individual Retirement Annuity as described in section 408(b), IRC (an annuity

set up by an insurance company).

  • A Qualified Trust -- a stock bonus, pension or profit sharing plan of an employer

(both defined contribution and defined benefit plans) with provisions to accept
rollovers that is established in accordance with section 401(a), 401(k), or 403(b)
of the IRC, for the sole and exclusive benefit of employees or their beneficiaries.
For purposes of a rollover, state law allows DROP assets to be rolled into the
FRS Investment Plan, which is a qualified trust plan.

  •  An Annuity Plan as described in section 403(a), IRC.

  •  An Annuity Plan as described in section 403(b), IRC.

  •  Deferred Compensation Plans of State and Local Governments as described in

section 457(b), IRC.

  • A Deferred Compensation plan as described in section 401(k), IRC.


How will my DROP benefits be taxed?
At the end of DROP, if you elect to have your DROP accumulation rolled over to an
eligible retirement plan, there will be no taxes due on the amount rolled over until you
begin to withdraw funds from the eligible retirement plan. If you elect to receive a total or
partial lump-sum payment of your DROP accumulation, the lump-sum amount will be
taxed as ordinary income the year you receive it. The division is required to withhold
20 percent federal taxes on this distribution. When you file your income tax forms for that
calendar year you may also owe additional taxes (depending on your tax bracket). For
example, a lump-sum distribution of $100,000 would require the division to automatically
withhold 20 percent ($20,000). Income tax forms for that year would reflect the lumpsum
amount you received plus the credit for the 20 percent tax already withheld. A
member in the 28 percent tax bracket would owe an additional 8 percent tax ($8,000), in
effect reducing the lump-sum benefit from $100,000 to $72,000. In addition, other taxes
may be due if you are under age 55 (age 50 for public safety officers) at the time you
terminate your DROP participation.

What is the Internal Revenue Service’s Simplified Method?
The Internal Revenue Service’s (IRS) Simplified Method calculates the monthly amount
of your benefit that is not taxable because it is a recovery of your after-tax employee
contributions. The Simplified Method calculation distributes the after-tax contribution
recovery monthly over a period of years. If you have any after-tax employee
contributions included in the benefits accumulated during your DROP participation, a
separate check will be issued to you at the time your DROP payout is issued.


Toll Free Phone Number
Does the division have toll free phone numbers?
Yes. The division offers toll free telephone access for members outside the Tallahassee
local calling area. Information and telephone numbers posted on the Contact Us page of
the division’s website will help you reach the division. 
 

*Information obtained from the DMS webiste (https://www.rol.frs.state.fl.us/forms/DROP-FAQ.pdf )