DROP
The Deferred Retirement Option Plan (DROP) is a plan in which, instead of terminating employment and receiving a retirement annuity, you can continue to work while accruing benefits in a separate account, payable to you whenever you terminate employment and retire. Participating in the DROP, therefore, provides you with the ability to begin accruing benefits without having to make the final decision to terminate employment.
- You must have a minimum of 28 years of actual service to enter the DROP. With 28 years of service, you will receive a monthly accrual equal to 63% of your retirement benefit.
- For each additional month of actual service until you reach 30 years, the monthly accrual percentage increases by one-half of one percent (0.5%). The maximum percentage is 75%, which you reach at 30 years of actual service.
Partial Annuity Withdrawal (PAW)
If you work beyond the date at which you are eligible for an unreduced monthly benefit, you are eligible to take an advance payment of part of your annuity as a lump sum payment. For some retirees, PAW is a good option to access funds as an upfront payment.
- This optional benefit allows you to receive up to 60 months of your monthly annuity as a lump sum.
- The number of months eligible for PAW will be determined by how many full months of service credit you earn after you are eligible for an unreduced monthly benefit.
- If you elect PAW, your monthly benefit will be adjusted downward, based on your age, to reflect the upfront lump sum payout.
- You cannot participate in both DROP and PAW.
How-To
If you are ready to apply for the DROP, you may apply in myAPERS by clicking Your Benefits, then Apply for Benefits. If you prefer a paper application, contact APERS at 501-682-7800.
If you are eligible to apply for PAW, you may do so when completing a retirement application. For an myAPERS application, you will elect PAW as you are completing your application. If you call to request a paper application, mention that you would also like a PAW application.
Frequently Asked Questions
When can I apply for DROP?
Our application deadlines are available at www.apers.org. You must apply no earlier than 90 days and no later than 30 days in advance of your effective DROP entry date.
What happens to my DROP funds if I die while in the DROP?
If you die while participating in the DROP, your accumulated DROP funds will be paid to your named beneficiaries. You must designate DROP beneficiaries as part of your application to enter the DROP.
When can I apply for PAW?
You will apply for PAW at the same time you complete your retirement application. Our application deadlines are available at www.apers.org. You must apply no earlier than 90 days and no later than 30 days in advance of your effective retirement date.
Considerations
For DROP, you should consider whether you will be ready to retire ten years from your DROP entry date. DROP participants are required to terminate employment and retire at the end of 10 years. Also, because your benefit is calculated based on the service and compensation at the time of DROP entry, any subsequent raises in your compensation will not factor into your benefit. For example, if you anticipate a significant raise soon, you may wish to delay or forgo DROP entry to continue accruing service and to enable your higher compensation to be reflected in your benefit.
For PAW, you should consider the effect of PAW on your monthly benefit. Your monthly benefit is reduced when you elect PAW, with more months of PAW leading to a greater reduction. You will need to evaluate how much monthly benefit you will need versus what you will receive in the lump sum PAW payment.