A 2-page, step-by-step guide to the deadlines, forms, and payout choices FRS members face when DROP ends.
Educational only.
Several FRS choices are permanent. Plan before you sign.
Your 2nd Election. You get one chance during your career to switch between the Pension Plan and the Investment Plan, and that chance goes away once you retire or enter DROP.
Entering DROP. Joining DROP freezes your pension calculation, sets your termination date, and ends the service credit you earn toward your pension.
Your Payout Option (1–4). Your choice decides what your spouse or beneficiary gets after you die. Once you cash or deposit your first benefit payment, it generally can't be changed.
What You Do With Your DROP Payout. A lump sum, a rollover, or a mix of both can't be undone once it's paid, and each has a different tax result.
1. Taking the DROP payout directly without a tax plan. When an eligible distribution is paid to you, 20% federal withholding is required, and the full amount can still count as taxable income that year. Not sure which payout path fits you? Book a free review.
2. Forgetting the Health Insurance Subsidy (HIS). HIS isn't paid during DROP and doesn't start on its own. You have to complete and return the HIS-1 certification form, and back payments are limited to six months. Want help making sure nothing gets missed? Book a free review.
3. Rolling everything into an IRA without checking your early-access rules. Some FRS and 457 money can be withdrawn before age 59½ without the 10% penalty. Rolling it into an IRA can take that flexibility away. Check your options first. Book a free review.
4. Choosing a payout option without modeling your spouse's income. Options 1–4 pay very different survivor benefits, and the choice is generally final. Compare them side by side. Book a free review.
5. Missing DROP deadlines or reemployment rules. If your termination paperwork is late, or you return to FRS employment too soon after retiring, your benefits can be at risk. Get your timeline mapped out. Book a free review.
Teachers & School Staff
Police, Fire & Special Risk
State & County Employees
Plan your DROP exit around the school calendar and your payout options. Instructional staff may qualify for special DROP extension rules.
Special Risk members follow their own retirement and DROP eligibility rules. Get help with timing, payout choices, and early-withdrawal planning.
From choosing between the Pension Plan and the Investment Plan to life after DROP, get a clear plan that fits your agency, your service years, and your goals.
• Where you stand: your plan, membership class, and retirement or DROP dates
What to Bring
• A recent FRS statement or benefit estimate (from FRS Online or MyFRS)
• Pension vs. Investment Plan and 2nd Election questions
• DROP entry or exit timing and your payout and rollover choices
• Your DROP start and end dates, if you're in DROP
• 457, 403(b), and IRA balances
• Choosing a payout option (1–4) for you and your family
• Your Social Security estimate (from my Social Security)
• Health Insurance Subsidy and Social Security coordination
• Your questions, and your spouse if possible
• A clear list of next steps, with no obligation
• MyFRS - plan education, Choice Service, free Financial Guidance Line
• FRS Online - Pension Plan account, estimates, DROP application
• Official DROP Guide (PDF)
• DROP FAQ (PDF)
• my Social Security - your SSA earnings and benefit estimates
