Opinion ID: 1148886
Heading Depth: 1
Heading Rank: 2

Heading: Deferred Retirement Option Plan

Text: The DROP program is described by LASERS in its publication to members as follows: DROP is an optional method of retiring from the Louisiana State Employees' Retirement System (LASERS).... When an employee enters DROP, his status in LASERS changes from active member to retiree, even though he continues working at his regular job. The employee can participate in DROP for up to three years. During his DROP participation, he accumulates money in an individual account based on what he would have received as a monthly retirement benefit. He also continues to earn his regular salary. He can withdraw the money from his DROP account after he ends state employment-either as a lump sum or a series of payments spread out over time. La.Rev.Stat. 11:447-451 authorize a state employee who is eligible for retirement to participate in the deferred retirement option plan, [i]n lieu of terminating employment and accepting a retirement allowance. La. Rev.Stat. 11:447 A. Under DROP, an eligible state employee may enroll in the plan and is thereafter considered by the system to be in a retired status for the period he or she participates in the program. La.Rev.Stat. 11:448 A. Although the employee continues to work, payments are credited monthly into the employee's DROP account in the amount of the retirement benefits that the employee was eligible to receive if he or she had retired. La.Rev.Stat. 11:448 C. The base amount of the employee's eventual monthly retirement benefits is fixed as of the time he or she enters the DROP program. La.Rev. Stat. 11:448 B. The employee does not receive the funds credited into the account until he or she actually retires, La.Rev.Stat. 11:450 A, but neither does the employee receive any service credit in the calculation of the eventual monthly retirement benefits for the years that the employee continues to work while in the DROP program. La.Rev. Stat. 11:448 B. As far as LASERS is concerned, the employee is retired and is credited in the DROP account with the amount of retirement benefits that would be due; as far as the employer is concerned, the employee continues to work and receives the salary for work performed; and as far as the employee is concerned, he or she receives the salary for the work performed and receives credit in the DROP account (which is not available to the employee until sometime in the future) for the retirement benefits that would have been paid had he or she retired, but is ineligible during the DROP period for accruing additional credits toward the calculation of either the base retirement benefits or the possible supplemental benefits earnable upon employment after the DROP period ends. After the period of participation in the DROP program, the employee, if he or she elects to remain in service, begins accruing additional service credit in the calculation of his or her eventual monthly retirement benefits, but such additional credit is in the nature of a supplemental pension, in addition to the base benefits that were fixed at the time the employee entered the DROP program. La.Rev.Stat. 11:450 D.