Opinion ID: 4104925
Heading Depth: 2
Heading Rank: 1

Heading: The DROP (Deferred Retirement Option Plan)/ Plan B.

Text: ¶8 Title 11 O.S. 2011 §§49-100.1 - 143.6. govern the Oklahoma Firefighters Pension and Retirement System (the System). 3 The eligible retirement date for a member of the System is the date in which the member completes 20 years of credited service or 22 years of credited service plus attainment of the age 50, depending on whether the member's start date is before or after November 1, 2013. 4 Under the traditional path to retirement, any firefighter who reaches the retirement date and retires from service, is paid a monthly pension equal to their accrued retirement benefit. 5 ¶9 An alternative to the traditional route is that a member may elect to participate in what is known as the DROP or commonly called Plan B. Under the DROP plan, in lieu of terminating employment and accepting the traditional retirement pension, 6 an eligible member may elect to defer the receipts of benefits under the plan and continue working, but not continue to increase their years of credible service. 7 Eligibility under this plan is also 20 years of credible service or 22 years, if employment was on or after November 1, 2013. 8 The duration of participation may not to exceed five years and, at the conclusion of participation, employment terminates. 9 ¶10 When the member participates in the DROP, the contributions of the member cease, but the employer contributions continue and interest are credited to the DROP account. 10 The monthly traditional retirement benefits that would have been payable had the firefighter chosen to retire on the date they join the DROP plan are deposited into the DROP account. 11 This is the first time the DROP account is funded. ¶11 At the end of the DROP period (not more than five years), the participant may then receive a lump-sum payment from the account equal to the payments which were made into the account. 12 In other words, once a firefighter is vested in the pension system, he or she will also be eligible to elect the DROP plan when the firefighter retires. The day the firefighter does elect the DROP plan, their pension payments would be calculated and deposited monthly into the DROP account as long as the firefighter continues to work for up to 60 months maximum. Employer contributions and interest are also credited to the account. Upon leaving employment, the firefighter would then receive both a lump-sum payment, and a monthly pension payment (calculated as if they had retired on the day they elected to participate in the DROP plan.) 13 ¶12 Enrolling in the DROP is merely another way for firefighters to begin receiving pension benefits. The advantage of not opting to do the DROP would be a higher pension benefit based on a longer number of credible service years. On the other hand, the advantage of opting to do the DROP, would be receiving a lump-sump payment, and continuing to receive a salary for a few extra years, even though ultimately, the monthly pension benefit would be lower than if they had started collecting traditional retirement benefits.