Deferred Retirement Option Program (DROP) · are in the military for the balance of the elected...
Transcript of Deferred Retirement Option Program (DROP) · are in the military for the balance of the elected...
DROP will be paid into a
DROP account in lieu of
being paid to the partici-
pant. Upon separation
from City employment,
the participant will re-
ceive the DROP account
balance and begin receiv-
ing the monthly retire-
ment benefit.
The Deferred Retirement
Option Program (DROP)
allows an eligible Public
Safety Member (sworn
police officer or fire-
fighter) to defer receipt of
unreduced retirement
benefits while continuing
employment with the
City of Richmond without
loss of any other em-
ployee benefits. Eligible
members may elect to
participate in the pro-
gram for up to five (5)
years. Upon an eligible
Member's election to par-
ticipate in DROP, the
amount of creditable ser-
vice and the three-year
average final compensa-
tion becomes frozen for
purposes of determining
pension benefits. The
participant is considered
a retired Member for all
purposes related to the
Richmond Retirement
System (the System) and
does not accrue addi-
tional retirement benefits
under the System, except
for cost-of-living adjust-
ments (COLA), if applica-
ble. The monthly retire-
ment benefit under the
What Is DROP?
Frequently Asked Questions Q. How does DROP
work?
A. Once you enter DROP,
you continue your em-
ployment with the City
of Richmond and the
retirement benefits you
would have received if
you had stopped work-
ing are credited
monthly to your DROP
account. You remain eligi-
ble for promotions, pay
increases and benefits,
such as annual leave and
sick leave. You are subject
to all of the same laws and
regulations regarding em-
ployment that you were
subject to prior to entering
DROP.
Public Safety Members
Deferred Retirement
Option Program (DROP)
What’s Inside:
A Brief DROP
Overview
*
An Explanation of
Who is Eligible for
DROP and When
*
How DROP Works
with other
City Benefits
*
How to Calculate an
Estimate of Benefits
*
Applying for DROP
*
Account
Accumulation
*
Account Distribution
*
Disability Benefits
*
Death Benefits
C I T Y OF R I C H M O N D
RICHMOND RETIREMENT
SYSTEM
Q. When am I eligible to
participate in
DROP?
A. You are eligible to par-
ticipate in DROP when
you become eligible for
an unreduced benefit.
The eligibility require-
ments are as follows:
1. Defined Benefit Plan
Member- 25 years of
creditable service as a
sworn police officer or
firefighter.
2. Defined Benefit Plan
Member with the En-
hanced Option - 20
years of creditable ser-
vice as a sworn police
officer or firefighter.
3. Upon reaching normal
retirement age of 60.
Q. Can I use my unused
sick leave to meet the
service eligibility
requirement?
A. Yes. You can convert
all or a portion of your
unused sick leave to
reach the service eligi-
bility requirement. You
will receive creditable
service for 50% of your
converted unused sick
leave.
Q. How soon must I sub-
mit my application to
participate in DROP?
A. Your application must
be received in the
Retirement Office no
later than sixty (60)
days prior to your effec-
tive retirement date.
Q. Must I schedule an
appointment with a
counselor to submit
my DROP applica-
tion?
A. No. However, counsel-
ors are available to meet
with you, if requested.
tenure in DROP. How-
ever, when you exit
DROP, standard deduc-
tions such as federal and
state income taxes are
withheld. Monthly pre-
miums for health/dental
insurance coverage will
be withheld if you are
eligible for coverage
and elect to continue the
coverage. Also, court
ordered child support
payments will be de-
ducted, if applicable.
Frequently Asked Questions
Q. Will I receive a DROP
account statement?
A. Yes. You will receive an
account statement twice
a year, once after June
30 and the other after
December 31.
Q. What deductions are
withheld from my
monthly retirement
benefits?
A. Your benefit is not
subject to payroll
deductions during your
Q. What if I enter DROP
and then change my
mind?
A. Once your effective date
of retirement has passed
you may not rescind
entering into DROP.
You may only rescind
your election into DROP
prior to your effective
retirement date.
Q. How long can I elect to
stay in DROP?
DROP is an
investment tool
that allows a
retiree to
invest in
themselves
while
continuing to
work for the
City.
Page 2 Public Safety Members
A. You may elect to partici-
pate in DROP for a
maximum of five years.
If you decide to leave
City service on schedule
or at an earlier date, you
must give 60 days writ-
ten notice to the Retire-
ment Office and your
department.
Q. Will I still contribute
to the System once I
enter into DROP?
A. No. Your contributions
to the System will stop
upon you entering DROP.
Q. Can I use my unused
sick leave to increase
my monthly retirement
pension when I enter
DROP?
A. Yes. However, conversion
of your unused sick leave
will not benefit you if your
creditable service is greater
than 35 years (maximum
years used in the benefit
calculation).
Q. Will I receive a cost-
of-living adjustment
(COLA) on the monies
in my DROP account?
A. COLAs may be granted
at the discretion of City
Council during the an-
nual budget process for
the City of Richmond.
The practice has been
that COLAs are granted
July 1 for persons retired
prior to July 1 of the pre-
vious year.
DROP can help you prepare for DROP can help you prepare for DROP can help you prepare for DROP can help you prepare for
your retirement years.your retirement years.your retirement years.your retirement years.
Time and Money Time and Money Time and Money Time and Money –––– Let DROP Let DROP Let DROP Let DROP
help you to have both.help you to have both.help you to have both.help you to have both.
Q. How does the health
and dental insurance
plan work in and out
of DROP?
A. Group health and den-
tal insurance benefits
continue during DROP
at the same monthly
premium as for any
other active employee.
When a member exits
DROP, the member may
continue coverage with
the City at the retiree
rate, if eligible.
Q. Will I still have group
life insurance cover-
age during and after
DROP?
A. Yes. Your coverage
and cost sharing
arrangements will
continue during DROP
as they would for any
other active employee.
Upon exiting DROP
coverage will continue
at no cost to you. Please
refer to your Certificate
of Insurance for details.
amount allowed by the
City for your vacation and
compensatory leave not
taken while employed
with the City. However,
any unused sick leave will
be forfeited upon exiting
DROP.
Q. Can I contribute to the
City’s 457 Deferred
Compensation Plan
while in DROP?
A. Yes. Being in DROP has
no effect on participation
in the 457 Plan.
Q. What happens to my
money when I exit
DROP?
You may receive your
DROP money by rolling
your monies directly
into a qualified retire-
ment plan as defined in
Section 401(a), 401(k),
403(b), or 457 of the
Internal Revenue Ser-
vice Code, an individual
retirement account, or
an individual retire-
ment annuity. You may
also elect to receive your
DROP money in a lump
sum, less any federal
and state withholding
taxes. No funds will be
dispersed until your
Drop Distribution Elec-
tion Form is received in
the Retirement Office.
Q. What happens to my
sick leave, vacation
leave and compensa-
tory leave when I exit
DROP?
A. You will be paid up to
the maximum dollar
Frequently Asked Questions
Q. What happens to my
DROP account if I
become disabled?
A. If you become disabled
and it is non-service con-
nected, you will exit
DROP and receive your
monthly retirement bene-
fit along with your DROP
account balance. You
cannot apply for disabil-
ity retirement. If your
disability is service con-
nected, you have two
options. You may apply
for a Compensable
Disability retirement
and if you are approved,
you will forfeit your
DROP account; or you
may receive your
regular retirement
benefit as calculated
when you entered
DROP along with your
account balance.
Q. What happens to my
account balance if I
should die during the
DROP period?
Q. What happens if my
participation in the
DROP is interrupted
by military service?
A. Your DROP retirement
allowance will continue
to be deposited into
your account while you
are in the military for
the balance of the
elected term, unless you
terminate employment
with the City of Rich-
mond.
“Retirement is
wonderful if you
have two
essentials-much
to live on and
much to live for”
Author Unknown
Page 3 Public Safety Members
Build your financial Build your financial Build your financial Build your financial
nest egg with DROP.nest egg with DROP.nest egg with DROP.nest egg with DROP.
You maintain health
and dental coverage
while in DROP.
A. If your death is service-
connected, your account
balance will be forfeited
and monthly retirement
benefits will be paid to
your surviving spouse
or, if no spouse, to your
child or children under
the age of 18. If your
death is non-service
connected, your benefici-
ary will receive your
account balance and a
survivor allowance if
elected upon entering
DROP.
Phone: 804.646.5958
Fax: 804.646.5299
Website:
www.richmondgov.com/
retirement
Calculate Your Estimate of Benefits
Public Safety Members
Deferred Retirement
Option Program
Frequently Asked Questions
in the DROP Exit
Process on our website.
Your DROP exit date
should be the last work-
ing date of the month.
You will receive your
first retirement benefit
directly on the following
month’s payroll. If you
do not follow the guide-
lines, you may delay
the disbursement of
your benefits. It is
recommended that you
seek advice from your
financial planner or
tax advisor before you
elect your DROP account
distribution option
(lump-sum payment or
a direct rollover to a
qualified plan).
Q. Can I continue to
contribute to the 457
Plan after I leave
City employment?
A. No. A member cannot
contribute to the plan
after leaving the City.
Q. How do I exit from
DROP?
A. The guidelines for exit-
ing DROP are located at
www.richmondgov.com/
retirement. You must
give sixty (60) days no-
tice to the Retirement
Office and your depart-
ment of your intention
to exit DROP and you
must complete the re-
quired forms indicated
Philip R. Langham
Executive Director
Benefits Unit
Judith Nicholas
Manager
Chris Ellis
Retirement Benefits Coordinator
Trina Smith
Retirement Benefits Coordinator
Forms to complete when
exiting DROP
1. DROP Distribution
Election Form
2. Direct Deposit
Authorization Form
(Must include a voided
check or a savings deposit
slip)
3. Federal Tax Withholding
Certificate
4. State Tax Withholding
Certificate
5. Health/Dental Insurance
Deduction Authorization/
Waiver Form
To project your monthly retirement
benefit, you may choose to:
Use the Richmond Retirement System
Website Calculator at
www.richmondgov.com/retirement
or
Perform a manual calculation using
the formula cited below:
1.65% x AFC x Years of Service (maximum 35)
12 months
NOTE: There is also a pre-65 supplement of .75 percent, up to a maximum of 25
years of service. Example for a member with 25 years of service:
1.65% x AFC x 25 years = 41.25% - after age 65
.75% x AFC x 25 years = 18.75%
60.00% - before age 65
AFC = Average Final Compensation
C I T Y OF R I C H M O N D
RICHMOND RETIREMENT
SYSTEM
This brochure is intended only to provide general information regarding DROP. In the event of any conflict between the information
contained in this brochure and the provisions of Chapter 78 of the Code of the City of Richmond the provisions of the Code will govern.
= Unreduced Monthly Benefit
Richmond Retirement System
900 East Broad Street
Room 400
Richmond, Virginia 23219