FLORIDA RETIREMENT SYSTEM · FEE-ONLY FIDUCIARY ADVISOR
Considering the Deferred Retirement Option Program (DROP retirement Florida)? Get expert guidance on timing, rollovers, tax strategy, and investment planning from a fee-only fiduciary who specializes in Florida public employee retirement.
UNDERSTANDING THE PROGRAM
The Deferred Retirement Option Program (DROP) is a special benefit available to members of the Florida Retirement System (FRS) Pension Plan. DROP allows eligible public employees to “retire” on paper while continuing to work for their FRS employer — and their monthly pension benefits accumulate in a tax-deferred account instead of being paid out.
Think of it this way: once you enter DROP, your retirement benefit is calculated and locked in. Each month, that benefit is deposited into your DROP account where it earns interest. Meanwhile, you continue working, earning your regular salary, and accumulating a significant lump sum that you’ll receive when you terminate employment.
The DROP retirement plan in Florida was designed to give experienced public servants — teachers, law enforcement officers, firefighters, state employees, and county workers — a powerful financial bridge between active employment and full retirement. When used strategically, it can result in a six-figure lump sum that, combined with your ongoing pension and Social Security, can fund the retirement you’ve earned.
However, the decisions you make before, during, and after DROP are critical. Timing, tax planning, rollover strategy, and investment allocation can mean the difference between a comfortable retirement and leaving tens of thousands of dollars on the table.
FRS DROP PROGRAM AT A GLANCE
Annual Interest Rate
Effective July 1, 2023. Increased from the previous 1.3% rate.
Maximum DROP Period
Up to 8 years. Instructional personnel may qualify for up to 120 months.
Cost to Participate
No enrollment fees. Your pension accumulates automatically in your DROP account.
Rollover Deadline
Choose your distribution method within 60 days of termination or face automatic lump-sum payout.
WEIGH YOUR OPTIONS
✅ Advantages of DROP✔️ Accumulate a significant tax-deferred lump sum ✔️ Continue earning your full salary while “retired” ✔️ Lock in your pension benefit at the highest calculation ✔️ 4.0% guaranteed annual interest on your DROP balance ✔️ Maintain employer health insurance during DROP period ✔️ Rollover options provide tax-efficient distribution flexibility ✔️ No cost to enroll — participation is free |
❌ Limitations to Consider✖ Pension benefit is frozen — no additional service credit accrues ✖ No cost-of-living adjustments during DROP period ✖ 4.0% interest may underperform market returns in strong years ✖ Must terminate employment when DROP period ends ✖ Lump-sum payouts face 20% mandatory federal withholding ✖ Complex tax implications require professional guidance ✖ Only available to FRS Pension Plan members (not Investment Plan) |
Not sure whether the pros outweigh the cons for your situation? Request a free personalized DROP analysis →
BEFORE YOU DECIDE
Timing is everything. Entering DROP too early means a lower pension calculation. Waiting too long could mean missing years of accumulation. The optimal entry point depends on your salary trajectory, years of service, membership class, and personal financial goals. A financial advisor experienced with the FRS DROP program can model multiple scenarios to identify your ideal entry date.
This is the most consequential financial decision most DROP retirement Florida participants face. Taking a lump sum triggers 20% mandatory federal tax withholding and potential early distribution penalties. Rolling your DROP balance into an IRA or other qualified plan defers taxes and gives you control over withdrawals. You can also do a partial lump sum with a partial rollover. Each option has different tax, investment, and estate planning implications that should be analyzed carefully.
Many Florida public employees also qualify for Social Security. The interplay between your FRS pension, DROP lump sum, and Social Security claiming strategy can significantly impact your total lifetime retirement income. Coordinating when to claim Social Security with your DROP exit timing and pension start date requires careful analysis. Some DROP participants benefit from delaying Social Security to age 70 while living off their DROP balance and pension.
If you roll your DROP balance into an IRA, withdrawals before age 59½ may trigger a 10% early distribution tax penalty in addition to regular income taxes. However, there are exceptions. The Rule of 55 may apply if you separate from service after age 55, and certain rollover strategies can provide penalty-free access. An experienced DROP financial advisor can structure your distribution plan to minimize penalties while maintaining access to your funds when needed.
Your DROP balance likely represents the largest single sum of money you’ll ever manage. Investing it wisely is essential. The right strategy depends on your age, risk tolerance, other income sources (pension, Social Security, spouse’s income), and retirement spending needs. A diversified, fee-conscious portfolio designed to generate sustainable income while preserving capital is typically appropriate — but one size does not fit all. See how advisory fees impact your wealth over time with our Fee Impact Calculator.
YOUR DROP FINANCIAL ADVISOR
As a fee-only fiduciary, we never earn commissions on products we recommend. Our only incentive is helping you make the best possible decisions with your DROP retirement benefits.
We model multiple entry and exit scenarios to identify the optimal DROP timeline based on your salary, service years, and personal goals.
Full rollover, partial lump sum, or FRS Investment Plan transfer — we analyze every option to minimize taxes and maximize flexibility.
Roth conversion strategies, tax bracket management, and multi-year distribution planning to keep more of your DROP money. Learn more about our tax planning services.
Evidence-based portfolios designed to generate retirement income from your DROP balance while managing risk. Explore our investment strategy.
Optimize the interplay between your FRS pension, DROP lump sum, and Social Security claiming strategy to maximize lifetime income.
Ensure your DROP retirement Florida benefits and pension survivor options are structured to protect your family. See our estate planning services.
Get a comprehensive DROP retirement analysis from a fee-only fiduciary advisor — no sales pitch, no commission pressure, just clear guidance.
IS DROP RIGHT FOR YOU?
Special Risk Class members with earlier retirement eligibility and unique DROP considerations including the enhanced benefit formula and hazardous duty provisions.
Instructional personnel may qualify for up to 120 months in DROP — the longest participation window. Coordinating with 403(b) plans and summer income adds complexity.
Special Risk Class firefighters face unique decisions around early retirement dates, disability considerations, and second-career planning after public service.
Regular Class FRS members in agencies, courts, universities, and local government who have reached normal retirement eligibility and want to maximize their final benefit.
Check your financial wellness and retirement readiness in 2 minutes with our free Financial Wellness Quiz.
We’ve helped dozens of Florida public employees — teachers, law enforcement officers, firefighters, and state workers — navigate their DROP decisions with clarity and confidence. Our fee-only approach means we have no incentive other than helping you get the best possible outcome.
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FREE RESOURCE
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📍 684 SE Monterey Road, Stuart, FL 34994
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Serving DROP participants and FRS retirees across Florida’s Treasure Coast & Palm Beaches: Stuart · Jupiter · Palm Beach Gardens · West Palm Beach · Port St. Lucie · Hobe Sound · Palm City
FREQUENTLY ASKED QUESTIONS
As of July 1, 2023, the FRS DROP interest rate is 4.0% annually. This was increased from the previous 1.3% rate through legislation (SB7024). Interest is compounded monthly on your accumulated pension benefits in the DROP account. Visit MyFRS.com for the latest official rate information.
Most FRS members can participate in DROP for up to 96 months (8 years). Instructional personnel (teachers and certain school employees) may qualify for an extended period of up to 120 months (10 years). Your DROP participation begins on the first day of the month following your election.
Yes. You can roll your DROP accumulation directly into a traditional IRA, Roth IRA (taxes apply on conversion), 401(k), 403(b), or other eligible retirement plan. Direct rollovers avoid the mandatory 20% federal tax withholding that applies to lump-sum distributions. You must elect your distribution method within 60 days of terminating employment, or you may be issued an automatic lump-sum payout.
You must be an active FRS Pension Plan member who has reached normal retirement eligibility. For members enrolled before July 1, 2011: age 62 with 6+ years of service, or 30 years of service at any age. For members enrolled on or after July 1, 2011: age 65 with 8+ years of service, or 33 years of service at any age. Special Risk Class members have earlier eligibility. FRS Investment Plan members are not eligible for DROP.
While not required, working with a financial advisor who specializes in the FRS DROP program can help you avoid costly mistakes. The rollover decision alone involves tax bracket analysis, penalty avoidance strategies, investment allocation, and coordination with Social Security and your ongoing pension. A fee-only fiduciary advisor — one who cannot earn commissions on products — ensures the advice you receive is 100% in your interest. Learn more about our retirement planning approach.
If you pass away while in DROP, your named beneficiary will receive the balance accumulated in your DROP account. Your beneficiary may also be eligible for survivor pension benefits depending on the retirement option you selected when entering DROP retirement Florida. It is critical to review and update your beneficiary designations and consider survivor benefit options carefully. Our estate planning team can help ensure your family is protected.
LEARN MORE
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Florida Retirement GuideEverything you need to know about retiring in Florida |
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Fee Impact CalculatorSee how advisory fees affect your DROP rollover over time |
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FRS Investment Plan GuideCompare your options in the FRS system |
Davies Wealth Management is a SEC-registered investment advisor. All investments involve risk, including potential loss of principal. Past performance does not guarantee future results. This website is for informational purposes only and does not constitute investment advice. The information on this page regarding the Florida Retirement System DROP program is believed to be accurate as of April 2026 but may change. Always verify current rules at FRS.fl.gov or MyFRS.com. Davies Wealth Management is not affiliated with the Florida Retirement System.