DROP Program Overview and Requirements

The Deferred Retirement Option Program (DROP) Seminar 2023-2024 provides detailed information on the DROP program, pension retirement requirements, and pension plan basics for employees of the Office of Retirement Services. Learn about eligibility criteria, benefits, and considerations regarding retirement under the DROP program. Contact Retirement Services for further assistance.

• Retirement Program
• Pension Plan
• DROP Seminar
• Financial Planning
• Retirement Benefits

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1. Deferred Retirement Option Program (DROP) Seminar 2023-2024

2. Presented by: Office of Retirement Services Contact Information 407-317-3227 Retirement.services@ocps.net www.ocps.net click on Departments > Retirement Services > Current Employees Disclaimer If questions arise as a result of this presentation or the materials provided, Chapter 121, Florida Statutes Chapter 605 Administrative Code and the Internal Revenue Code shall remain the final authorities.

3. Retirement Services Staff Sandra Brookins-Crudup: Retirement Specialist Marcia Patton: Retirement Specialist Sheron Legette: Retirement Specialist Olga Rivera: Section Leader

4. Pension Retirement Regular Retirement requires either of the following: 30 Years of service, regardless of age OR Age 62 with at least 6 years of FRS service Whichever event happens first This applies to those employees enrolled BEFORE 7/1/2011

5. Pension Retirement Cont For those hired ON or AFTER 07/01/2011 Regular Retirement requires either of the following: 33 Years of service, regardless of age OR Age 65 with at least 8 years of FRS service Whichever event happens first

6. Pension Plan Basics Guaranteed lifetime monthly benefit Based on a formula created by FRS Non-contributory system from 1975- June 2011 Defined benefit plan No risk to the employee

7. Deferred Retirement Option Program (DROP) You must meet Pension Retirement requirements Must be retired with FRS- No additional service or salary credit will be used in the calculation of your benefit You will no longer have to contribute 3% from your paycheck earnings Your Insurance benefits do not change while you are in DROP, unless you change it You still earn sick leave and/or vacation leave while you are in DROP You MUST be in the Pension Plan 7

8. FRS Website & Estimates https://frs.fl.gov/#/login Follow the steps Create your own Account to access your information: 8

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11. Estimate printout 11

12. Purchasing years of service in the Pension Plan Out of State and Federal Public Service Withdrawn or refunded service Leave of Absence Military Service OCPS pays the Military Leave of Absence on behalf of the employee if it occurred PRIOR to 07/01/2011 If all or part of your Military leave occurred on or after 07/01/2011, you must pay any required employee contributions, plus interest If Military Leave of Absence you must provide a copy of leave form, Orders and DD-214 upon return to OCPS

13. Service Credit Fiscal Year runs from July 1 through June 30 You receive service credit for each month you are actively employed and receive a pay check Less than complete work year 10 month employee (5/10 = .50) 12 month employee (5/12 = .42)

14. Value Per Year Regular Class Service Age 62 or 30 years Age 63 or 31 years Age 64 or 32 years Age 65 or 33 years 1.60% 1.63% 1.65% 1.68% Senior Management 2.00% Special Risk 3.00%

15. Basic Benefit Formula Add together the Average of your HIGHEST five or eight years of salary/earnings (depending on if hired before or after 07/01/2011) = AFC Then calculate: Years of Service X Value per Year X AFC = Option 1 of Annual Benefit at Regular Pension Retirement Divided by 12 = Option 1 Monthly Benefit

16. Benefit Payment Options You must choose your option at Pension Retirement/DROP entry OPTIONS: 1. Highest benefit option for you only- no benefits paid after your death 2. Choose a Beneficiary to receive your benefit for guaranteed up to 10 years 3. Benefit continues to a qualified Joint annuitant 4. Reduced continuing benefit to surviving joint annuitant

17. Beneficiary Designation If you choose option 1 or 2 Your beneficiary can be anyone you choose- if NOT your spouse, they must sign the SA-1 form If you choose option 3 or 4 Must be your Spouse or qualified Joint Annuitant A joint annuitant may be one or more of the following: Your spouse Your natural or legally adopted child who is under age 25 or who is physically or mentally disabled and incapable of self support Anyone for whom you are the legal guardian and who is dependent upon you for at least one half of his or her financial support Your parent or grandparent who is dependent upon you for not less than one half of his or her financial support 17

18. DROP You MUST establish a future termination date Program runs for a maximum of 96 months/8 years Retirement Benefits are Banked while you continue to work and earn a paycheck Your banked benefits will earn 4% interest compounded monthly Effective 07/01/2011 you will receive a Cost of Living Increase (COLA) Based on creditable years of service through June 2011

19. Applying For Pension/DROP Entry Call for a group appointment with Retirement Services to: Apply for Retirement/DROP 1 to 3 months in advance of your Retirement/DROP date, or at least by your ELIGIBILITY date to prevent unnecessary delay Need birth date verification for member & spouse as well as marriage license depending on your option choice Your Driver s License- for notarization purposes Need spousal acknowledgement, if married (option 1 or 2) Designate a beneficiary(s) You will need their Names, SSN s, DOB s, Address & Phone # s 19

20. Extension of DROP K-12 Instructional Personnel Effective July 1,2023- Florida Statute hereby has authorized the extension of the Deferred Retirement Option Program (DROP) period from 96 months to 120 months Approval of extending the DROP program does not guarantee a position will be available at the school/work location that one is currently assigned. Notification of your intent to extend DROP shall be provided three months prior to your five year DROP end date. If interested or for additional information, please call Retirement Services at (407) 317-3227 or email at retirement.services@ocps.net 20

21. DROP payout options Cash Payout- Taxes will be taken out Rollover- Taxes can be deferred Combination Cash Payout & Rollover Cash payout amount will have taxes taken Rollover payout amount taxes will be deferred You have 60 Days from your DROP exit to make a decision on how your payout is handled or FRS will send you a cash payout minus 20% for taxes

22. Retirement Benefit Payment Options Choose an option at Retirement/DROP Entry: Option 1: No benefit after death Option 2: Up to ten years guaranteed to beneficiary Option 3: Benefit continues to joint annuitant Option 4: Reduced continuing benefit to survivor 22

23. Beneficiary Designation If you choose Option 3 or 4 If you choose Option 1 or 2 Beneficiary can be anyone (Spouse must sign SA-1 form) Beneficiary must be Spouse or Joint Annuitant Everyone must have a beneficiary on file! 23

24. After Retirement Benefit is subject to withholding tax Cost of Living Increase Based upon years of service through: 06/30/2011 Health Insurance Subsidy (HIS) added to your monthly benefit Not applicable during DROP Years of Service X $7.50 Maximum Amount$225.00 Minimum Amount $45.00 24

25. After contd Once a benefit payment is cashed or deposited, retirement is final Option cannot be changed No service may be added Benefits paid monthly Direct deposit required 25

26. Sick Leave Payout Contributions during DROP or Irrevocable Retirement Multiple Annual Contributions Increasing percentage of Sick leave at end of each year of DROP 8 Year example: Year 1 20% Year 2 25% Year 3 33% Year 4 50% Year 5 0% Year 6 0% Year 7 0% Year 8 100% 5 Year example: Year 1 20% Year 2 25% Year 3 33% Year 4 50% Year 5 100% 26

27. Terminal Sick Leave Pay Percentage at Retirement An employee receives terminal pay as follows: 0-3 Years * 35% 3.01-6 Years 40% 6.01-9 Years 45% 9.01-12 50% 12.01-over 100% *Based on consecutive years of service at the time of retirement. Note: Revision to contract effective 07/01/08: If the person has worked at least five consecutive years prior to retirement, previous time at the district may be counted. 27

28. Bencor Special Pay Plan Your terminal Sick Leave payments will go to the Bencor Special Pay Plan By doing this it will save you: Federal Income Taxes % Eliminate Social Security and Medicare Taxes Defer Federal Income Taxes to a lesser % 28

29. Pre-Tax Retirement Savings Plans Pre & Post Tax Retirement Savings plans with OCPS are voluntary contributions are made by the employee- NO OCPS Match OCPS offers 12 different 403(B) companies OCPS offers 12 different 457 companies You will still pay FICA & Medicare taxes It can reduce your federal withholding taxes 29

30. To add a Pre/Post tax annuity Log into the Employee Self-service Portal: From the Self-service tab home page choose BENEFITS: 30

31. Choose a provider that you feel comfortable with investing and follow the prompts for adding a plan You will see the deduction on your next available Payroll You can make Anytime Plan Changes from the portal anytime you want to Stop or change the amount of your deduction. Be aware that the change will occur on the next AVAILABLE payroll, we run payrolls in advance. From the Benefits home page choose: Quick Enroll 31

32. Insurance Benefits Upon retirement, you have one opportunity to continue OCPS health insurance Can continue for your lifetime by paying premiums Rates are negotiated annually and are effective October through September Benefits Office Phone: 407-317-3245 Log into the OCPS Intranet > Insurance Benefits The Homepage has ALL the information you need to research your OCPS Insurance Benefits Reminder: Please keep beneficiary information updated! 32

33. Questions & Answers If you have questions, please email us directly at retirement.services@ocps.net Thank You Office of Retirement Services Disclaimer: If questions arise as a result of this presentation or the materials provided, Chapter 121, Florida Statutes Chapter 605 Administrative Code and the Internal Revenue Code shall remain the final authorities 33