D a l l a s P o l i c e a n d F i r e P e n s i o n S y s t e m  

If you like the idea of building a nest egg for retirement, the Pension System offers you a great way to build it while you are still employed. The program is called the Deferred Retirement Option Plan - or DROP.

What are the requirements for Active Members to participate in DROP?
To qualify for DROP, you must be in Active Service when you enroll and be eligible to retire and immediately receive a pension benefit.

How does DROP work?
Basically, a DROP account allows you to save a lump-sum amount for retirement in addition to the regular pension benefit that you will receive after you leave Active Service. Here are the key features:

  • After you enroll in DROP, you cannot change your decision.
  • With DROP, you continue working and earning a paycheck after you are eligible to begin receiving a pension from the Pension System.
  • Instead of paying you a pension, the Pension System puts your regular monthly pension benefit into an account on your behalf
  • Your obligation to make contributions to the System continues when you enter DROP while on Active Service.
    The requirement to pay pension contributions ends when the Member leaves Active Service and retires.
  • You are entitled to any benefit supplements and annual adjustments that you would have received if you have actually retired - and those will be included in deposits to your DROP account.

What happens when I leave Active Service?
When you leave Active Service, you must decide:

  • How to receive your monthly pension benefit - You can receive your regular monthly pension payments directly, have them deposited to your bank account, or have them credited to your DROP account and receive them later.
  • Whether to take money from your DROP account - If you decide to receive payments from your DROP account, they can be lump sum amounts or monthly payments. DROP withdrawals are taxable income. Federal law requires you to start taking money from your DROP account when you reach age 701⁄2.

The Pension System urges you to meet with a tax or financial advisor before you decide when and how to receive distributions. By planning carefully and getting help from an expert, you can make the best possible decision and avoid or reduce any adverse tax consequences.

Is DROP right for me?
When you enroll in DROP, in exchange for the advantage of accumulating a DROP account, you are not entitled to earn additional pension benefits through pay increases or additional years of Pension Service. A Benefits Counselor can explain the DROP rules to you in detail and point out the advantages and disadvantages of participating in DROP.

This is a general overview of DROP as currently defined in the Pension Plan. It is intended to increase your awareness of the options available to you, but it does not give legal or financial advice or provide enough details for you to make decisions.

For additional information, refer to your Member Handbook, the Plan Document, or attend the Pension System's educational programs. Go to the Forms section. You also may contact a Benefits Counselor via e-mail, or call the Pension System office at 214.638.3863 or 1.800.638.3861. You also should consider obtaining advice from a tax consultant or financial advisor of your choice before deciding when to retire and how to receive your pension benefit.

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