State of California

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California Deferred Retirement Option Plan (DROP)

DROP Overview for the City of Los Angeles Fire and Police Pension Plan

The Deferred Retirement Option Plan (DROP) is an enhancement to your Fire and Police Pension Plan that may provide another way of saving for your retirement years. It is an optional voluntary program that allows you to work and receive pay and benefits as an active employee while accumulating service pension payments in a DROP account. You are considered "retired" for purposes of pension calculations only. For all other purposes you are considered an active member of your respective department. While in DROP, your monthly pension payment is held in an account with a guaranteed interest rate of 5% per annum. When you decide to leave the DROP program (after one day or up to five years maximum), you are required to terminate sworn employment with the Fire or Police Department. You will then begin to receive your regular pension benefits on a monthly basis. In addition, you will receive your accumulated DROP account balance either in a lump sum or you may roll all or part of your balance into another tax-qualified account.

DROP is currently available until April 30, 2012, but may be extended if the City Council decides to do so. You can participate in DROP up to a maximum of 60 months (five years) regardless of when you sign up.

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