Florida Retirement System

Considering Entering D.R.O.P.

Did you know that from your first day of D.R.O.P., you have a 5-year window to save for retirement before you are forced to terminate with your current employer?

This begs the question: "How can I best prepare myself for this long-awaited day?" We realize that "you don't know what you don't know." Below are some suggestions from FRS Partners that often go overlooked until it is too late.

Employer/Individual Retirement Accounts

Review your current retirement plans to ensure that they are adequately allocated and reflect the amount of risk suitable for a person at your stage in the retirement process. Retirement accounts established (5+) years ago may have been appropriate at the time, but require additional attention now that you are approaching retirement.

Keep in mind that once you separate from service, the retirement account options you are currently eligible for will not be available to you, because you are no longer an employee. It is always a good idea to explore your options and see what benefits these accounts can provide into retirement.

Estate Planning Concerns

Be proactive and get any wills, trusts, and beneficiaries updated to ensure that your assets are left to your loved ones or a designated person of your choice. Many retirees fail to properly register cars, homes, and bank accounts, creating issues for those whom they originally intended their assets to be left to in the first place.

Our estate planning attorney can help take the guess work out of this legal process and provide peace of mind that your estate and assets are passed along smoothly to those people or organizations closest to your heart.

Insurance Concerns

Life insurance is the cornerstone to retirement planning. While many financial firms focus on returns (which are important), keeping what you have is more important. Life insurance gives you the ability to mitigate the risk of losing an income stream due to death with a large lump sum.

How can I best prepare myself for retirement?

Be proactive -
FRS Partners can help.

Currently Utilizing D.R.O.P.

If you just entered D.R.O.P., congratulations! But, keep in mind: You now have 5 years to save for the rest of your life. If you have been in D.R.O.P. for a while, you have even less time. Our best piece of advice; don't procrastinate! Whether your D.R.O.P. exit date is next month or a few years away, FRS Partners encourages you to start now! It is not too late.

First Things First: Establish a 457 Plan

If you don't already have an account, contact FRS Partners to begin a 457 plan. If you do have one, ask our team to review it. A 457 plan is an employer sponsored retirement plan, and will allow for you to make contributions out of each paycheck (if desired). Additionally, this will be an account that can be used for your D.R.O.P. rollover. Not only does FRS Partners recommend that you use a 457 plan for your D.R.O.P. rollover, but so does Jeff Atwater, the Chief Financial Officer of the Florida Department of Financial Services. As you will soon learn, you only have 60 days from your exit date to rollover your money to another investment before the Florida Retirement System sends you a taxable check.

Establishing a 457 plan allows you take a deep breath and relax, finding comfort in knowing that you have already made accommodations for perhaps the biggest decision that you will have to make regarding retirement. In addition, establishing a 457 plan allows you to use a 100% accessible, risk-free investment option, so that you can "let the dust settle" from retirement and really figure out what your retirement needs are. But don't take our word for it. Download Plan Watch PDF, a publication issued by the Florida Department of Financial Services.

Have You Saved Enough? Create an Exit Strategy.

Meet with an FRS Partners retirement consultant to determine an approximation for your income in retirement. This will be comprised of your Florida Retirement System Pension Check, Social Security Check, additional income, and planned income from investments. Please keep in mind that for some people it makes sense to take Social Security early, and for others it makes sense to delay benefits. Your FRS Partners retirement consultant will run a series of calculations to determine what is most suitable for you and the needs of your family. Then, compare your income base to your expenses to determine liquidity needs, long-term care needs, and life insurance needs. Download and create your own personalized Income Analysis Worksheet.

Don't Procrastinate!

Whether your D.R.O.P. exit date is next month or a few years away - start now! It's not too late.

Exiting D.R.O.P. This Year?

If retirement is rapidly approaching and you are scheduled to exit D.R.O.P. within the year, here are some things to help keep you on track. Or, just call your local FRS Partners retirement consultant who would be happy to personally guide you through the process.

At FRS Partners, we know how exciting and scary this experience can be all at the same time. We are here to help you every step of the way with professional guidance, investment advice, and expertise on the Florida Retirement System, the D.R.O.P. Exit Process, Retirement Forms, Sick Leave, and Health Insurance Subsidy. Take full advantage of our local retirement consultants and have peace of mind that while this may be your first time, we help our clients go through this process every day.

Use this checklist to help keep yourself on track.

  • Meet with your local FRS Partners retirement consultant regarding any questions you have about the retirement process, to review current accounts and establish proper accounts to accept your D.R.O.P. rollover, if necessary.
  • Meet with a representative of the Insurance Department regarding continuing retirees' insurance. It may be necessary to submit enrollment paperwork prior to your last day of work in order to prevent any lapse or delay in coverage.
  • Complete Termination Notification (DP-TERM) for the Division of Retirement. You will receive this form from the Division of Retirement. Your Employee Benefits Department will need to complete the form for you to sign and have notarized.
    View a sample DP-TERM form.
  • Complete the Selected Payout Method (DP-PAYT) form and submit to the Division of Retirement. If you select the Direct Rollover or Partial Lump Sum option, you must have this form completed by your FRS Partners financial retirement consultant.
    View a sample DP-PAYT form.
  • 30 Days After Retirement: Complete Withholding Certificate for Pension Payments (Form W-4P). You will receive this form after submission of the completed DP-TERM and DP-PAYT forms above.
    View a sample Form W-4P.
  • 30 Days After Retirement: Complete Health Insurance Subsidy Certification (HIS-1) form. You will receive this form after submission of the completed DP-TERM and DP-PAYT forms above.
    View a sample HIS-1 form.
  • 30 Days After Retirement: Complete Direct Deposit Authorization (EFT) form. You will receive this form after submission of the completed DP-TERM and DP-PAYT forms above.
    View a sample Direct Deposit Authorization EFT form.
  • If eligible, apply for Social Security benefits at www.ssa.gov, or at your local Social Security office.

Download a printable PDF of the checklist above.

We're here to
help you

EVERY step of the way.

Already Retired or Exited?

Having a retirement account is NOT the same as having a retirement plan. While you may have already established a retirement account, what is the purpose of that account? Do you know? Here is a list of frequently asked questions that our clients have asked over the past 28+ years. These are a few things you should be able to answer regarding your retirement accounts. If you don't know the answer to ANY of these questions, contact your local FRS Partners retirement consultant for a comprehensive review of your retirement picture.

FAQs

  • How do I access my money?
  • Is there a penalty to access my money?
  • When does the penalty to access my money expire?
  • How is my money invested?
  • Can I lose value in my investments?
  • What interest rates do my investments earn?
  • Does my investment match my risk tolerance?
  • Is my account (RMD) Required Minimum Distribution "Friendly"?
  • What is the cost of owning my account? (There are no philanthropists in this business.)
  • Does my account have a death benefit?
  • Are my beneficiaries up to date?
  • What are my needs in retirement?
  • Does my investment solve my retirement needs?

At FRS Partners, we are sure you've probably heard the phrase, "They don't build things the way they used to." Often times, we find that old policies and contracts have features and provisions that are no longer available to new contract holders. At FRS Partners, we place a high level of importance on reviewing existing accounts and policies for these attractive features. "It's hard to know where you're going if you don't know where you've been."

If you don't know the answers to any of these questions,
contact us now.

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