Griffin Speaks
WORKING UNTIL YOU DROP
Those persons participating in the program must participate for at least three years and no longer than five years. A participant who voluntarily terminates employment or withdraws from the program in the first three years of participation is penalized. If a participant is fired or otherwise involuntarily removed from the program, becomes disabled, encounters an involuntary transfer of spouse, or dies within the first three years, no penalty will be assessed. Drop participants continue to receive the same employer benefits during DROP participation. Participation in DROP does not mean that you can not be terminated.
DROP accounts earn on
average 4% annual interest compounded monthly. DROP funds are not
distributed until the participant terminates employment with his
participating RSA agency. There are two methods for distributing DROP funds.
The participant can choose to receive a lump-sum payment of the full amount
in the DROP account less the 20% federal income tax withholding. DROP funds
are exempted from Alabama State income taxes. A second method is to roll the
DROP funds over into a regular IRA account, or another employer retirement
plan.
An employee becomes
eligible to participate in DROP whenever he meets the requirements for
participation which are: 25 years of employment and age 55 or 52 for state
police officers.
Sick-leave balances will
be paid, but will not be included in determining years of service. DROP
participants will continue to earn sick and annual leave. When the
participant leaves service, his monthly retirement allowance will be
recalculated to include earned sick leave. The number of days converted must
not exceed the number of days the participant had on the date he entered the
DROP program. If a participant leaves the DROP program before three years he
will forfeit all employer contributions and interest. The participant’s
contributions plus interest will remain.
Once the five year
period ends the participant is not required to terminate his employment.
DROP proceeds will remain in the participant’s DROP account earning 4%
interest until the participant terminates his employment.
An employee considering
the DROP program can determine what his benefits will be by visiting the RSA
web site at www.rsa.state.al.us.
This is a wonderful program. In addition to simultaneously earning a salary
and accumulating retirement income, the program provides financial security
for retirement; provides inheritance for a beneficiary not eligible for a
continuing benefit under RSA; participants are able to accumulate a lump sum
of money, with no maximum employment date. The only down side is you are
forced to select the program in advance of your termination and the program
reduces your monthly pension benefit for the rest of your life if you would
have continued to contribute under RSA.
My soon to be 79 year
old dad, Dr.
Melvin J. Griffin Sr., a State employee is determined to work until
he DROPS. He has an incredible work ethic and vows to participate in the
DROP program for the maximum number of 5 years. He spoke with a retirement
counselor and was informed that he will be eligible to begin participating
in the DROP program when he reaches age 95 (he will then have the required
25 years of service). He will start receiving his benefits when he reaches
age 100. Isn’t GOD good? ALL
the TIME!!!!!!!!!!!!!!
Click
Here
Greg Griffin is a free lance writer. You can read his previous articles by visiting his web page at www.greggriffin.com or write to him at P.O. Box 250194 Montgomery, Alabama 36125-0194.
