Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Comparison tables scroll horizontally on smaller screens.
Updated August 19, 2026. Quick answer: Florida Retirement System (FRS) — the COLA is automatic, but prorated, and whether it compounds is not stated, service credit can be purchased, and there is a DROP. Vesting takes 8 years if you enrolled on or after 7/1/2011, and 6 years if you enrolled before that. The four decisions below are the ones that are hard to reverse.
Jacksonville police officers and firefighters belong to a separate city fund with its own rules: Jacksonville police and fire pension decisions.
Tampa city general employees belong to a separate city fund with its own rules: Tampa general employees retirement decisions.
The choice between the two FRS plans, and the one-time switch, in full: FRS Investment Plan vs Pension Plan.
Provisional. This page is published at medium confidence. The specific points that could not be confirmed are listed under What could not be verified below, and are named rather than smoothed over.
The verdicts
| Is the COLA granted? | Automatic, but prorated |
|---|---|
| Is the COLA compounded? | Unstated |
| Vesting | 6 years of creditable service for members initially enrolled BEFORE 7/1/2011; 8 years for members initially enrolled ON/AFTER 7/1/2011 (Fla. Stat. §121.021(45)(a)/(b)) — 8 is the current standard for new hires. Normal retirement: age 62 or 30 years of service (pre-7/1/2011 cohort) vs. age 65 or 33 years (post-7/1/2011 cohort) for Regular/Senior Management/Elected Officers classes; Special Risk Class uses separate age-55/25-years rules not tied to the 2011 split. |
| Buy service credit? | Yes |
| DROP? | Yes |
| State | Florida |
Those first two rows are separate questions and are routinely confused. Whether you get an increase at all is one thing; whether it compounds is another. A system can grant an increase automatically every year and still compute it against your original pension forever, which is a materially worse deal than it sounds.
The COLA
3% base annual COLA applied each July 1, but for members retiring ON/AFTER 7/1/2011 the COLA factor = 3% × (service credit earned before 7/1/2011 ÷ total service credit) — a per-member blended, prorated rate. A member whose entire career was earned on/after 7/1/2011 receives effectively 0% COLA on that service. Members retiring before 7/1/2011 get the full 3%. Statutory floor: the benefit can never be reduced below the level in effect 7/1/1970 or at actual retirement, whichever is later (Fla. Stat. §121.101). Compounding status of the 3% year-over-year was not explicitly confirmed in the statute text reviewed.
Buying service credit
The employer ‘may pay all or a portion of the cost’ (§121.1115). Payment methods (lump sum vs. rollover from a 403(b)/457/IRA) could NOT be confirmed — the statute is silent on this and the myfrs.com service-credit-purchase page and the member handbook PDF were both unreachable (HTTP 403 / repeated timeouts) in this research pass. Unconfirmed.
What it costs. Statutorily fixed formulas rather than case-by-case actuarial valuation: past service pre-1975 = 8% of annual gross salary + 4% compound interest to 7/1/1975 then 6.5% thereafter; past service post-1975 = employer contribution rate × salary + 6.5% compound annual interest; out-of-state/federal/military = 20% of annual compensation for the member’s first full FRS work year (minimum $12,000) + 6.5% compound annual interest from date of first FRS salary until paid; in-state public/nonpublic service uses the same formula by statutory cross-reference (Fla. Stat. §§121.081, 121.1115, 121.1122).
Run your own numbers before deciding — some purchases never recover their cost, and the calculator shows which.
Taking a refund
Only employee contributions are refundable — ’employer contributions made on behalf of the member are not refundable’ (§121.091(5)(a)/(c)). A refund ‘waives all rights under the Florida Retirement System and the health insurance subsidy to the service credit represented by the refunded contributions’ — i.e. forfeits the service credit, future benefit eligibility, AND the retiree health insurance subsidy tied to that credit. Reversible: a member who completes 1 year of new creditable service can reinstate the prior service credit by repaying the refunded contributions plus interest (4% pre-7/1/1975, 6.5% thereafter, compounded annually), or can separately purchase that prior service credit later under §121.081(2) even without full reinstatement. Could not independently confirm from primary sources the commonly-cited claim that FRS Pension Plan members were largely non-contributory before a 2011 law change — flagged unconfirmed.
This is the irreversible one. Refund versus leaving it in sets out the decision in the order it should be made.
Optional next step
Want help with this pension decision?
Ask an adviser how this choice fits your broader retirement income plan.
- No fee to request a match
- No obligation to hire
Expect questions about your situation, your name, email and phone, and phone verification by text. A match is not guaranteed.
The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
Opens here. Nothing loads and nothing reaches Kapitalwise until you press the button.
How our partner relationships workDROP
FRS DOES have a real DROP for Pension Plan members (Investment Plan members are not DROP-eligible), available only after reaching normal retirement date. Employment does NOT legally terminate at DROP election — statute: ‘the member is not deemed retired from employment until his or her deferred resignation is effective.’ At DROP entry, the monthly benefit, creditable service, payment option, and average final compensation are all fixed; the benefit accrues via a separate FRS Trust Fund accounting while the member keeps working and drawing salary. INTEREST RATE (Fla. Stat. §121.091(13)): 6.5%/yr compounded monthly if DROP participation began before 7/1/2011. If it began on or after 7/1/2011, 1.3%/yr compounded monthly through 6/30/2023 and 4%/yr compounded monthly beginning 7/1/2023, so a member who entered DROP on or after 7/1/2011 and is still participating now accrues 4%, not 1.3%. MAX PERIOD: 96 calendar months (8 years) — NOT 60 months/5 years — verified twice from independent official statute mirrors (leg.state.fl.us and flsenate.gov). K-12 instructional/certain administrative personnel may extend up to 24 additional months beyond the 96-month cap. REEMPLOYMENT: after DROP ends, same reemployment limits as other FRS retirees apply — for retirees on/after 7/1/2010, no FRS-employer salary may be drawn concurrently with retirement benefits for 6 calendar months post-termination. Accumulated DROP proceeds are distributed via lump sum, direct rollover, or a combination.
How DROP works, and what freezing your benefit costs.
Survivor options
Four options: (1) maximum benefit, life only, no survivor; (2) reduced, with a 10-year certain guarantee; (3) joint and full survivor, continuing at the same amount for the joint annuitant’s life; (4) joint and two-thirds survivor. The election becomes ‘final and irrevocable at the time a benefit payment is cashed or deposited or credited to the Deferred Retirement Option Program’. Exact actuarial reduction factors are UNCONFIRMED – they live in tables behind the handbook PDF, which was unreachable.
How an FRS DROP balance is paid out: lump sum, rollover, or both
The FRS pages already cover how the Deferred Retirement Option Program accrues. This section covers the last step, how the balance is paid out, and what the rules read treat as fixed. The statute says “the division shall distribute the member’s total accumulated DROP benefits” once the employer has verified that all employment has ended, and the handbook says payment comes “not earlier than the calendar month following your employment termination”.
There are three routes. The handbook says “You may choose to receive your DROP accumulation as a lump-sum payment”, a direct rollover to an eligible tax-sheltered account, or “a combined partial lump-sum payment and rollover”. The statute defines the lump sum this way: “All accrued DROP benefits, plus interest, less withholding taxes remitted to the Internal Revenue Service, shall be paid to the DROP participant or surviving beneficiary”. A rollover sends the money “directly to the custodian of an eligible retirement plan”, and, unlike the lump-sum wording, the statute’s rollover wording does not mention withholding. For the split, “A portion of the accrued DROP benefits shall be paid to DROP participant or surviving spouse, less withholding taxes remitted to the Internal Revenue Service, and the remaining DROP benefits must be transferred directly to the custodian of an eligible retirement plan”, and “The proportions must be specified by the DROP participant or surviving beneficiary”.
Two points are fixed. The benefit is set at entry: the statute lists “initial normal monthly benefit, including creditable service, optional form of payment, and average final compensation, and the effective date of retirement are fixed”. The payout method has a deadline: “If a member or beneficiary fails to elect a method of payment within 60 days after termination of DROP, the division shall pay a lump sum”. So silence after the 60 days produces the lump sum, the route with withholding. The handbook also says “No interest is earned on benefits on deposit for less than one month or after your DROP participation ends”.
| Item | Figure | Source |
|---|---|---|
| Usual DROP maximum | 96 months | FRS member handbook |
| K-12 instructional extension | up to 24 months | FRS member handbook |
| Window to choose a payout method | 60 days | Fla. Stat. 121.091 |
| DROP interest rate beginning July 1, 2023 | 4.00% | FRS member handbook; Fla. Stat. 121.091 |
| Termination period after DROP | 6 calendar months | FRS member handbook |
The statute requires that “The form of payment selected by the DROP participant or surviving beneficiary must comply with the minimum distribution requirements of the Internal Revenue Code”. The handbook warns that an FRS employment relationship in the first six calendar months after DROP ends “may void your retirement and you and your FRS employer may be held jointly and severally liable for repayment of all retirement benefits received, which include any DROP accumulation or payout”. The payout therefore depends on a clean break from FRS employment, whichever route is chosen.
If the participant dies, the named beneficiary can use the same routes, but for a surviving spouse the statute says “an eligible retirement plan is an individual retirement account or an individual retirement annuity”. A refund of contributions after leaving FRS is a separate decision, and there the statute says “Partial refunds are not permitted”. See refund versus leaving it in.
The pages read do not state the 20 percent or any other withholding rate, the tax treatment of a lump sum compared with a rollover, or whether a payout election can be changed once processed. The handbook points to “Preparing to Terminate the DROP” for “special tax information on DROP payouts”, but that guide was not among the pages read, and no payout formula is given, so no computed example is shown. Confirm the tax consequences with the division and a tax professional.
Sources for this section:
- Florida Retirement System, member handbook: https://frs.fl.gov/forms/member_handbook.pdf
- Florida Statutes 121.091 (2025), benefits payable under the system: https://www.flsenate.gov/Laws/Statutes/2025/121.091
What could not be verified
SURVIVOR/PAYMENT OPTIONS AND IRREVOCABILITY (not captured by this schema’s fields, flagged as highest-stakes): FRS Pension Plan offers 4 options at retirement — Option 1 (maximum benefit, no survivor), Option 2 (reduced benefit + 10-year-certain guarantee to a beneficiary), Option 3 (further-reduced, 100% joint-and-survivor to a joint annuitant for life), Option 4 (reduced, 66⅔% joint-and-survivor for life) — Fla. Stat. §121.091. IRREVOCABILITY (verified directly from statute): the option selected becomes ‘final and irrevocable at the time a benefit payment is cashed or deposited or credited to the Deferred Retirement Option Program’ — i.e. once the first payment is cashed/deposited (or credited into DROP for DROP participants), it cannot be changed. Exact reduction magnitude for Options 2-4 was not quantified in the statute text (actuarial tables were unreachable). myfrs.com/frs.fl.gov handbook and SPD PDFs were blocked/timed out throughout — every finding above rests on Fla. Stat. Ch. 121 only, not on FRS’s own plain-language handbook.
These gaps are stated because a plan-rule page that hides its own limits is worse than no page. Your member handbook is the authority, and where it and this page disagree, the handbook wins.
Sources
- https://www.flsenate.gov/Laws/Statutes/2025/121.091
- http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0121/Sections/0121.101.html
- http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0121/Sections/0121.021.html
- http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0121/Sections/0121.081.html
- http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0100-0199/0121/Sections/0121.1115.html
Read 2026-08-04.
Sponsored advisor-matching link. We may earn compensation if you submit the third-party form. Compare fees, scope, conflicts, credentials and fiduciary duty before hiring. Affiliate Disclosure.
Related: buyback calculator · is buying service credit worth it · refund or leave it in · DROP explained.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ change, and interest rates published by the IRS change every month – never rely on a rate quoted on any page, including this one. We are not a law firm or a tax adviser, and this is not legal or tax advice.