Updated October 22, 2026. Quick answer: The ATRS Member Handbook says a member with at least 30 years of service credit may join T-DROP with no additional reduction, and a member with at least 28 years may join with a 6% reduction for each year early. The member must also be actively employed by an ATRS covered employer, or be active in a reciprocal plan with state-supported reciprocal service credit established before entry, and in that case must enter the reciprocal plan’s DROP as well. Entry is only on July 1, applications are accepted only from March 1 to May 31, and a member can stay for up to 10 consecutive years.
What this covers
The Member Handbook has a section headed T-DROP with questions on eligibility, enrollment, participation years and exiting. This page quotes that section. For the wider choices, see Arkansas ATRS retirement decisions and public pension retirement decisions. For the general idea of a deferred retirement option, see how DROP plans work in general.
What the handbook says, situation by situation
Each row is the handbook’s own wording.
| Situation | What the handbook says |
|---|---|
| 30 or more years of service credit | “If you have at least 30 years of service credit, you may elect to participate in T-DROP with no additional reduction.” |
| 28 or 29 years of service credit | “If you have at least 28 years of service credit, you may elect to participate in T-DROP with an additional reduction for early participation (6% reduction for each year early).” |
| Active employment | “You must be actively employed by an ATRS covered employer, or have established state-supported reciprocal service credit prior to entry and be active in a reciprocal plan. If you are active in a reciprocal plan, you must also enter their DROP in order to enter T-DROP.” |
| Who cannot join | “Members who are active with an Alternative Retirement Plan (ARP) are not eligible to participate in T-DROP.” |
| When you can enter | “You can only enter T-DROP on July 1, with applications only accepted between March 1 and May 31.” |
| How long you can stay | “You can participate in T-DROP for up to 10 consecutive years.” |
| Interest on the account | “Interest accrues on your T-DROP deposit account balance at the rate of 3% compounded annually.” |
| Borrowing | “No, you cannot borrow money from your T-DROP deposit account.” |
How T-DROP works
The handbook says “When you elect to participate in T-DROP, you do not officially retire from the System.” It continues: “You continue to work for and be paid by your covered employer.” and “You will not directly receive a monthly retirement benefit.” Instead, “your retirement benefit amount is calculated and set, with a portion of benefits being deposited once a month into your T-DROP deposit account.”
The early-participation reduction
The handbook says “Early participation at 28 years will have an additional 6% reduction for each year less than 30 years of service credit, or 12% at 28 years and 6% at 29 years.” That follows from the rule of 6% for each year under 30: 30 minus 28 is 2 years, and 2 times 6% is 12%; 30 minus 29 is 1 year, and 1 times 6% is 6%. The handbook also says “Your T-DROP deposit is based on what your monthly retirement benefit would be if you retired, reduced by 1% for each year of service credit.” It prints no dollar example, so this page gives none.
What you must keep doing
A participant does not have to work full time, but “there are a minimum number of days that you must work every quarter in order to continue your monthly T-DROP deposits.” The handbook’s table gives the minimum days for each quarter:
| Quarter | Months | Minimum days to work for monthly deposits |
|---|---|---|
| First quarter | July, August, September | 15 |
| Second quarter | October, November, December | 25 |
| Third quarter | January, February, March | 25 |
| Fourth quarter | April, May, June | 15 |
If you stop working for a covered employer, the handbook says “monthly retirement benefit deposits will not be made to your T-DROP deposit account.” “Interest will continue to accrue and be deposited into your T-DROP deposit account.”
What stops accruing
“You do not earn and cannot be given any additional service credit when you elect to participate in T-DROP since your retirement benefit is already calculated.” “You do not pay contributions to ATRS while participating in T-DROP since your retirement benefit is already calculated.” “Any salary that you earn after entering the T-DROP program cannot be used to recalculate your final average salary.”
Leaving T-DROP and the four ways to take the balance
“You leave T-DROP when you elect to retire from the System, or pass away.” “Once you retire out of T-DROP, you cannot participate again.” The handbook lists four ways to take the account balance: an annuitized monthly benefit added to the monthly retirement benefit, a lump-sum payment, a transfer to the Cash Balance Account maintained by ATRS, or a transfer into a qualified retirement plan such as an IRA or 403(b). You can “divide the balance among multiple options. The total allocation must equal 100%.”
On taxes the handbook warns “if you receive any portion of your T-DROP deposit account balance in a lump-sum payment, there may be significant tax consequences.” The state rules are on how Arkansas taxes retirement income.
What the handbook does not say
The section prints no sample deposit or balance, and it does not explain how the 1% reduction interacts with the benefit formula beyond the sentence quoted above. The handbook also says “If you do not leave T-DROP after 10 consecutive years, the monthly retirement benefit deposits to your T-DROP deposit account will stop.” Ask ATRS for a statement before you apply.
Edition
This page reads the Arkansas Teacher Retirement System (ATRS), Member Handbook, 2026-2027 school year, the file ATRS served on 2026-10-22. It describes ATRS, the system for Arkansas public school teachers and other covered education employees. Other Arkansas systems (APERS, LOPFI and the rest) have their own rules, and Arkansas law and your own member account control over this summary.
Common mistakes
- Missing the deadline. The handbook says “you will not be allowed to participate in T-DROP that upcoming July.”
- Expecting to borrow from the account. The handbook says money “cannot be distributed until you stop participating in T-DROP” and retire from the System, or pass away.
- Counting on higher final pay. Salary earned after entry “cannot be used to recalculate your final average salary.”
Related: Arkansas ATRS retirement decisions, public pension retirement decisions, and how DROP plans work in general.
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Answer againSources
- Arkansas Teacher Retirement System (ATRS), Member Handbook, 2026-2027 school year: www.artrs.gov
- Related official page (not quoted): Arkansas Teacher Retirement System, official site: www.artrs.gov
- Related official page (not quoted): IRS, Topic no. 413, Rollovers from retirement plans: www.irs.gov
- Related official page (not quoted): IRS, Topic no. 558, Additional tax on early distributions: www.irs.gov
Read from the pension system handbooks linked above on October 22, 2026. General information, not tax advice. Your own facts decide the outcome, and a pension system or a qualified professional is the right place to confirm anything consequential.