Arkansas LOPFI Retirement: Options, DROP, Refund, COLA

Updated October 16, 2026. Quick answer: Arkansas LOPFI offers four payment options: A60 (no reduction), A120 (98% of A60), B50 (94% for a same-age beneficiary) and B75 (89%). The ACFR calls the option irrevocable once the first payment becomes payable, except with a life changing event. DROP credits 75% or 72% of the monthly benefit at 6% interest. Vesting is 5 years for most hires before July 1, 2013 and 10 years for later hires and for members of departments that joined LOPFI on or after that date; the COLA is 3% compound.

More on public pension systems, topic by topic: Arkansas LOPFI DROP, Arkansas LOPFI benefit payment options and Arkansas LOPFI return to work after retirement.

What this page covers and what it does not

This page works from the 2026 LOPFI Member Handbook (PDF created August 21, 2026), the Annual Comprehensive Financial Report (ACFR) for fiscal years ended December 31, 2025 and 2024, and the system’s overview page, which says LOPFI “is a statewide retirement system for paid and volunteer police officers and firefighters of political subdivisions in the State of Arkansas”. The Handbook says it “should be viewed as a summary of the plan provisions” and that conflicts with the Board’s rules or the law “will be controlled by law”. The page covers paid-service police officers and firefighters; volunteer benefits, disability, return to work and local plans are not covered. For scale, the ACFR schedule titled “LOPFI Covered Groups and Covered Persons (Excluding Local Plans)” lists 7,427 active members for its paid service groups at the 12/31/2025 valuation date, with the footnote “Includes DROP participants, if any”.

When a pension can start and how it is figured

Normal retirement has four routes: “Any age with 28 years of credited service”; “At least age 55 and has at least 20 years of credited service”; “At least age 60 and has at least 5 years of credited service” (members hired before July 1, 2013); or “At least age 60 and has at least 10 years of actual LOPFI service credit” (members hired on or after July 1, 2013). Vesting divides at July 1, 2013: “Members hired prior to July 1, 2013, have a five (5) year vesting requirement”, while “Members hired on/after July 1, 2013, have a ten (10) year vesting requirement”. Two exceptions apply: a member of any department that adopted LOPFI coverage on or after July 1, 2013 has ten-year vesting regardless of hire date, and members who left LOPFI-covered employment before July 1, 1998 have a ten-year requirement. Final average pay uses “the highest 36 consecutive months (3 years) of pay during the last 120 months (10 years)”. For paid service not covered by Social Security the formula is “3% x FAP x Years of Paid Service”. Where Social Security covers the service, “The 3% multiplier is comprised of a 2% life benefit and a 1% temporary annuity”. Under the optional Benefit Program 2 the multiplier for service not covered by Social Security is 3.34%. The cap: “The benefit cap for paid service is 100% of FAP regardless of which benefit program you are covered under”.

LOPFI Board Rule 5 also limits what counts toward the ten-year test for members hired on or after July 1, 2013. It says “Purchased, recognized, and/or reciprocal service credit shall not count towards ten (10) year vesting.” So the exclusion covers recognized and reciprocal service as well as purchased service, and the rule asks for “ten (10) years of actual LOPFI credited service”. These are Board Rules, which the Handbook says yield to the law; the Arkansas Code sections behind them could not be read for this page.

A computed example from an assumed $4,200 final average pay and 20 years of paid service, not a LOPFI figure: 3% x $4,200 x 20 is $2,520 a month, or 60% of the assumed pay. The Handbook’s own illustration for the same inputs prints $2,520. Personal estimates come from the Member Portal.

The payment option: single life versus survivor

The choice is made “at the time of retirement or DROP enrollment”. “Except for Option A60, electing one of the other benefit payment options will reduce the Member’s life benefit”. The options are A60, A120, B50 and B75; for the general trade-off see single-life versus joint-and-survivor pension.

A60 is the unreduced option: the ACFR says “Option A60 pays an amount equal to 100% of the life benefit”, and the Handbook adds that if the member dies early, the beneficiary gets the same payment for the rest of 60 months. A120 pays “ninety-eight percent (98%) of the A60 benefit” with a 120-month guarantee. Under B50 the survivor gets 50% of the member’s reduced benefit, which starts at “ninety-four percent (94%)” when the ages match; the factor falls by one-half of one percent for each year the beneficiary is younger, and rises by the same step for an older one, “up to a maximum of ninety-eight percent (98%)”. B75 pays the survivor 75%, starting at 89% for the same age, moving three-fourths of one percent per year, with a ceiling of 94%. For B50 and B75 the beneficiary must be “the Member’s spouse for no less than one (1) year immediately preceding the first payment due date”, or another person receiving more than one-half support from the member, or a dependent child deemed physically or mentally incompetent.

A computed example from an assumed $3,000 monthly A60 benefit, not a LOPFI figure: A120 is 98% of $3,000, or $2,940; B50 is 94%, or $2,820, with 50% of that, $1,410, to the survivor; B75 is 89%, or $2,670 a month, and the survivor receives 75% of that, $2,002.50. If the B50 beneficiary is 5 years younger, 94% less 0.5% for each of the 5 years is 91.5%, so the member receives $2,745.00 (computed) and the survivor $1,372.50 (computed). LOPFI provides the actual amounts at application, so this shows the method only.

What is fixed, and the deadlines

The ACFR is clearest on finality: “Once the member’s first benefit payment becomes payable the option is irrevocable, except with a life changing event”. The Handbook does not use the word irrevocable but allows two changes: someone in A60 or A120 can switch to B50 or B75 after a marriage (“once you have been married for one (1) year and no later than eighteen (18) months thereafter”), and someone in B50 or B75 can revert to A60 “if there is a change in your marital status due to death or divorce”. An application must be received “at least thirty (30) days, but not more than ninety (90) days” before the effective date, and “Effective dates of retirement occur only on the first day of a month”. Counseling is available by appointment: “By scheduling an appointment with us, we will provide you with an estimated benefit as well as other costs”.

LOPFI Board Rule 17 is wider than the Handbook’s switch for a DROP participant. It says “should a change in marital status occur (through marriage, divorce or death of a spouse), a participant may rescind the elected benefit option and elect a different benefit option”, and it names all four options (A60, A120, B50 or B75), so after a divorce or a spouse’s death the new choice is not limited to A60. The Handbook sentence above remains the source for members who are not in DROP; ask LOPFI which applies before relying on either.

Early retirement

Early retirement is available “when an active Member has at least 20 years of service credit and is at least age 50, but younger than age 55”, and the benefit “will be permanently reduced 1/2 of 1 percent for each month the Member is younger than age 55”. A second route: “an active Member with 25 years of actual paid LOPFI service credit can retire at any age”, but “Time credited as a volunteer will not allow for eligibility”. A computed example from an assumed $4,200 final average pay and 25 years of paid service at age 52, not a LOPFI figure: 3% x 25 x $4,200 is $3,150 unreduced; 36 months under 55 at 0.5% each is 18%, so the benefit is 82% of that, $2,583 (computed) a month, permanently.

DROP: the deferred retirement option plan

DROP is open to “any active LOPFI-covered paid service Member who has at least 28 years of paid service credit or who has at least 20 years of paid service credit and is at least age 55”. Purchased service does not count: “total service credit shall not include purchased service credit”. Entering DROP ends service accrual: “No further service credit accrual (paid or volunteer) is permitted upon enrollment in DROP”. With 28 years or more, “75% of the Member’s monthly benefit is placed into the Member’s DROP account”; with at least 20 but less than 28 years and age 55, 72%. “The Member’s DROP account balance earns 6% annual interest that is awarded based on the average balance in the Member’s DROP account”. “The Member may remain in DROP up to a maximum of ten (10) years”. At the end, “At the conclusion of DROP, the Member shall terminate employment and begin receiving the full monthly retirement benefit calculated at the time they entered DROP”.

LOPFI Board Rule 17 counts two kinds of service the Handbook sentence does not mention. For eligibility it says “A member may use up to thirty-six (36) months of actual LOPFI volunteer service credit to attain eligibility to enroll in DROP.” It also says credited service “includes military service under ACA 24-10-502, but shall not include credited service that is purchased.” The volunteer months do not raise the deposit: “no volunteer service credit will be included in the calculation of the monthly DROP benefit.”

A computed example from the assumed $4,200 final average pay, 20 years of service and age 55, not a LOPFI figure: the monthly benefit at entry is $2,520, and 72% of it, $1,814.40 (computed), goes into the account each month. Five years (60 months) of deposits total $108,864 (computed) before the 6% interest.

DROP payout: lump sum, rollover, annuity or leaving it

The balance can be “Distributed directly to the Member as a lump sum payment less applicable tax withholdings”; “Rolled over to an investment entity”; paid as a monthly annuity; left on account; or split among these. “Any portion left on account will accrue 2% annual interest that is awarded based on the average account balance”, and “DROP monies left on account must be distributed no later than April 1st of the calendar year after the attainment of age 73”. If a member dies during the annuity period before payments equal the balance, the difference goes to the survivor or the estate. “Enrollment in DROP removes the ability for a Member to change LOPFI-covered departments or employers”.

LOPFI Board Rule 17 answers three details. On the last date, it says “In the case of a participant who attains age seventy-two (72) after December 31, 2022, and age seventy-three (73) before January 1, 2033, the applicable age is seventy-three (73).” A later cohort has a later age: “In the case of a participant who attains age seventy-four (74) after December 31, 2032, the applicable age is seventy-five (75).” On a death during the annuity period, “The survivor(s) may choose to either continue the DROP annuity payments or accept a lump sum distribution.” but “If the balance is paid to an estate, it shall be made in a lump sum distribution.” What the survivors receive is not the whole account: “before the total of the monthly DROP annuity payments equals or exceeds the original DROP account balance prior to distribution, that difference shall be paid to the member’s survivor(s), or if none, the member’s estate.” The payout “equal to the balance held in the DROP account” is the lump-sum choice at the end of DROP.

A rollover defers the tax; see 20% withholding on a pension lump sum. A computed example from an assumed $100,000 DROP balance taken as a taxable lump sum paid to the member, not a LOPFI figure: 20% withholding is $20,000, leaving $80,000 in cash before any further tax or penalty.

The partial annuity and lump sum option

A member who is eligible for an unreduced benefit and not in DROP may take a lump sum of “one month of benefit for each completed month of credited service beyond eligibility for an unreduced retirement benefit”, and “The lump sum shall not exceed an amount equal to 60 months of retirement benefits”. The price: “the Member’s remaining retirement benefit shall be reduced by the actuarial value of the withdrawn amount”. A computed example from the assumed $4,200 final average pay and 24 years of service at age 55, not a LOPFI figure: the monthly benefit is 3% x $4,200 x 24, or $3,024. With 48 completed months past the 20 years, the upper limit is 48 x $3,024 = $145,152 (computed) (the 60-month ceiling would be $181,440 (computed)). The Handbook prints no factor for the actuarial cut, so the reduced pension cannot be computed here.

LOPFI Board Rule 17 states the eligibility more broadly than not being in DROP. It applies when a member “does not terminate employment and retire when first eligible for an unreduced annuity as provided under ACA 24-10-604 and was not eligible or did not participate in the LOPFI DROP”, so a member who could have entered DROP but did not is covered.

Leaving before retirement: refund or keep it

A member who leaves before vesting “may elect to keep their Member contributions with LOPFI or receive a refund of their Member contributions”. The price: “If the Member receives a refund, they are ineligible to receive any future benefit associated with the paid service credit that was forfeited due to the refund”. After vesting but before retirement eligibility, “the Member is eligible for a deferred benefit or a refund of their Member contributions”. “The deferred benefit is computed in the same manner as a normal retirement benefit”, except that if the paid service was also covered by Social Security the 1% temporary annuity is not paid, and payments begin at normal retirement age. See pension refund versus leaving it.

A refund can be repaid: “The Member can receive credit for the previous LOPFI-covered employment when the Member returns to LOPFI the amount of Member contributions that were previously withdrawn plus interest”. The Handbook does not state the repayment interest rate or whether a refund carries interest.

Buying service credit

A vested member “may purchase up to five (5) years of credited service for active duty military service that was rendered before the Member’s employment was covered by LOPFI”; for other public safety service the member “may purchase up to fifteen (15) years of credited service as a public safety or law enforcement officer in any agency not covered by LOPFI or any reciprocal system”. The member must “pay the actuarial cost of the service credit purchase”, and payment in full is due at least 30 days before the retirement date. “Purchased service cannot be used for DROP eligibility”, and purchased service does not count toward vesting. See the pension buyback calculator for general buyback math; LOPFI’s quote controls.

LOPFI Board Rule 21 adds terms the Handbook sentence leaves out, for service bought under sections 24-10-506 and 24-10-510. The credit “will be used to determine the member’s total accrued service for benefit payment purposes but will not be used to determine final average pay.” The rule also says “Service credit purchases will only be permitted for paid service.” Payment can be spread: “The payment period shall not exceed a total of sixty (60) months.” Payment in full must still come at least 30 days before the retirement date, and purchased credit “shall not be credited to the member’s service credit record until full payment is received by LOPFI.”

Cost-of-living increases

“On July 1st of each year all eligible LOPFI retirees receive an annual 3% compound cost of living adjustment (COLA)”, and “A Member must have been retired for twelve (12) full months prior to July 1st to be eligible for their first COLA”. A computed example from an assumed $3,000 benefit, not a LOPFI figure: the first increase is 3% of $3,000, $90 (matching the Handbook’s own example, $3,090), and five compound increases bring it to $3,477.82 (computed). For DROP participants the raise on the future pension starts “once they reach year six (6) in DROP”; for survivors, “Once a survivor receives benefits for a full twelve (12) months, they will be eligible for their first 3% compound cost of living adjustment (COLA)”.

If the member dies before retirement

A benefit is payable if a paid member who has met the vesting requirement dies from non-duty causes, or a member with any amount of service dies from duty-related causes; an unvested paid member who dies from non-duty causes leaves only a refund of member contributions to the designated beneficiary. Where a benefit is payable, “For both duty and non-duty deaths, the designated beneficiary benefit is computed as if the Member had retired on the date of death and elected Option B50”. For a duty death with under 25 years of service, the benefit is figured as though the member had 25 years. “The minimum beneficiary benefit is the greater of 20% of FAP or $125 per month”. In the Handbook’s duty-death example, 3% x 4,875 x 25 is $3,656.25 a month (recomputed), and “B50 benefit = $3,656 x 94% = $3,436/month”, then “Spouse annuity = $3,436 x 50% = $1,718/month for life”. The example’s stated assumption: “The following examples assume the beneficiary was the same age as the Member and the type of service was paid and not covered by social security”.

What the IRS adds on tax

A refund or lump sum from a public pension is a distribution, so the IRS rules apply on top of LOPFI’s own. On withholding, the IRS says that a taxable eligible rollover distribution paid to you “is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later”, and that if you roll it over yourself “you’ll have to add funds from other sources equal to the amount withheld”. The Handbook lists a rollover among the DROP payout choices, which would avoid the mandatory withholding on the rolled-over part. The rollover clock, if the money is paid to you: “you have 60 days from the date you receive it to roll it over to another eligible retirement plan”.

On early distributions the IRS says “the law imposes a 10% additional tax on certain early distributions from certain retirement plans”. Its list of exceptions includes “Distributions made to you after you separated from service with your employer after attainment of age 55” and “Distributions made to a qualified public safety employee from a governmental plan” who separated from service during or after the year in which they attained age 50 or 25 years of service under the plan, whichever is earlier. Whether an exception fits a particular refund depends on your own plan and facts, so confirm it with a tax preparer before you take one.

Taxes at the state level

State treatment is at Arkansas retirement taxes and does Arkansas tax pensions; the state’s other large system is at Arkansas APERS retirement decisions.

Where the sources disagree

DROP lump sum. The Handbook says the account balance can be “Distributed directly to the Member as a lump sum payment”, while the ACFR says “received either as a lump-sum payment equal to the payments into their DROP account”. One wording could be read as excluding interest; neither document says. Ask LOPFI for the exact figure before electing.

Partial lump sum eligibility. The Handbook says any active member eligible for an unreduced benefit and not in DROP; the ACFR says “Any active vested member who is eligible for an unreduced retirement benefit and was not eligible or did not elect to participate in the DROP”, adding the word vested.

Finality. The Handbook describes only two marital-change cases; the ACFR’s broader phrase life changing event is not defined in the pages read.

What this page could not settle

• The Handbook prints no factor table for the DROP annuity or for the actuarial reduction in the partial annuity and lump sum option.
• The pages read do not state whether a refund of member contributions carries interest, or the interest rate on a repayment.
• The pages read do not describe spousal consent for choosing an option, taking a refund or taking a lump sum.
• The pages read do not state whether a partial annuity and lump sum payment can be rolled over; only the DROP balance is described that way.
• The pages read do not say which benefit program and Social Security status apply to a given employer, and so which formula applies.
• The pages read state no restriction on who can be the beneficiary under A60 or A120.
• The Board’s Rules and Resolutions and Arkansas law, which control over the Handbook, were not reviewed.

Arkansas LOPFI topic pages

Each row links to the page that reads one topic in the Arkansas LOPFI member documents: the topic, then the summary that page carries.

Common mistakes

• Choosing a survivor option without checking the beneficiary’s age and relationship: the B50 and B75 factors move with the age gap, and who can be named is limited.
• Treating the payment option as changeable later, when the ACFR calls it irrevocable once the first payment becomes payable, apart from marital-change cases and other life changing events.
• Taking a refund without weighing that it forfeits the future benefit tied to that paid service credit.
• Taking a DROP balance as a lump sum instead of rolling it over, and losing 20% to withholding up front.
• Assuming purchased service counts for DROP or vesting: the Handbook says it does not.

Related on this site: Arkansas retirement taxes, does Arkansas tax pensions, Arkansas APERS retirement decisions, single-life versus joint-and-survivor pension, pension refund versus leaving it, 20% withholding on a pension lump sum and public pension retirement decisions by system.

Sources

• Arkansas Local Police and Fire Retirement System (LOPFI), Your guide to LOPFI benefits: 2026 Member Handbook (2026 edition, PDF created August 21, 2026): https://www.lopfi-prb.com/Files/LOPFI-Member-Handbook.pdf
• Arkansas Local Police and Fire Retirement System (LOPFI), Forty-Third Annual Comprehensive Financial Report, fiscal years ended December 31, 2025 and December 31, 2024: https://www.lopfi-prb.com/Files/2025-Annual-Comprehensive-Financial-Report.pdf
• Arkansas Local Police and Fire Retirement System (LOPFI), LOPFI overview page (lopfi-prb.com, read October 2026): https://www.lopfi-prb.com/LOPFI
• IRS, Topic no. 413, Rollovers from retirement plans (irs.gov): https://www.irs.gov/taxtopics/tc413
• IRS, Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (irs.gov): https://www.irs.gov/taxtopics/tc558

Sources: the primary documents linked above, read on October 16, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.