Updated October 8, 2026. Quick answer: An Austin police officer retiring under the Austin Police Retirement System chooses a life annuity or one of five survivor options, and the choice cannot be changed after retirement. Group A is paid 3.2 percent of average final compensation per year of service, Group B 2.5 percent. A member with 10 years can leave contributions on deposit; withdrawing returns contributions, not the city’s share. Forward DROP deposits carry a fee of 25 percent in year 1, falling to 5 percent.
What this page covers and which members it fits
This page works from documents the Austin Police Retirement System (APRS) publishes: its pension statute, Article 6243n-1, its Member Benefit Guide dated May 2025, three website pages on retirement benefits, annuity options and DROP, and its Five Year and Seven Year Forward DROP policies. The Guide adds: “In case of any conflict between the guide and the statute, the statute will prevail”. Any figure below is APRS’s, or is labeled as a computed example from assumed inputs.
The page covers both membership groups. The Guide lists Group A as “Hired on or before 12/31/2021” and Group B as “Hired on or after 1/1/2022”, and adds that “In the case of a member being rehired, dates can affect Group designation”. The DROP sections separate the groups. Tax on the pension and on a payout is on Texas retirement taxes and does Texas tax pensions.
When a pension can start and how it is figured
The statute sets the age and service tests by group. Group A: “A group A member shall be eligible for service retirement if the member has attained the age of 55 years and completed at least 20 years of creditable service with the city, or has completed 23 years of creditable service, excluding any military service established under Section 5.02 of this Act”. Group B: “A group B member shall be eligible for service retirement if the member has attained the age of 50 years and completed at least 25 years of creditable service with the city, excluding any military service established under Section 5.02 of this Act”. Either group: “Any member, irrespective of the number of years of creditable service, shall be eligible for service retirement after attaining the age of 62 years”.
The statute says each monthly payment of the life annuity “shall be equal to one-twelfth of: (1) for a group A member, the product of 3.2 percent of a member’s average final compensation multiplied by the number of months of creditable service; or (2) for a group B member, the product of 2.5 percent of a member’s average final compensation multiplied by the number of months of creditable service”. The averaging window differs: “the 36 months for a group A member or 60 months for a group B member which yielded the highest average during the last 120 months of membership service”.
A computed example from assumed figures, not an APRS figure: a Group A member with an assumed 25 years of service and an assumed $8,000 average monthly pay would have 3.2 percent x 25 x $8,000, a computed $6,400 a month. A Group B member with the same assumed inputs would have 2.5 percent x 25 x $8,000, a computed $5,000 a month. APRS’s own estimate governs, and in MemberDirect a member can “click Estimate a Benefit”.
The election: a life annuity or one of five survivor options
At retirement a member picks how the annuity is paid. The statute says that a written designation approved by the board “shall entitle the member to receive the actuarial equivalent of the life annuity”. APRS’s website lists the choices.
| Option | What the member receives | What a survivor receives |
|---|---|---|
| Life Annuity | A monthly annuity for the member’s life | No survivor benefit; any excess of accumulated deposits over payments received goes to beneficiaries or the estate |
| 100% Joint and Survivor | A reduced monthly annuity for life | The designated survivor receives the same annuity amount for life |
| 50% Joint and Survivor | A reduced monthly annuity for life | The designated survivor receives one-half of the annuity for life |
| 66-2/3% Joint and Survivor | A reduced monthly annuity for life | The designated survivor receives two-thirds of the annuity for life |
| Joint and 66-2/3% Last Survivor | A reduced monthly annuity for life | Two-thirds is paid to the last survivor of the two after either the member or the survivor dies |
| Fifteen Year Certain and Life | A reduced monthly annuity for life | If death comes before 180 payments, the remaining payments go to the survivor or estate |
The Guide says “A member’s benefit is permanently reduced if an option is chosen that provides survivor benefits”, and “The options that include benefits to a survivor are calculated according to the ages of both member and survivor included in the plan”. No percentage by which any option reduces the annuity appears in the pages read. For the general tradeoff, see single life vs joint and survivor pension.
A computed example from assumed figures, not APRS figures: if a Fifteen Year Certain and Life member died after an assumed 60 monthly payments, 180 less 60 leaves a computed 120 payments for the survivor or estate. If a member’s assumed reduced annuity were $6,000 a month, a two-thirds survivor would receive a computed $4,000 a month and a one-half survivor a computed $3,000. The $6,000 is invented, since the reduction is not published in the pages read.
What is irrevocable, and the survivor limits that can apply
After retirement the choice is locked: “A member may not change their chosen option or survivor after they have already retired”. The website says “This will be an irrevocable election”, and “this choice is binding for both the member and their survivor/beneficiary”.
Before retirement the choice can be made early and revised. The website says “A member may pre-select a survivor option within one year prior to their retirement eligibility date by filing an Annuity Option Election Form with the System”. Under the statute, “The member shall retain the right to make a final selection until the date of retirement”, and “The final selection shall be binding on all parties”. If the member dies after becoming eligible but before retiring, “their designated survivor’s benefit will be calculated as if they had retired and selected such option”.
IRS age-gap rules limit a survivor who is not a legal spouse. The website says “Annuity options are limited if the member chooses a survivor who is not their legal spouse, if there is more than a 10-year age gap between the member and their designated survivor”. “If the age gap is more than 10 but less than 25 years, the highest available annuity option is the 66 2/3% survivor benefit”. “if the age gap is 25 years or more, the highest available annuity option is the 50% survivor benefit”.
Retro DROP, Forward DROP and the DROP lump sum
APRS has two deferred retirement option plans (DROP). The Retro DROP is paid at retirement, and the website says it applies narrowly: “Effective April 1, 2015, the Retro DROP program will only apply to members with 23 years of credible service as of April 1, 2015”. The website says the Retro DROP “is a one-time benefit paid at retirement to a member with a subsequent associated reduced monthly annuity”, and “Permissive Service Credit purchase is not allowed in combination with this DROP program”.
The Forward DROP works while the member is still employed. The website says “The Forward DROP, is a one-time benefit that allows Group A active members to defer their annuity benefit payment into a DROP account while still working and before actual retirement”, and “A Member’s election to participate in the Forward DROP is irrevocable”. The Five Year policy, for the earlier program, says “A Member is eligible for a DROP retirement if he or she has 23 years of creditable service on or before February 17, 2016”, and also: “No Group B Member will be eligible for a DROP retirement”. The Seven Year policy’s eligibility list includes: “A Group B Member who has attained the age of 50 years and has 25 years of creditable service”. Because the programs differ, a Group B member should read the Seven Year policy as the one that applies.
No DROP money is paid while working: “No distribution may be made from a Member’s DROP account until the Member has separated from service as a police officer or as an employee of the System”. The lump sum is then paid in one payment, no later than “60 days after the last day of the month immediately following the participant’s Effective Date of Retirement” or the required minimum distribution date, whichever comes first, the policy says.
What the Seven Year Forward DROP costs
The Seven Year program is the one open to Group A members reaching 23 years after February 17, 2016 and to eligible Group B members. “The maximum period of time during which a Member may participate in DROP is eighty-four (84) months”. “A minimum of 90 days participation is required”. “A Member’s election to participate in DROP may not be changed”. Three costs are built in.
First, a fee on each monthly deposit, shown below. Second, contributions stop building anything: “The Member’s contributions under Section 8.01 that are made after the DROP Participation Date shall be immediately forfeited to the System and deposited into Fund No. 2 instead of to the Member’s DROP account or the Member’s individual account with the System”. Third, the Guide says for Group A members reaching 23 years after February 17, 2016 that “There will be no interest applied to the member’s Forward DROP account”.
| Year of DROP participation | Fee on the monthly deposit |
|---|---|
| Year 1 | 25% |
| Year 2 | 20% |
| Year 3 | 15% |
| Year 4 | 10% |
| Years 5 to 7 | 5% |
A computed example from an assumed $6,400 monthly annuity, not an APRS figure: the year 1 fee is 25 percent of $6,400, a computed $1,600, leaving a computed $4,800 deposited each month. In year 5 the fee is 5 percent, leaving a computed $6,080. The policy also says that “A Member who participates in DROP becomes ineligible for any disability benefit”.
After retirement, “the Member may transfer funds to a PROP account with the System”. On the PROP account, the Guide says “Partial payments are limited to two (2) distributions per calendar year” and “The IRS requires a minimum distribution from the PROP once members reach the IRS RMD age”.
Leaving before retirement: refund or leave it
Vesting decides the choice. The Guide says “When a member reaches ten (10) years of creditable service (excluding pre-membership military service) which may include approved Proportionate Service Credit if applicable, they become a vested member of the retirement system”. The statute adds that a vested member “shall have a right to elect to leave the member’s accumulated deposits with the police retirement system” until retirement age.
For someone who leaves, the default is the refund: “On employment termination, the member shall receive the amount of the accumulated deposits standing to the member’s credit in one lump sum, except that if such member has had at least 10 years of creditable service at the time the member separates from service, the member shall have a right to elect to leave the member’s accumulated deposits with the police retirement system”. The Guide says what comes back: “When a member leaves employment covered by APRS before becoming eligible for retirement, all member contributions and interest are returned, however, contributions made by the city of Austin remain with the System”. Interest is set by the board: “Accumulated deposits also include interest that is credited annually to the account of a vested member at a rate of five percent or the rate determined by the board”. Seven years after separation with under 10 years of service, if no previous demand has been made, the statute says unclaimed deposits “shall be returned to the member or to the member’s estate, but if the contributor or the member’s personal representative cannot be found or if the member dies without leaving heirs or legatees, the member’s accumulated deposits shall thereafter become a part of Fund No. 2”.
A refund ends the pension claim for that service, since the statute defines withdrawal as “employment termination for any cause whatsoever prior to retirement date and the subsequent receipt or direct rollover of the accumulated deposits standing to the member’s credit”. For how to weigh the two paths, see pension refund vs leaving it. The statute allows a direct rollover of an eligible distribution to an IRA or similar plan.
Withdrawing is not always final, but reinstating forfeited service has a price: “An interest charge of 8% per year is made to the System to reinstate the forfeited service credit”. Service in other Texas systems can help eligibility, but “proportionate service counts for eligibility purposes only and does not add to additional service credit years for pension calculation purposes”.
Buying service, divorce, death benefits and COLA
The Guide says permissive service is “Eligible service that can be purchased at the full actuarial cost by Group A members with at least 20 years of creditable service, excluding pre-membership military service, for up to 60 months with immediate retirement” and by Group B members who have attained age 50 with at least 22 years of creditable service, and “Cannot be used in conjunction with the Deferred Retirement Option Plans (DROP)”.
In a divorce, “Texas is a community property state, so any APRS benefits earned during a marriage may be divided by a court in a divorce proceeding”. On death after retirement, “the sum of $10,000 shall be payable in a lump sum to the member’s beneficiary or, if no beneficiary, to the member’s estate, unless the member shall have directed otherwise in writing, duly acknowledged and filed with the board”. The Guide cautions that “The City of Austin beneficiary designation form does not designate beneficiaries for APRS retirement benefits and cannot be used by APRS to pay out death benefits”.
On cost-of-living increases, the statute shows earlier COLA subsections as “Repealed by Acts 2021, 87th Leg., R.S., Ch. 738 (H.B. 4368), Sec. 16, eff. September 1, 2021”, and says “annuities already granted may not be reduced below the base retirement amount granted at time of retirement”. The pages read do not state a current COLA formula.
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 APRS’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”. APRS’s statute provides for a direct rollover of an eligible distribution, and its Seven Year DROP policy lists a rollover to an IRA among the ways a DROP distribution can be made before age 59 and a half. 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” if the employee separated from service during or after the year 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.
Where the sources disagree
On DROP for Group B, the Five Year policy says “No Group B Member will be eligible for a DROP retirement”, while the website and the Seven Year policy let a Group B member qualify at age 50 with 25 years. These are separate programs, but a Group B member should confirm with APRS which one applies. On interest, the Guide says “When a member leaves employment covered by APRS before becoming eligible for retirement, all member contributions and interest are returned, however, contributions made by the city of Austin remain with the System”, while the statute credits interest “to the account of a vested member”.
What this page could not settle
- The pages read do not state how much any survivor option reduces the monthly annuity, only that the reduction depends on the ages of the member and the survivor.
- The pages read do not state a current cost-of-living adjustment for retirees; the statute shows the earlier COLA subsections as repealed in 2021.
- The pages read do not state whether a spouse must consent to a refund or to a choice of the Life Annuity.
- The pages read do not state whether a member with under 10 years of service is credited interest on a refund.
- The pages price military, reinstated, probationary and cadet service purchases by formula, and say only that permissive service is at full actuarial cost with no figure.
- The Retro DROP policy, the Retiree forms and the individual option election forms were not read.
- The Guide is dated May 2025 and the Seven Year policy October 2022; the pages read do not show whether later board action changed a rule.
- Retiree health insurance is provided through the City of Austin and was not read.
Common mistakes
- Treating the option as changeable later; the Guide says a member may not change the chosen option or survivor after retiring.
- Naming a survivor without checking the IRS age-gap limits when the survivor is not a legal spouse.
- Enrolling in Forward DROP expecting to reverse it; the election is irrevocable and the Seven Year program carries a fee of up to 25 percent.
- Assuming a refund includes the city’s contributions; the Guide says they remain with the System.
- Buying permissive service credit and then planning for DROP; the Guide says it cannot be used with DROP.
Related on this site: public pension retirement decisions by system, Texas retirement taxes, does Texas tax pensions, Dallas ERF retirement decisions, pension refund vs leaving it and single life vs joint and survivor pension.
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Answer againSources
- Austin Police Retirement System, Article 6243n-1, Vernon’s Texas Civil Statutes (APRS statute as published by APRS): https://www.ausprs.org/Resources/7d91c651-a5cb-4881-969d-aadd51c2a42b/APRS%20Statute%20Article%206243n-1.pdf
- Austin Police Retirement System, APRS Member Benefit Guide (as of May 2025): https://www.ausprs.org/resources/13459dd8-4fac-4f65-a8e6-0504972d89fc/benefits-guide25final.pdf
- Austin Police Retirement System, Annuity Options (web page, read October 8, 2026): https://www.ausprs.org/actives/annuity-options/
- Austin Police Retirement System, Retirement Benefits (web page, read October 8, 2026): https://www.ausprs.org/actives/retirement-benefits/
- Austin Police Retirement System, DROP (web page, read October 8, 2026): https://www.ausprs.org/actives/drop/
- Austin Police Retirement System, Policy for the Five Year Forward Deferred Retirement Option Plan (adopted August 21, 2025): https://www.ausprs.org/resources/f3a93167-a0e3-497a-9018-7999f01e51eb/2025-five-year-forward-drop-final.pdf
- Austin Police Retirement System, Policy for the Seven Year Forward Deferred Retirement Option Plan (updated October 19, 2022): https://www.ausprs.org/Resources/8d2f81f3-040a-4c66-88c9-f0719c9c5742/SevenYearForwardDropPolicy.10.19.2022.FINAL.pdf
- 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 8, 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.