Colorado FPPA Retirement Decisions: Options and Refunds

Updated October 8, 2026. Quick answer: In the Fire & Police Pension Association of Colorado’s Statewide Retirement Plan Defined Benefit Component, a pension pays 2% of Highest Average Salary per year of service for the first ten years and 2.5% after. Members vest after five years and pick a payment option (single-life, 100%, 75% or 50% survivor, 50% last survivor, with or without a pop up) shortly before benefits start. DROP lets a member keep working up to five years while pension payments build a cash account, and the DROP election is irrevocable. A refund returns contributions plus 5% as interest and forfeits all employer contributions.

What this page covers and what it does not

This page works from FPPA’s brochure for the Statewide Retirement Plan Defined Benefit Component (the edition read is dated 5/12/26), two pages of its website on that Component and on refunds, and two DROP forms. It covers one membership group only. The brochure says the Component “covers all full-time firefighters, police officers, and other first responders of participating departments in Colorado hired on or after April 8, 1978”, and refers to it as “formerly the Statewide Defined Benefit Plan”. The Hybrid, Social Security and Money Purchase Components, the Colorado Springs New Hire Pension Plan, the volunteer plans and the Old Hire plans were not read, and the pages read set up no new-hire versus old-hire comparison. Every figure below is FPPA’s or is labeled a computed example from assumed inputs.

The brochure carries its own caveat: “Official interpretations or determinations are based upon the statutes, plan documents, rules and regulations which govern these plans.” The Component page names the Colorado Revised Statutes as a governing document, saying “Colorado Revised Statutes (Refer specifically to Title 31 Article 31 Part 4)”. For state tax questions see Colorado retirement taxes and does Colorado tax pensions.

When the pension can start and how it is figured

Normal Retirement is stated as “25 years of service credit and age 55 OR eligible for Rule of 80 with a minimum age of 50”, where the Rule of 80 applies when “they have reached age 50, their combined age and years of service credit equal at least 80, and they are not receiving a disability benefit”. Early Retirement is “Minimum of five years of service credit, payable at age 50”, Vested Retirement is “Minimum of five years of service credit, payable at age 55”, and the Component page adds that “Members are vested in their benefits after five years”. The formula is the same for each: “Members receive a 2% benefit for each year of service credit for the first ten years, then a 2.5% benefit for each year of service credit thereafter.” Highest Average Salary is “the average of the highest three (3) calendar years’ Base Salary while in the Statewide Retirement Plan”.

A computed example from assumed figures, not an FPPA figure: for an assumed 25 years of service credit, 10 years at 2% plus 15 years at 2.5% is a computed 57.5% of Highest Average Salary. On an assumed Highest Average Salary of $60,000, that is $60,000 times 57.5% divided by 100, a computed $34,500 a year, or a computed $2,875.00 a month before any payment option reduction. The brochure’s own example uses the same 57.5% for 25 years.

Early, vested and deferred starts

Early Retirement is not a full-benefit start. The brochure says: “the Member’s projected Normal Retirement benefit is reduced on an actuarial equivalent basis to reflect the early receipt of the benefit”. The reduction factors were not readable as text, so no early-start percentage is given here. Deferral runs the other way: members who qualify for Normal or Vested Retirement “may delay the start of their defined benefit pension to as late as age 65”. The brochure warns that “There is a separate factor for each age, specific to both the year and the month”.

A computed example from an assumed $2,000 monthly benefit at 55, not an FPPA figure: the brochure illustrates a $1,000.00 benefit at 55 becoming $1,529.50 at 60, a 152.95% factor, which applied here gives $2,000 times 152.95% divided by 100, a computed $3,059.00 a month from 60. That factor is the brochure’s illustration for one age pair; the table in effect when benefits begin decides the real number.

The election: payment options and what each does for a survivor

The brochure sets out the timing: “Members wait to elect their payment options until shortly before they begin receiving their benefit.” “This timing ensures that the beneficiary and payment option calculations are accurate.” The table uses its worked example: a member age 55, a beneficiary age 53, 25 years of service credit and a base salary of $50,000.00 a year. The brochure shows “$50,000.00 X 57.5% = $28,750.00 annually”, then multiplies by each option’s factor. The Single-Life amount is computed here, since the brochure does not print it as text: $28,750.00 divided by 12 is a computed $2,395.83.

Of the survivor options the brochure says: “This monthly benefit is actuarially equivalent to the Single-Life Benefit.” The factors are the price of survivor protection and depend on ages. The factor tables are images in the brochure and could not be read, so factors for other age pairs are not given. On the pop up versions, the brochure says “if the designated beneficiary dies before the retiree, the pension benefit “pops up,” or reverts to the Single-Life Benefit”, and “The pop up is effective the first day of the month following the beneficiary’s death”. It also warns: “If a Member elects a non-spouse beneficiary who is significantly younger than the Member, certain restrictions may prohibit the election of this payment option or may require additional calculations in order to comply with US Treasury Regulations.” The pages read do not describe a spousal consent or waiver form for this Component. For the general trade-off see single-life versus joint-and-survivor pension.

A computed example of what survivor protection costs

A computed example from assumed figures, not an FPPA figure: the assumed single-life benefit above is a computed $2,875.00 a month. Applying the brochure’s 0.894 factor for the 100% option (its age 55 and beneficiary age 53 factor; other ages use other factors) gives a computed $2,570.25 a month, $304.75 less than single-life, and the beneficiary would keep that computed $2,570.25 for life. With the brochure’s 0.944 factor for the 50% option, the retiree receives a computed $2,714.00 and the beneficiary a computed $1,357.00 after the retiree’s death. The real comparison depends on the beneficiary’s age and the member’s own record, which FPPA can run.

What is irrevocable, and the DROP election

For a standard pension, the pages read do not state a filing deadline, a date after which the option cannot be changed, or a revocation period; confirm those with FPPA before signing. DROP is stated plainly. The brochure defines it: DROP “allows Members to build up a cash account during their final years before retirement”. “When a Member enters DROP, they will technically retire for pension purposes, but will actually continue to work at their department for up to five (5) years.” The brochure adds that “while participating in DROP, Members do not earn additional service credit toward retirement”. Eligibility is “Be eligible for Normal Retirement”; “Be eligible for Vested Retirement and age 55”; or “Be eligible for Early Retirement”, with a written agreement between the Member and the Employer also required.

The election form is titled “IRREVOCABLE ELECTION TO PARTICIPATE IN THE DEFERRED RETIREMENT OPTION PLAN (DROP) AND RESIGNATION FROM EMPLOYMENT”. It states: “participation in the DROP requires the Member to choose Member’s retirement benefit payment option at the same time the Member elects to participate in the DROP” “The Member may participate in the DROP only once.” “No disbursement of any DROP funds can occur absent the retirement or death of the Member.” On risk it says “it is possible, due to economic or investment factors or a combination of both, that substantial losses could occur in the DROP account”. The member is given “at least twenty-one (21) days to consider the Agreement” and can “revoke Member’s signature on this Agreement within seven (7) days after signing it”; the pages read state no other revocation period.

A computed example from an assumed $2,875 monthly pension, not an FPPA figure: all 60 monthly payments over five years would deposit $2,875 times 5 years times 12 months, a computed $172,500, before the member’s own contributions, which the brochure also routes into the account, and before any investment gain or loss.

Leaving DROP, a lump sum, and what is silent

At exit the brochure says: “Distributions may be paid as periodic payments, or as a lump sum.” “Monthly pension benefit payments will begin the month following the month you terminate DROP.” The brochure adds that “a Member could use all or a portion of their DROP account to purchase a monthly lifetime benefit, which may include a survivor benefit and Cost of Living Adjustments (COLAs) if they are awarded”, and “The “purchase of a monthly lifetime benefit” option must be elected before the Member receives their first payment from the Statewide Retirement Plan”. The Termination form says a request for this is only an estimate: “Marking the boxes on this application only indicates that you would like an estimate prepared. It is not an irrevocable election.”

Overstaying has a cost. The election form says “if the Member continues to work after the expiration of the DROP period, the DROP account will be forfeited and transferred from the fire and police members’ self-directed investment fund to the fire and police members’ benefit investment fund, and the Member will be awarded service credit for the DROP participation period, subject to Rules and Regulations adopted by FPPA”. See 20% withholding on a pension lump sum and pension lump sum versus monthly annuity break-even.

The pages read describe three lump sums: the DROP account, the Single-Life floor paid to a beneficiary or estate after death, and the refund of contributions. They do not describe a partial lump sum at retirement or a cashout of the pension itself, so that should be confirmed with FPPA in writing.

Leaving before retirement: refund or leave it on deposit

The brochure’s refund rules: “If a Member terminates employment with less than five years of service credit, they may choose to receive a refund of their Member contributions plus 5% as interest.” For a member with more than five years: “If a Member terminates employment with more than five years of service credit, the Member’s contributions plus 5% as interest may be refunded, instead of receiving a retirement benefit.” “If a refund is chosen, all Employer contributions to this Component are forfeited.” A vested member can instead leave the contributions in place, since “Members are vested in their benefits after five years” and Vested Retirement is payable at 55. The trade is the one the brochure names: a refund is “instead of receiving a retirement benefit”. For the general comparison see pension refund versus leaving it.

On process, FPPA says “Inactive Members who have terminated service may claim refunds of their individual contributions in the Member Account Portal”. Members choose “A refund”, “A rollover (to an eligible qualified plan such as a 457, 401(k) or IRA)”, or “A split between a refund and a rollover”. “If choosing a refund, members may also select whether to receive the funds as a paper check or direct deposit.” To begin the application a member must be “officially inactive from their department for at least 30 days”, and the page warns that “The system will not save your information until you submit your refund request”. It also links a “Special Tax Notice Regarding Your Rollover Options”.

A computed example from an assumed $10,000 taxable refund paid to the member, not an FPPA figure: 20% of $10,000 is a computed $2,000 withheld for federal tax, leaving a computed $8,000 in cash; a direct rollover avoids that withholding, as the IRS section below explains. The pages read do not state whether the 5% interest is annual or a single credit, or whether a spouse must consent to a refund.

Service credit, COLAs and beneficiaries

“FPPA Members who have prior public employment time with a non-FPPA employer, employment with a private employer, or military service may be eligible to purchase service credit under the Statewide Retirement Plan if certain conditions are met.” After one year of earned service credit, members may buy “Any public employment time for which they are not eligible for a retirement benefit” and “Up to five years of military time for which they are not eligible for a retirement benefit”; after five years, “Up to five years of private employment for which they are not eligible for a retirement benefit”. The brochure states that “purchase(s) can be made throughout the Member’s career, but must be completed prior to retirement or entry into DROP”. On cost: “The cost is based on the Member’s age and highest annual base salary in the Plan.” For whether a purchase pays back see the pension buyback calculator.

“Cost of Living Adjustments (COLAs) are not guaranteed and are not a fixed amount. They are set annually by the FPPA Board of Directors.” “COLAs may be any amount, up to the rate of inflation (measured by CPI-W) or 3%, whichever is greater.”

On beneficiaries, the brochure says: “Members may change their beneficiaries any time prior to retirement by logging into the Member Account Portal (MAP).” “If a Member passes away prior to Normal Retirement eligibility, benefits may be paid under the Statewide Death & Disability Plan.”

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 FPPA’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”. FPPA’s refund page describes the same two outcomes, a refund paid out or a rollover to an eligible plan, and a split of the two. 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.

What this page could not settle

• The pages read do not state a filing deadline for the retirement application or a date after which a payment option outside DROP cannot be changed.
• The Early Retirement reduction factors, the Deferred Retirement factors beyond one illustration and the survivor factors for other age pairs were not readable as text; the tables are images in the brochure.
• The pages read do not state whether a spouse must consent to a refund or to a single-life election.
• The pages read do not state whether the 5% interest on refunded contributions is annual or a single credit, or what happens at exactly five years of service credit, since the refund paragraphs say less than five and more than five.
• The pages read do not describe a partial lump sum or a cashout of the pension, other than the DROP account, the refund and the lump sum a member may take from the Money Purchase Component.
• The Hybrid Component, the Social Security Component, the Money Purchase Component, the Statewide Death & Disability Plan, the Colorado Springs New Hire Pension Plan and the Old Hire plans were not read, nor were the Rules and Regulations or the statute; the DROP forms are editions dated 10-11-22 and 11-14-25.
• The pages read do not state Colorado state tax treatment of any payment.

Common mistakes

• Treating the payment option as casual; the brochure says members elect shortly before benefits start, and DROP participants choose at entry.
• Choosing a survivor option without checking the age factor; the brochure’s example factors are for a member age 55 and a beneficiary age 53 only.
• Entering DROP without reading the irrevocable election, the one-time participation limit and the five-year ceiling.
• Taking a refund without weighing what is lost; all employer contributions are forfeited and the lifetime pension is replaced.

Related on this site: public pension retirement decisions by system, Colorado retirement taxes, does Colorado tax pensions, Colorado PERA retirement decisions, Denver DERP retirement decisions and pension refund versus leaving it.

Sources

• Fire & Police Pension Association of Colorado, Statewide Retirement Plan Defined Benefit Component brochure (edition dated 5/12/26): https://fppaco.org/files/c3024ff34/SRP-DB-Brochure.pdf
• Fire & Police Pension Association of Colorado, Refunds (web page, read October 8, 2026): https://www.fppaco.org/refunds
• Fire & Police Pension Association of Colorado, Statewide Retirement Plan: Defined Benefit Component (web page, read October 8, 2026): https://www.fppaco.org/statewide-retirement-plan-defined-benefit-component
• Fire & Police Pension Association of Colorado, Statewide Retirement Plan Irrevocable Election to Participate in the Deferred Retirement Option Plan (DROP) and Resignation from Employment (form SDBP_IETPITD 10-11-22): https://www.fppaco.org/files/f67710bfe/DBS-DROP-Participation.pdf
• Fire & Police Pension Association of Colorado, FPPA Defined Benefit System Termination of DROP Participation (form FDBSTODP 11-14-25): https://www.fppaco.org/files/11107a2d3/DBS-DROP-Termination.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.