Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated August 19, 2026. Quick answer: State Teachers Retirement System of Ohio (STRS Ohio) — the COLA is automatic — current practice unconfirmed, and whether it compounds is not stated, service credit can be purchased, and no DROP was found. Vesting takes 5 years of qualifying service credit. The four decisions below are the ones that are hard to reverse.
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 — current practice unconfirmed |
|---|---|
| Is the COLA compounded? | Unstated |
| Vesting | 5 years (‘five or more years of qualifying service credit’) is the threshold used in the age-65 retirement-eligibility pathway (ORC 3307.58(B)(1)), and is also the point at which the refund-interest formula becomes most favorable (ORC 3307.563) — functioning as the de facto vesting point for a future DB benefit. |
| Buy service credit? | Yes |
| DROP? | None found |
| State | Ohio |
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
ORC 3307.67 requires the board to annually increase each allowance/benefit payable under the STRS defined benefit plan. Eligibility for the first increase begins after 12 months of benefit receipt (if benefit began before Aug 1, 2013) or 60 months (if on/after Aug 1, 2013). The board retains statutory authority to adjust the increase if the actuary certifies it won’t materially impair the plan’s fiscal integrity — i.e., the board can lower or suspend the codified rate. Statute sets 3% annually through July 31, 2013, and 2% annually thereafter (ORC 3307.67) as the codified DEFAULT. Could NOT verify what rate the board has actually applied for 2025-2026 — STRS Ohio’s COLA is known to have changed/been frozen multiple times in recent years; this is UNCONFIRMED for current practice.
Buying service credit
Military active-duty/POW service (max 5 years, ORC 3307.752); prior teaching/comparable public service in another state, federal government, or Ohio municipal system (max 5 years, ORC 3307.74); exempted service (ORC 3307.73); leave of absence for illness/education/professional/board-approved reasons (max 2 years per period, ORC 3307.77); leave for pregnancy/adoption (max 2 years, ORC 3307.771); prior PERS/SERS service not already credited toward a paid benefit (ORC 3307.76); school/governing board member service (ORC 3307.78); restoration of previously withdrawn/refunded service credit (ORC 3307.71).
What it costs. For purchases on/after Jan 1, 2014: 100% of the actuarial liability resulting from the purchase, as determined by the STRS Ohio board (ORC 3307.70). Restoration of withdrawn credit (ORC 3307.71): repayment of the amount originally withdrawn plus board-determined compound interest. Leave-of-absence purchases (ORC 3307.77): based on last full year of compensation before the leave, plus compounded interest.
Run your own numbers before deciding — some purchases never recover their cost, and the calculator shows which.
Taking a refund
A member who ceases teaching may withdraw accumulated contributions (ORC 3307.56). Interest crediting scales with service length: under 3 years, up to 4% compounded annually; 3-5 years, up to 6% compounded annually; 5+ years, 6% plus an additional amount (funded from the employers’ trust fund) equal to a percentage of certain member contributions (ORC 3307.563). Per ORC 3307.56(C): payment of a member’s accumulated contributions ‘cancels the member’s total service credit in the state teachers retirement system’ — ALL service credit is wiped out, not just the most recent period. Per ORC 3307.563, the refund returns only the member’s own accumulated contributions plus interest — NOT employer (school district) contributions. Because all service credit is cancelled, the member also forfeits any right to a future monthly DB pension and forfeits retiree health-care eligibility that depends on service credit (health eligibility under ORC 3307.39 is tied to service credit that no longer exists after a refund). Yes, conditionally. ORC 3307.71 allows a former member to restore cancelled service credit by repaying the withdrawn amount plus board-determined compound interest, but only after returning to contributing service and accruing at least 1.5 years of new contributing service credit in STRS Ohio (or specified reciprocal Ohio systems).
This is the irreversible one. Refund versus leaving it in sets out the decision in the order it should be made.
DROP
No ‘deferred retirement option plan’ or DROP provision found anywhere in ORC Chapter 3307 (reviewed sections 3307.50-3307.81, covering the defined benefit and defined contribution plans in full). No section title or cross-reference to a DROP provision appears. N/A N/A
This is an absence-of-evidence finding: it means a DROP does not appear in the materials reviewed, not that the system has published a denial. DROP is rarer than it appears — of the twelve systems checked for this guide, only one has an active programme.
Survivor options
At retirement, a DB plan member elects a ‘plan of payment’ under ORC 3307.60: a single lifetime benefit (no survivor continuation), or one of several numbered joint-and-survivor options (Options 1-6 in statute) continuing a reduced benefit to named beneficiaries after death. Since Oct 1, 2002, a partial lump-sum option (6-36 months of benefit) combined with a reduced ongoing benefit is also available. Married applicants default to a specific survivor option (Option 3) unless the spouse consents otherwise or a court order applies. Per ORC 3307.60, the member may freely change the plan-of-payment election until the first payment is made. Once the first payment is made, the election generally becomes irrevocable, subject to narrow exceptions — e.g., certain retirants who chose a single lifetime benefit (or other plans) may add a spouse after a post-retirement remarriage, within stated limits.
What could not be verified
IMPORTANT BLOCKER: strsoh.org (STRS Ohio’s own website) was completely inaccessible this session (HTTP 403 on every attempt), so unlike the task’s preferred sourcing order, ALL facts here come from the Ohio Revised Code (an allowed source) rather than STRS Ohio’s own handbook/FAQ. This is flagged explicitly: (1) COLA current-practice status (has the 2%/year statutory default been frozen/modified recently?) is UNCONFIRMED. (2) DROP absence is inferred from statutory silence, not confirmed against STRS’s own FAQ. (3) Whether a ‘Combined Plan’ still exists for legacy members is UNCONFIRMED — current statute (ORC 3307.031) names only a Defined Benefit plan and a Defined Contribution plan. (4) Rollover as a service-credit-purchase payment method is unconfirmed. Recommend a follow-up direct read of strsoh.org before publication, especially for COLA and DROP claims.
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://codes.ohio.gov/ohio-revised-code/section-3307.01
- https://codes.ohio.gov/ohio-revised-code/section-3307.56
- https://codes.ohio.gov/ohio-revised-code/section-3307.563
- https://codes.ohio.gov/ohio-revised-code/section-3307.58
- https://codes.ohio.gov/ohio-revised-code/section-3307.60
- https://codes.ohio.gov/ohio-revised-code/section-3307.67
- https://codes.ohio.gov/ohio-revised-code/section-3307.70
- https://codes.ohio.gov/ohio-revised-code/section-3307.71
Read 2026-08-04.
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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.