Distribution of DROP
When your DROP participation ends, you will have several options of how you can draw from your DROP account.
- You can take a total lump-sum distribution.
- You can take a partial lump-sum distribution and leave the balance in your DROP account to draw from at a later date.
- You can transfer the balance to another qualified plan.
- You can leave the balance in your DROP account, where it will continue to earn 3 percent interest. Money left on deposit in the DROP account can only be withdrawn up to four times per calendar year. Remember:
All money remaining in the DROP account must be withdrawn no later than April 1 of the calendar year after you are 70 years, 6 months of age.
Indicate your choice for your DROP distribution on the DROP Account Distribution Request (R0665H).
Tax Information for DROP Distributions
- State Police are exempt from the IRS's 10 percent early withdrawal penalty if they are age 50 or older when they take their lump sum DROP distribution. The distribution code on your federal income tax form 1099-R would reflect an "early distribution-exception applies."
Tax forms are issued each January. In the year that you take a DROP distribution from ORS, you will receive a federal 1099-R from ORS for your pension and another for your DROP distribution. If you transfer your DROP money to a qualified plan, once you begin taking distributions from your investment account, such as from Voya Financial®, your investment company will issue 1099-Rs for those distributions.