SB494 Alabama 2011 Session

Summary

Primary Sponsor

Tom Whatley

Republican

Session

Regular Session 2011

Title

Retirement, Deferred Retirement Option Plan, new participation prohibited, limits on interest paid on DROP accounts, Secs. 16-25-150, 36-27-170 am'd.

Summary

SB494 would let DROP participants in Alabama's retirement systems leave service within the first three years without forfeiting the retirement-portion of their DROP account.

What This Bill Does

It amends Sections 16-25-150 and 36-27-170 to remove the rule that voluntary termination within the first three years in DROP results in forfeiture of the retirement-allowance portion. It ensures that both the retirement-allowance portion and the member's own contributions and any interest credited to that portion are not forfeited if the member leaves within three years. It preserves DROP features (eligibility, election timing, continued contributions, and interest accrual) and adds protections for involuntary dismissal, disability, spouse transfer, or death. It becomes law immediately.

Who It Affects

• DROP participants (teachers and education employees) who are in DROP and voluntarily leave within the first three years; their retirement-allowance portion would not be forfeited, and their contributions and any accrued interest would remain theirs.
• DROP program administrators and retirement system staff who implement and enforce the non-forfeiture rule when members terminate.

Key Provisions

• Amends Sections 16-25-150 and 36-27-170 to remove forfeiture for voluntary early DROP termination within three years; the retirement-allowance portion of the DROP account will not be forfeited.
• Ensures member contributions and any interest credited to the DROP retirement-allowance portion are not forfeited, and provides no penalty forfeiture if termination is due to involuntary dismissal, disability, involuntary spouse transfer, or death.
• Keeps existing DROP mechanics (eligibility, election, contribution requirements, and interest accrual at the same rate as active accounts; no COLA during DROP) and applies these changes to both the Teachers' and Employees' Retirement System DROP provisions.
• Effective immediately upon passage; the act is severable.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement