HB1 Alabama 2018 Session

Summary

Primary Sponsor

Tommy Hanes

Republican

Session

Regular Session 2018

Title

Retirement, Deferred Retirement Option Plan (DROP), options for Tier I and Tier II members to participate, reopened, Secs. 16-25-150, 16-25-151, 36-27-170, 36-27-171 am'd.

Summary

HB 1 would reopen the Deferred Retirement Option Plan (DROP) for Tier I and Tier II members of Alabama’s public retirement systems and add new participation options.

What This Bill Does

It reopens DROP for members of the Employees' Retirement System (ERS) and Teachers' Retirement System (TRS) and sets new participation options for Tier I and Tier II. Eligibility is Tier I: at least 25 years of service, age 55 or older, and eligible for service retirement; Tier II: at least 25 years of service, age 62 or older (or 56 for certain public safety roles), and eligible for service retirement. Enrollment can be chosen in 1-year increments from 3 to 5 years, and a member may participate only once; voluntary termination within the first three years would forfeit part of the retirement allowance, though contributions and interest are preserved. While in DROP, 80% of the monthly retirement allowance is deposited into the DROP account, with ongoing employer and employee contributions, and no DROP fees; at the end, a lump-sum payment plus accumulated contributions is made, with options to roll over or begin the regular monthly retirement benefit (which may be recalculated for sick leave) and with rules for death or beneficiary arrangements.

Who It Affects

• Tier I ERS/TRS members who meet the eligibility criteria (25+ years of service and age 55+ and eligible for service retirement) would be able to participate in DROP again under the new rules.
• Tier II ERS/TRS members who meet the eligibility criteria (25+ years of service and age 62+, or 56+ for certain public safety roles, and eligible for service retirement) would be able to participate in DROP again under the new rules.

Key Provisions

• Reopens DROP for Tier I and Tier II members of ERS/TRS with defined eligibility criteria (Tier I: 25+ years, age 55+, service retirement; Tier II: 25+ years, age 62+ or applicable public safety ages, service retirement).
• Allows participation to be elected in 1-year increments not less than 3 years and not more than 5 years, with participation limited to one time; enrollment window and timing align with current rules (no later than March 24, 2011 for initial program).
• During DROP, 80% of the monthly retirement allowance is deposited into the DROP account, contributions continue, there are no DROP fees, and interest accrues; after DROP ends, participants receive a lump-sum payment plus accumulated contributions, and may roll over to another eligible retirement plan or begin the regular retirement benefits (potentially recalculated for sick leave).
• Post-DROP rules include how benefits are recalculated with sick leave credits, how death or disability affects benefits, and the prohibition on earning service credit for time spent in DROP; option allowances and survivor/beneficiary provisions are maintained.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Deferred Retirement Option Plan (DROP)