SB149 Alabama 2019 Session

Summary

Primary Sponsor

Shay ShelnuttSenator

Republican

Session

Regular Session 2019

Title

Retirement, Deferred Retirement Option Plan (DROP), open participation in Employees' Investment Retirement Plan (EIRP), 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

SB 149 would reopen and expand participation in DROP through an Employees' Investment Retirement Plan (EIRP), giving Tier I and Tier II members options to participate under defined age and service rules.

What This Bill Does

It creates DROP EIRP as an optional feature within the retirement system and sets eligibility for Tier I (25+ years, age 55+, eligible for service retirement; with state police age exception) and Tier II (25+ years, age 62+ or 56+ for certain public safety roles, eligible for service retirement). Participation lasts 3 to 5 years (in annual increments), can be entered only once, and requires careful timing with a 30–90 day pre-participation window. While in DROP EIRP, the employee and employer continue contributions, 80% of the would-be retirement allowance is redirected into the DROP EIRP account, the account earns interest, and there are no DROP EIRP fees; and upon withdrawal, the member receives a lump sum and/or rolls over benefits, with monthly benefits resuming and sick-leave credits applied, while time in DROP EIRP does not count as retirement service credit.

Who It Affects

• Tier I and Tier II members of the Employees' Retirement System (ERS) and Teachers' Retirement System (TRS) who meet the eligibility criteria and choose to participate in DROP EIRP.
• Employers and the retirement system administration, which would manage DROP EIRP elections, ongoing contributions, account maintenance, benefit calculations, and distributions or rollovers.

Key Provisions

• DROP EIRP is established as an optional account within DROP to allow continued employment for a set period while deferring retirement benefits until the end of participation.
• Eligibility: Tier I members require at least 25 years of creditable service and age 55+ (with a state police age exception); Tier II members require at least 25 years of service and age 62+ (with certain public safety role age exceptions).
• Participation is limited to 3-5 years in annual increments, irrevocable once begun, and can be used only once per member; specific forfeiture rules apply for voluntary termination within the first three years, while some protections apply for involuntary termination, disability, spouse transfers, or death.
• During DROP EIRP, 80% of the monthly retirement allowance that would have been paid is deposited into the DROP EIRP account; both employer and employee contributions continue; DROP EIRP funds stay part of the regular retirement fund until disbursed; the account earns interest and has no fees.
• Sick leave may be treated for retirement credit only as allowed by law; the election to participate may include an option allowance, and the chosen option is irrevocable once participation starts.
• Benefits at withdrawal: participants receive a lump-sum from DROP EIRP and their accumulated contributions plus interest, with possible rollover to another eligible retirement plan; monthly benefits resume and are recalculated to reflect sick leave credits; any new service after DROP is treated separately and is not added to pre-DROP service for benefit calculation.
• If a participant dies or becomes disabled during DROP EIRP, lump-sum and beneficiary arrangements apply, with some limitations on other death benefits; end-of-period rules state that DROP contributions stop and withdrawal is required to begin monthly benefits.
• Effective date: the act would take effect January 1, 2020.

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)