HB136 Alabama 2025 Session

Summary

Primary Sponsor

Terri CollinsRepresentative

Republican

Session

2025 Regular Session

Title

Retirement, deferred retirement option plan (DROP), options for Tier I and Tier II Teacher Retirement System members to participate, reopened

Summary

HB136 would reopen the Deferred Retirement Option Plan (DROP) for Alabama's Teacher Retirement System and create new DROP participation options for Tier I and Tier II classroom teachers, with eligibility rules and a sunset date.

What This Bill Does

The bill reopens DROP and adds specific participation options for Tier I and Tier II members who are classroom teachers. It sets eligibility: Tier I requires 25–30 years of service and at least 55 years old; Tier II requires 30+ years of service and at least 62 years old, with both groups needing to be classroom teachers. Elections to participate can be in 3–5 year increments, may be made only once, and contributions continue while in DROP; upon withdrawal, members receive a lump-sum and a monthly retirement allowance, with sick-leave credits handled under existing rules; a sunset limits participation after July 31, 2031, and the act becomes effective immediately.

Who It Affects

• Tier I and Tier II TRS members who are classroom teachers and who meet the new age and service thresholds would have the option to participate in DROP.
• Local boards of education, TRS employers, and TRS administrative entities (Board of Control and the State Superintendent) who certify eligibility, administer DROP elections, and implement the new procedures.

Key Provisions

• Reopens the DROP program for TRS members and adds participation options for Tier I and Tier II classroom teachers.
• Tier I eligibility: at least 25–30 years of creditable service, age 55 or older, eligible for service retirement, and employed as a classroom teacher; Tier II eligibility: at least 30 years of creditable service, age 62 or older, eligible for service retirement, and employed as a classroom teacher.
• A classroom teacher is defined as a K-12 instructor with an average of at least four hours per day, excluding aides and full-time administrators; the State Superintendent must certify eligibility and annually verify continued eligibility.
• Election to participate can be made in 3–5 year increments, may be participated in only once, and is irrevocable once the period begins (with certain exceptions).
• Sick leave cannot be used to establish retirement eligibility or calculate the original retirement allowance for DROP, except as provided in existing law; participation rules and sick-leave conversions remain otherwise governed by current sections.
• Contributions continue from both employer and employee; DROP funds are kept within the regular retirement system and are not subject to fees; the DROP account earns interest like active accounts.
• If a participant withdraws after the DROP period, they receive a lump-sum payment plus accumulated contributions with interest, and may roll over to an eligible retirement plan; the monthly benefit begins at withdrawal and is recalculated to reflect sick-leave credits; the option chosen at DROP start cannot be changed.
• If a participant dies, terminates voluntarily, or does not complete the period, lump-sum and accrued contributions are paid to beneficiaries or estate, with rules governing survivor benefits and sick-leave adjustments.
• No DROP participation after July 31, 2031; the Board of Control must adopt procedures to implement the section; the act takes effect immediately.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement