Is the DROP Worth It for Police and Fire? (Florida and Ohio Examples, 2026)

What a DROP is actually trading

On the day you enter a DROP, your plan freezes your pension at your years and pay right then. Every month afterwards that frozen check goes into an account with your name on it instead of your mailbox, credited at a rate the plan sets. You keep working and keep your salary, then walk out later with the account. What you give up is everything those extra years would have added to the pension itself — service credit and a higher final average salary — for life. So the DROP is one comparison, and only one:

The lump sum you would collect, against the present value of the extra monthly pension you would otherwise earn, for as long as you would collect it.

Two things decide it, and neither is the size of the lump sum: how fast your plan's formula keeps growing after the entry date, and how long you live.

Maria, a Florida firefighter at 50

Maria is 47, in the FRS Special Risk Class, and plans to retire at 50 with 25 years. Her pensionable pay is $85,000 today, rising 2% a year. She has $60,000 in her 457, adds $300 a month, and expects to spend $5,700 a month in today's dollars.

FRS Special Risk pays 3.00% a year, so 25 years is 75% of pay. Her pay reaches $90,203 at 50, making the pension $5,638 a month — $67,652 a year, at fifty. The 457 grows to about $83,234 and adds $277 a month at a 4% draw: $5,915 against $6,049 of spending, 98% covered. Florida safety jobs are inside Social Security, so about $2,972 more arrives at 67, taking her to $8,887.

Now the DROP. FRS allows 96 months, and money credited from July 1, 2023 earns 4.00% a year, so her frozen $5,638 banked monthly for eight years becomes $634,708 at 58. Working those eight years instead means 33 years of service — 99% of pay — on pay grown to $105,687: $8,719 a month, or $3,081 more, for life. Discounted at 4% from 58 to 85, that extra pension is worth $614,826 today. The DROP wins by $19,882, and the higher pension catches up at about age 87.

A coin flip dressed as a windfall. Run your plan, years and pay through the first responder pension and DROP engine before signing the election packet — the tie breaks differently at every length.

Short DROPs lose. Long DROPs win.

Same firefighter, only the DROP length changes. "Advantage" is the lump sum minus the present value of the pension she gives up.

The worst deal there is a four-year DROP, at −$17,188; the best is the maximum eight. The reason is arithmetic, not policy: the lump sum compounds on a growing base for the whole period, while the pension you surrender is discounted over a shorter remaining retirement each year you delay. Half-measures collect neither effect. If your plan's DROP is worth taking at all, take the maximum term — and run each length to see where your own sign flips.

Ohio OP&F: the same eight years wins by $136,829

The same numbers under the Ohio Police & Fire Pension Fund: a 45-year-old officer retiring at 48 with 25 years on $85,000 of pay, entering an eight-year DROP credited at 4.44% — OP&F's rate for July to September 2026, set at the 10-year Treasury with a 2.5% floor and a 5% cap.

OP&F pays 2.5% a year for years 1 to 20, then 2.0% for years 21 to 25 and only 1.5% for years 26 to 33, capped at 72% of pay. So 25 years is 60% of pay, and on pay grown to $90,203 by 48 that is a $4,510 a month pension. Eight years of DROP builds $516,803. Working through to 56 instead would pay $6,341 a month — just $1,831 more, worth $379,975 in present value.

The DROP wins by $136,829 and the break-even age is past 120 — not because OP&F is generous, but because its formula flattens. Every year past 25 buys 1.5% instead of 2.5%, and the 72% cap is in sight. When the benefit curve goes flat, the pension you give up is small and the DROP is close to free money.

Houston is the mirror image. A 45-year-old HPOPS officer at 20 years, taking a ten-year DROP credited at 5%, banks $501,873 and still loses by $20,722 — he is on the steep part of the curve with a decade of raises ahead. Check where your multiplier is going, not what the lump sum looks like.

The two assumptions that flip the answer

Every DROP comparison rests on a rate of return and a length of life. Maria's eight-year FRS DROP under each:

The break-even age holds at 87 through the first four rows on purpose: it is a property of the lump sum and the pension given up, not of how long you plan to be around. What changes is whether you get there.

The FRS answer swings from +$90,608 to −$86,030 on nothing but how long Maria lives, and from −$137,984 to +$80,940 on what she earns on the money. A pension is an annuity you cannot outlive; a lump sum is a portfolio you can. If your family history is long, or the money will sit in a money market fund, the higher pension is the safer half of the trade — and the retirement calculator shows what either version does across a whole retirement rather than at the exit date.

What 25 years buys across twelve plans

Same officer, 47 today, 25 years of service, $85,000 of pay rising 2% a year, each plan at its own earliest normal retirement rule. The dollar column carries the retirement date as well as the formula, so pay has grown longer where the rule pushes retirement later.

NYC Tier 3 is the row to look at twice: it caps at 50% of final average salary however long you serve, and from 62 the pension is cut by half of your Social Security. Two rules that never appear in the multiplier do most of the work.

The 457, and the money you can reach at 50

A public safety pension starts twenty years before an ordinary one, which makes the 457 the bridge. Three rules matter more than any fund choice.

Money you contributed to a governmental 457(b) carries no 10% early-withdrawal penalty at any age once you have left the job. Pension plan, 401(a) and 403(b) money gets a narrower break: no penalty for a qualified public safety employee who separates in or after the year they turn 50, and since SECURE 2.0 at any age with 25 years of service under the plan. Roll any of it into an IRA and you lose that break until 59½ — the most common expensive mistake made with a DROP payout.

The 2026 elective deferral limit is $24,500, plus $8,000 from age 50 and $11,250 at ages 60 to 63. In the three years before your plan's normal retirement age a governmental 457(b) also allows up to twice the limit, $49,000, capped at room you did not use earlier. It cannot be combined with the age-50 catch-up; take the larger. And the DROP payout is fully taxable when paid to you, with 20% mandatory federal withholding on a direct payment. A rollover defers it — but under 59½, roll it inside the governmental plan, not to an IRA.

One 2025 change matters here too: the Social Security Fairness Act repealed the Windfall Elimination Provision and the Government Pension Offset, so a police or fire pension no longer cuts Social Security earned in other work, or a spousal or survivor benefit. If your department is outside Social Security — most are — every covered job before and after now pays in full. When to start it is an open question at 50, and the Social Security breakeven calculator is where to settle it.

FAQ

Q: Is the DROP worth it? It is worth it when your plan's formula flattens and you take the maximum term. Under Ohio OP&F, where years 26 to 33 earn only 1.5%, an eight-year DROP beats working through by $136,829. Under Florida FRS, where every year still earns 3%, the same eight years wins by only $19,882 — and a four-year DROP loses $17,188.

Q: How big is a DROP lump sum? Your frozen monthly pension, deposited every month and compounded at the plan's rate. A $5,638 pension banked for eight years at 4.00% comes to $634,708; at five years, $373,095. FRS credits a flat 4.00%; OP&F uses the 10-year Treasury with a 2.5% floor and a 5% cap, 4.44% in the third quarter of 2026.

Q: What is the break-even age on a DROP? The age at which the larger pension you passed up has caught up with the lump sum — about 87 on the Florida firefighter's eight-year DROP, 78 on a one-year DROP. Live past it and working through would have paid more. A long-lived family is a real argument against the lump sum.

Q: How is the DROP taxed when I leave? Every dollar is ordinary income in the year it is paid to you, and the plan must withhold 20% for federal tax on a direct payment. Taking the whole account in one year pushes much of it into higher brackets. A direct rollover defers the tax; keep it inside a governmental plan if you are under 59½.

Q: Can I take 457 money at 50 without a penalty? Yes, once you have separated from the job. Amounts you contributed to a governmental 457(b) are never subject to the 10% additional tax, at any age; only money rolled in from another plan type can be. Income tax still applies to every pre-tax dollar.

Q: Can I work after I retire and keep the pension? Private-sector work never affects a public pension. Returning to an employer inside the same system is where the rules bite: FRS retirees and DROP leavers cannot work for any FRS employer for 6 calendar months without voiding the retirement and the payout, and the pension stops for any month of FRS work in months 7 through 12. Check your plan's waiting period first.

Sources

• FRS Employer Handbook chapter 9 — Special Risk formula, DROP terms and the early-retirement reduction
• Ohio Police & Fire Pension Fund — service retirement definitions and DROP information
• IRS — 457(b) contribution limits and the three-year special catch-up
• IRS — exceptions to the 10% additional tax (public safety at 50; governmental 457(b))