DROP withdrawals

Your participation in DROP is over and you’ve officially retired! So, what’s the next step? Before you start withdrawing the money in your DROP account, please review your withdrawal options and the tax laws that affect these withdrawals. TRSL will send you information on withdrawal options specific to your account, which will help you decide when and how often to take withdrawals.

The federal SECURE Act of 2019 increased the age to begin required minimum distributions (RMDs) from 70½  to 72, effective with those turning 70½  in 2020.

When you can take withdrawals:

Immediate withdrawals: Withdrawals can begin as early as the 15th of the month following payment of your first monthly regular retirement benefit.

Delayed withdrawals: Age determines how long you can put off withdrawing funds from your DROP account:
  • If you are under age 72 in the calendar year in which you retire, withdrawals can be delayed for up to 11 months after your retirement date.
  • If you are 72 or older in the calendar year in which you retire, withdrawals can be delayed for up to 11 months or until March 15 of the calendar year that follows your retirement date, whichever occurs first.
NOTE: Your first withdrawal will include a retroactive payment back to your date of retirement, if you delayed beginning withdrawals or your first payment was delayed until you received your first monthly benefit.

Frequency of your withdrawals:
  • Monthly withdrawals: An amount to be determined by your life expectancy or an amount specified by you to last for a period less than your life expectancy.
  • Annual withdrawals: Same as monthly withdrawals. You select the month in which the annual payment is made.
  • Partial, single-sum withdrawal: Can be taken once during the lifetime of you or your spousal beneficiary. If the partial, single sum is taken when beginning withdrawals, the balance of the account must be taken out monthly or annually, not to exceed your life expectancy.
  • Total DROP account balance withdrawal: Your total account balance can be withdrawn any time after ending DROP participation and terminating employment, and may be withdrawn even after beginning a series of withdrawal payments. There are potential tax issues if you do this.
NOTE: The manner in which funds are withdrawn from DROP accounts can have serious tax consequences. TRSL recommends you consult a qualified tax advisor before making any decisions about withdrawing your funds.

Related forms & information

DROP account withdrawals are made on the 15th of each month. Please make sure you submit forms so that TRSL receives them at least 30 days before the disbursement of funds.

  DROP handbook
  DROP/ILSB accounts: Information on withdrawals and interest
  Special Tax Notice regarding TRSL payments 
  DROP interest rates
  DROP/ILSB statements
  Internal Revenue Service

  DROP or ILSB Retiree Withdrawal Method Selection (Form 11J)
  DROP or ILSB Retiree Withdrawal Method Selection for Ages 70-1/2 and Over (Form 11N)
  Direct Deposit of DROP or ILSB Account Withdrawals (Form 11R)

Click here to view additional forms related to DROP/ILSB accounts, including withdrawal options.

COVID-19: TRSL Information and Resources
Last updated 09/15/2022

Important information about the CARES Act
TRSL Regular Plan, Plan A and Plan B (defined-benefit plan)
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, certain refunds and distributions from retirement plans were not subject to the 20% mandatory federal tax withholding at the time of withdrawal, if certain conditions were met. However, the distributions were taxable. The tax on the income from this distribution must be paid by April 15, 2024. 
The CARES Act provision applied to TRSL members who terminated employment in all positions eligible for TRSL membership and who refunded member contributions as well as to TRSL DROP/ILSB retirees who made DROP withdrawals (single sum and partial-single sum only) on or after Jan. 1, 2020, and before Dec. 31, 2020 and completed one of the following forms:
  • Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 – Application for Refund (Form 04-7CA) 
  • Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 DROP or ILSB Withdrawal Method Selection (Form 05-11CA)​​​​​​​​​​​​​​
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