Golden Opportunities

Ohio ’s police officers and fire fighters risk their lives to keep us safe. When they retire, they should certainly be rewarded with a safe retirement. To help build their nest eggs, the DROP Plan was created. But getting the maximum benefits is not so simple. Here to help our public servants avoid “dropping” the ball on their retirement “drop plans” is Jim Lineweaver, founder of Lineweaver Financial Group.

Question: What is the DROP program?

Answer: The Deferred Retirement Option Plan (DROP) is an optional benefit that allows eligible police officers and firefighters to accumulate a lump–sum of money for retirement. The Ohio Police & Fire Pension Fund (OP&F) offers this benefit to its membership, and it has been the most requested addition to OP&F’s benefit offerings in many years.

Question: Now an important time is approaching.

Answer: Yes. The first participants in OP&F’s Deferred Retirement Option Plan (DROP) are rapidly approaching their three–year anniversary in the program. If you have chosen to become part of this plan, January, 2006 will be the first time in Ohio that DROP participants will be first eligible to officially retire.
Under the guidelines one could stay in the program from a minimum of 3 years to a maximum of 8 years.

Question: If you are thinking about retiring in the near future, what should you do?

Answer: If you are contemplating retirement soon, please take note of your DROP effective date. To realize the advantages of DROP you must not terminate employment prior to three years after this effective date. For example, if you entered DROP on Jan. 19, 2003, your termination date could be no earlier than Jan. 18, 2006 for you to receive the full benefit of your DROP accrual. If you terminate employment prior to three full years in DROP, you will forfeit all the accrued interest in your account.
Once you have terminated employment, you will be eligible to request a distribution of the funds accrued while you were a DROP participant, as a lump sum, periodic payments, or monthly payments. At this point, there are many things to consider, and you might want to talk to a financial advisor about some of your options.

Question: What things will someone retiring with DROP want to think about?

Answer:

• Do you want to take your DROP pension in a lump-sum and roll it over to a self-directed IRA or leave it in the program, earning a fixed rate of interest and receive income payments similar to your Ohio Police and Fire Pension Fund (OP&F)?
• How much income will you need for retirement? Will your OP&F and the DROP be enough? Are you planning on continuing to work in another industry or in the private sector?
• Did you participate in the Deferred Compensation Plan (457 Plan) and if so will you be rolling this to a self-directed IRA or do you want to keep it in the current plan after you retire?
• If you decide to roll your money to a self directed IRA, will you be managing the money yourself? If not, do you know how to look for an advisor? What are the questions you should ask before letting someone manage your retirement?
• Is your estate in proper order, such as your wills, durable power of attorney for financial purposes, general power of attorney for health care, living will, etc? Do you need a Trust?
• Do you understand how to coordinate your health insurance with your spouse’s after you retire? Do you fully understand the new prescription drug plans the government is putting in place in January and which one is right for you?
• Do you have a good tax plan in place? Remember, we live in a marginal tax bracket society so the more income you bring in during retirement, the more taxes you may have to pay! Are you taking advantage of any tax credits or will you be eligible for any during retirement that may be able to increase your retirement income?
• What contingency plans do you have in place to take care of yourself and your family should the unexpected occur? Do you have Long Term Care plans to make sure your assets are not depleted in case of a nursing home stay or if home health care is required?

When you retire, you’ll be making lots of tough decisions. You may want to “DROP” in on Jim. He’ll also be happy to “drop” an information sheet in the mail to you.