Arkansas ATRS T-DROP, step by step

Who can enter

Full participation takes 30 years of service; early entry is possible at 28. Service counts: ATRS actual, purchased and established reciprocal service. Active in ATRS or an Arkansas state-supported reciprocal system (and in its DROP); members active in an ARP are not eligible. Member Handbook p. 17, T-DROP Enrollment; p. 18; 24 CAR § 10-703(a); 2026 Retirement Planner pp. 2, 4; T-DROP pamphlet p. 2

July 1 only; applications March 1 - May 31; may be cancelled through August 31. Member Handbook p. 17, T-DROP Enrollment; p. 18; 24 CAR § 10-703(a); 2026 Retirement Planner pp. 2, 4; T-DROP pamphlet p. 2

No service credit is earned and no member contributions are paid while in T-DROP; the FAS is frozen. Member Handbook p. 17

The monthly deposit

Deposit = would-be monthly benefit reduced 1% for each year of service credit. Entering early at 28 or 29 years: a further 6% for each year under 30 (12% at 28, 6% at 29). Member Handbook p. 17, How does T-DROP work?; 2026 Retirement Planner p. 4; T-DROP pamphlet p. 2; 24 CAR §§ 10-704(c), 10-705(b)

Straight life annuity the member would get if retired (no stipend). The $50 stipend isn't included. 24 CAR § 10-704(c)(2); T-DROP pamphlet p. 2, How is T-DROP Calculated?

Actuarial valuation 2025 p. C-12 (G = 0.28 x (E+F); H = 0.12 x (E+F-G))

At 30 years there's no early cut, only the 1%-a-year reduction (30% at 30 years).

T-DROP participants get the 3% COLA each July 1 as if retired; deposits rise by 3% of the initial T-DROP deposit each year. T-DROP pamphlet p. 2, Do Members Receive a COLA in T-DROP?; 24 CAR § 10-704(b)(1); Actuarial valuation 2025 p. C-3, item 7

Before interest. Actuarial valuation 2025 p. C-12 (G = 0.28 x (E+F); H = 0.12 x (E+F-G))

Interest

Interest accrues at 3% compounded annually; the Board may authorize an incentive rate (up to 6% total). A member who retires out of T-DROP before July 1 gets no T-DROP interest for that last fiscal year. Member Handbook p. 17; T-DROP pamphlet p. 2, How much Interest does T-DROP Earn?; 2026 Retirement Planner p. 10 (Regular T-DROP Interest rate 3%); 24 CAR § 10-706(a), (c)

Regular T-DROP interest = fixed 3% + incentive up to 3% (Resolution 2017-35); the incentive may be granted if ATRS's estimated return is 2% above the assumed return. FY 2025: 3% + 0%. Actuarial valuation 2025 pp. C-3 to C-4, item 7

After 10 years

After 10 years, deposits stop but interest continues, credited each June 30, at 4% to 6% (variable rate = ATRS return - 2%, floor 4%, cap 6%; with incentive up to 7.5%). 2026-2027: 4%. Member Handbook p. 19, What if I do not leave T-DROP after 10 consecutive years?; T-DROP pamphlet p. 2; 2026 Retirement Planner p. 10 (Post 10-Year T-DROP Interest rate 4%); 24 CAR § 10-706(b); Actuarial valuation 2025 p. C-4 (Resolution 2017-36)

Working enough days

To earn a quarter's deposit you must work a minimum number of days in it:

Member Handbook p. 18, quarter table; 24 CAR § 10-705(c)(2)

When you leave T-DROP

At retirement the T-DROP balance can go to any mix of the 4 options totaling 100%. The election can be changed until the end of the second full calendar month after the effective retirement date, except a rollover. Member Handbook p. 19, What happens to my T-DROP deposit account after I retire?; T-DROP pamphlet p. 1; 24 CAR § 10-710

• Annuitize into the monthly benefit
• Lump sum
• Transfer to the ATRS Cash Balance Account (CBA)
• Rollover to a qualified plan (irrevocable)

Once you retire out of T-DROP you cannot participate again. Member Handbook p. 19

The Cash Balance Account

If you move your balance to ATRS's Cash Balance Account (CBA), it earns a rate that steps up each fiscal year. For CBAs established on or after July 1, 2021, credited monthly:

The handbook's table and ATRS's rules go from 3.5% to 4% in year 6; the planner's "0.25% each year" wording doesn't match, so we follow the table. Member Handbook p. 45, Appendix C; p. 20, Cash Balance Account; 24 CAR § 10-712(a)(3), (b), (g)

Your health insurance and school benefits don't change while you're in T-DROP. Member Handbook p. 49; T-DROP pamphlet p. 2 ('No loss of school benefits')

From the sources

• T-DROP lets you keep working instead of retiring. Your benefit is frozen and a monthly deposit goes into a T-DROP account that earns interest. You need 30 years of service for full participation, or 28 for early entry. You enter only on July 1 (apply March 1 - May 31).Member Handbook pp. 17-18; T-DROP pamphlet p. 2
• The deposit is your would-be benefit reduced by 1% for each year of service (30 years = 30% less). Entering at 28 or 29 years cuts it a further 12% or 6%.Member Handbook p. 17; 2026 Retirement Planner p. 4
• The actuary's example: 28 years and a $35,000 average give a $21,070 benefit. The T-DROP deposit is $13,350 a year, rising by about $400 a year with the COLA.Actuarial valuation 2025 p. C-12
• T-DROP interest is 3% compounded annually, credited June 30 on the mean balance. The Board may add an incentive (up to 6% total). If you retire before July 1, you get no interest for that last year.Member Handbook p. 17; T-DROP pamphlet p. 2
• Deposits run for up to 10 years. If you keep working after that, deposits stop but the balance earns post-10-year interest of 4% to 6% (4% for 2026-2027).Member Handbook p. 19; 2026 Retirement Planner p. 10
• When you retire, the T-DROP balance can be added to your monthly benefit, paid as a lump sum, rolled over, or moved to ATRS's Cash Balance Account. The CBA earns 2.5% the first year, rising to 4% from the sixth year.Member Handbook pp. 19-20, 45

Questions

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