Are you curious about BackDROP? This Deferred Retirement Option Provision (DROP) allows you to receive a lump-sum payment at retirement, in addition to a monthly benefit. Let’s review the basics of BackDROP.

BackDROP is only available to general state employees (including university employees) enrolled in the MSEP or MSEP 2000 plans. To be eligible, you must be employed in a MOSERS benefit-eligible position at least two years beyond your first normal retirement eligibility date.

If you elect BackDROP, the monthly benefit payable on your actual retirement date is calculated as if you had left employment and retired on an earlier date. You will also receive a lump-sum payment equal to 90% of the Life Income Annuity amount you would have received if you were retired during the BackDROP period.

The BackDROP date is used to calculate your retirement benefit and must meet the following requirements:

• It must be on or after the date you were first eligible for normal (unreduced) retirement benefits; and
• It must be within the five-year period immediately before your actual retirement date.

The length of time between your BackDROP date and your actual retirement date is called the BackDROP period. You can choose a BackDROP period in yearly increments or for the total time worked, ranging from one year to a maximum of five years.

If you elect BackDROP, we will calculate your monthly benefit using your final average pay (FAP) and creditable service as of your BackDROP date.

• Any salary or service credit earned during the BackDROP period will not be included in your benefit calculation.
• COLAs and any temporary benefits you would have received during the BackDROP period are included in the calculation.
• Any sick leave credit accrued during the BackDROP period is included in the calculation.
• If you decide not to elect BackDROP, we will calculate your monthly pension using your FAP and creditable service as of your actual retirement date.

You are not required to elect BackDROP, no matter how long you work beyond normal retirement eligibility.

If you elect BackDROP, you will complete a BackDROP Distribution Form during the retirement process and choose from one of the following payment options:

• Cash Option. We will pay this distribution directly into your bank account as a lump-sum payment at retirement. This distribution is considered taxable income for the year you receive the payment.
• Rollover Option. We will pay this distribution directly to a qualified IRA or another eligible employer plan (MO Deferred Comp, 403(b), 401(k), 401(a), etc.). This distribution will not be taxed in the year of the rollover, and no income tax will be withheld unless the rollover is to a Roth IRA. The payment will be taxed when it’s withdrawn from the traditional IRA or an eligible employer plan.
• Combination Cash & Rollover Option. This distribution allows you to specify the amount we pay to a traditional IRA or eligible employer plan, with the remainder paid to you in a lump sum. The cash portion of this distribution is considered taxable income for the year you receive the payment.

We have several resources to help you learn more about BackDROP:

• If you are within five years of retirement eligibility, consider attending a Ready to Retire seminar, where we explain BackDROP in more detail and provide examples.
• Use the interactive Comparison Calculator to compare your retirement benefit over the long term with and without BackDROP, or with different BackDROP periods (1-5 years).
• Contact a benefit counselor to request an estimate or log in to myMOSERS to generate your own benefit estimate and compare options with and without BackDROP.
• Read the Understanding Your Backdrop Benefit Estimate flyer.
• Visit the BackDROP page and our Taxes page to learn about BackDROP and taxes.