Frequently Asked Questions

General FAQ

What is my Retirement Plan?

Your Retirement Plan is a Hybrid and has two components, a pension piece and an annuity piece. The pension, also called a Defined Benefit Plan, piece is mandatory and deductions are withheld from your paycheck every pay. A pension is a retirement plan funded by employer contributions, employee contributions and earnings from the assets of the System. Think of it similar to Social Security. The annuity piece is voluntary and is known as a Defined Contribution Plan, think of it similar to a 401(k) some people call it the Annuity Savings Fund. The annuity permits you to make voluntary contributions, which, while employed earns between 0% and 5.25% annually. You may contribute between 1% and 10% of your pay in 1% increments. You can also change voluntary contributions throughout the year. The voluntary contributions you make are yours to withdraw once you meet plan criteria.

If you hired before July 1, 2014 you may have two retirement plans. The Legacy Plan which has its own rules and the Hybrid plan which is applicable to all those that have hired on or after July 1, 2014.

How much are my mandatory contributions?

If you were hired prior to July 1, 2014 your contribution is currently 6%. If you were hired on or after July 1, 2014 your contribution is currently 8%. These rates are subject to change based on the funding of the plan. Please see the Plan of Adjustment for more details.
Can I opt out of the hybrid pension plan?
No
May I take out my hybrid pension as a lump sum amount while working?
No.
When can I retire?

Legacy (Pre- July 1, 2014 Members)
You may retire when you have at least 25 years of credited service regardless of age. DPOA and Fire equivalents need at least 20 years. There is a transition chart for DPLSA members that can be found in the DPLSA Collective Bargaining Agreement. As always please refer to your Collective Bargaining Agreement and/or the Plan of Adjustment/Combined Plan Document for more information.

Hybrid
You may retire at age 50 with 25 years to receive an unreduced benefit. As always please refer to your Collective Bargaining Agreement and/or the Plan of Adjustment/ Combined Plan Document for more information.

Can I be eligible for early pension benefit? Can it be reduced
If you are entitled to a vested pension, age 62 with 10 years of vesting, you may be eligible for a reduced early pension. A reduced early pension is an election to receive your pension before you are eligible for a service retirement. We recommend you call the office and ask for an estimate, you must be at least 55 in the Hybrid Plan. The estimate will allow you to review if this is the best option for you.
How many years do I have to work to receive a pension from the new hybrid pension plan?
Once you have 10 years of service you are entitled to a vested pension at age 62. As mentioned above, you may be eligible for a vested early retirement at age 55. A normal retirement is age 50 with 25 years of service.
If I am a former employee returning to work for the City, am I vested in the new hybrid pension plan?
A service check is needed to determine if you are vested. Please contact the Retirement System’s Office at 313-224-3362 to request a service check. If you previously withdrew your mandatory contributions, they must be repaid within 2 years of re-employment otherwise that time is not eligible to count towards vesting.
What is the DROP Plan?

The Deferred Retirement Plan Option (“DROP”) is a voluntary program that allows you to freeze your retirement pension benefit at the time of your DROP election; once you DROP in either plan you cease to earn any further service credits. A Member shall be entitled to participate in the DROP program for a maximum of five years unless extended by Collective Bargaining and approved by the Bankruptcy Court. At the end of such five year period of participation in the DROP program, the Member shall be retired from employment. Upon termination of employment, a Member who is a participant in the DROP program shall receive, at his or her option either a lump sum payment from the DROP Account equal to the amount then credited to the DROP Account or an annuity based upon the amount credited to his or her DROP Account. Any such annuity shall be subject to market rates of interest return and other market-related assumptions as adopted by the Board upon recommendation of the Investment Committee.

Eligibility:

You are eligible to irrevocably choose the DROP after you become eligible for a 20 or 25 year service retirement allowance. It depends on the language in your applicable Collective Bargaining Agreement and/or the Combined Plan document.
Options:

(a) Actually retire and begin receiving an immediate full monthly pension which includes defined contribution plan amounts, or take the defined contribution plan amounts in a lump sum and begin receiving a monthly pension from the defined benefit plan.

(b) Continue working and accruing benefits under the System (based on continued service and compensation).

(c) Continue working, but irrevocably elect the DROP Program.

You can choose to participate in the DROP any time after you become eligible. It is a voluntary election and you cease to earn future service credits in all retirement plans. Remember, if you choose the DROP plan, the decision to participate in the program is IRREVOCABLE. You make your election to DROP by completing and signing the appropriate DROP Election Form. We encourage you to make a copy of the document for your records.

The DROP election date on your form must be the date the form is delivered to the Retirement Systems’, or a future date. Your DROP election date will be the last day you will accrue any service or compensation for computing a system pension benefit. You cannot retroactively elect to DROP. For example, you cannot deliver a DROP Election Form to the Retirement Systems on August 1, 2018 electing to DROP on July 1, 2018.

Operation of the DROP:

If you choose to elect to participate in the DROP, the following will happen:

(a) Your System benefits will become "frozen" (i.e., no further service credit or compensation will accrue).

(b) Your contributions to the System will end.

(c) You must choose, in writing, a form of distribution for your system pension benefit (e.g., straight life monthly benefit or joint & survivor monthly benefit) in accordance with the System processes.

(d) Effective with your DROP election, 75% of the amount of your monthly pension (including applicable escalator increases) that you would have received from the System had you actually retired on your DROP election date, is instead paid into your individual DROP Account where it will accrue earnings on a tax-deferred basis for as long as you participate in the DROP.

NOTE: There will likely be an administrative delay before your first DROP contributions are allocated to your DROP Account while it is being set up.

(e) At this time, your DROP Account will be invested in a stable value, group annuity contract product with Voya Financial that provides a credited rate of interest, set once each year by Voya.

You should carefully review the material detailing how your DROP Account is invested. You will be provided notice of any subsequent change in the DROP investment product or provider.

(f) Your DROP allocations will continue for as long as you continue to be actively employed, within the 5 year limitation, unless collectively bargained and approved by Bankruptcy Court

(g) While you are actively employed and participating in the DROP, to the System's knowledge you are subject to the same employment rules and regulations as before you elected to participate in the DROP. You will continue to be paid your wages as an employee. To the System's knowledge, your seniority status and eligibility for benefits will not be affected during your DROP participation. However, you will not accrue any additional credit towards retirement as a DROP participant. Participation in the DROP does not guarantee continued employment.

(h) When you end your active employment with the City, you may take a distribution from your DROP Account or you may directly roll over your DROP funds to an IRA.

(i) At the end of your DROP participation, when you retire, you will begin to receive 100% of your "frozen" system pension (including annual escalator amounts) that you would have received had you initially retired at the date you elected to participate in the DROP, plus you will be entitled to the value of your individual DROP Account (which, together, are subject to applicable IRS limits on "annualized" benefits.

Drop Plan Disability:
If a Member becomes Totally Disabled while participating in the DROP program and while still an Employee and his or her employment with the City is terminated because he or she is totally Disabled, such Member (a) shall be immediately retired and one hundred percent (100%) of the Retirement Allowance that would have been paid to the Member as of the date the Member's participation in the DROP program commenced (together with any applicable variable Pension Improvement Factor (Escalator) increases) will commence in accordance with the payment option selected by the Member at the commencement of the Member's participation in the DROP program as provided in Section 12.1 (2), and (b) shall be entitled to receive payment of the funds in his or her DROP Account (in the form of a lump sum or other Actuarially Equivalent form of payment described in Section 8.1). Such Member shall not be entitled to disability retirement benefits under Section 5.3 or Section 5.4 hereof.

Can I make a withdrawal from my DROP account due to a financial hardship?
No.
Can I borrow the funds that are in my Drop Account?
No.
Will I get credit for military service?
If you are granted a leave of absence to enter the military while you are employed by the City, you will be given service time credit as if your service was uninterrupted, provided you return to City service after completing military duty within the period of time prescribed by law. You will not make contributions while you are in military service, but interest will continue to be credited to your accumulated contributions.
How long is the process to receive Military Service Credit?
It takes 4-6 weeks to complete the process.
How is my pension calculated?

The calculation for all pensions is the following formula:
Years of Credited Service X Multiplier X Average Final Compensation

Hired on or after 1-1-69 (Frozen Plan)
Your multiplier is 2.50% for the first 25 years of credited service and 2.10% for years beyond 25 to a maximum of 35 years of service.
Hybrid (time accrued after June 30, 2014)
Same calculation as above, the multiplier is 2.0% for all years of service.

If you are within 5 years of retirement please contact the office and request and estimate. NOTE: When you retire, if you withdraw or have already withdrawn your accumulated Defined Contribution Plan (Annuity Savings Fund) in a lump sum, your total retirement allowance will be reduced.

Will my accrued sick leave be counted in the Average Final Compensation calculation of my Old Pension when I retire?
Yes, if the Retirement Systems received your completed Election Form by August 22, 2014; then 25% of the unused frozen accrued sick leave that would be payable to you in cash if you had retired as of June 30, 2014 will be included in your Average Final Compensation for the purposes of calculating your frozen accrued benefit under the Old Pension. If a completed form was not received by the Retirement Systems by August 22, 2014, then your Average Final Compensation will not take into account any of your unused sick leave.
If you’ve made the special election, the sick leave that was subject to the election will not be paid to you in cash when you retire. If you were not eligible to retire when you made the special election and your employment with the City is terminated before you become eligible to retire, the election will be void and your Average Final Compensation will not take into account any of your unused sick leave
Can I still receive a lump sum distribution of a percentage of my accrued sick leave if I retire after June 30, 2014?
Yes, your eligibility for a lump-sum distribution of a portion of your unused accrued sick leave at retirement is not affected by the June 30, 2014 freeze. The lump sum payment amount you will receive will vary depending on whether you’ve made the rollover election or if you will receive full payment of your frozen sick leave bank.
How is retirement service credit earned?
A month of service credit is earned if you’ve been paid for 140 hours of work during a month.
When is a pension vested?

Component II (Legacy)
Age 40 and 8 years of service, or if a DPOA Member or their Fire equivalents who terminate employment on or after August 29, 2003 with 10 years of service regardless of age.


Component I (Hybrid)

10 years of service is required to be vested.

If I resign before my retirement age, will I still receive a retirement allowance?
If you have at least 10 years of credited service you can retire at age 62. You may be eligible for an early retirement at age 55.
If I am a former employee returning to work for the City, am I vested in the new hybrid pension plan?
A service check is needed to determine if you’re vested in both plans. Please contact the Retirement System’s Office at 313-224-3362 to request a service check.
If I'm a former employee and vested in the legacy pension plan can I draw an actuarial reduced benefit from the hybrid plan instead of waiting until age 62?
You can receive a vested retirement with 10 years of service and age 55 in Hybrid Plan.
Can I name someone other than my spouse as my beneficiary?
You may name any person as your beneficiary.
What if I die before my retirement eligibility, does my beneficiary receive a pension?

If you die from duty related causes, your designated beneficiary will receive your accumulated contributions, including interest, in a lump sum. Your spouse will receive a monthly pension equal to five-elevenths (5/11) of the maximum pay for the rank of patrolman or firefighter for the Spouse’s lifetime. Each unmarried child under 18 receives one-tenth (1/10) of such Final Compensation with a maximum total of seven thirty-thirds (7/33) of the maximum pay for all children. The total of all pensions paid cannot exceed two-thirds (2/3) of the maximum pay. If there is no eligible spouse, unmarried children under 18 receive one-fourth (1/4) of the maximum pay with a maximum total of one-half (1/2) of the maximum pay. If there is no eligible spouse or children, dependent parents receive one-sixth (1/6) of the maximum pay.

If you die from non-duty related causes and had at least 10 years of vesting service, your surviving spouse shall receive a Retirement Allowance computed in the same manner in all respects as if said member had (1) retired effective on the say preceding the Member’s death notwithstanding that the member had not attained Normal retirement Age, (2) elected a joint and 100% survivor allowance and (3) nominated the surviving spouse as beneficiary.

Who should my beneficiary contact in the event of my passing?
Please contact the Retirement System at (313) 224-3362.
How long does it take for the death benefit claim to be processed?
It takes approximately 8 to 10 weeks to process death claim benefits.
Why do I need to have another affidavit notarized for the final pension check disbursement?
When processing death benefit payments, the Proof of Death Claimant Forms must be notarized. The process to initiate the final pension check is separate process.
Suppose my spouse and I divorce before or after I retire, are my benefits affected?
If your accrued retirement benefits are included as a marital asset in a divorce property settlement, the courts can allocate the marital portion of your pension and/or annuity among the involved parties under an Eligible Domestic Relations Order (EDRO). You should consult with your attorney concerning Public Act 46 of 1991.
When will I be eligible to withdraw from my legacy/hybrid annuity?

Legacy

  • You may withdraw from your Component II Annuity Plan if:
  • You are converting from a duty/non-duty disability to a service retirement.
  • You are separated (retirement/resignation/termination/layoff) from service with the City.
  • You are an active service employee, which means you are currently working and have at least 25 years of service (20 years for DPOA members & Fire Equivalents).

Hybrid

  • You may only withdraw from your Component I Annuity Plan if you are separated from service (retirement/resignation/termination/layoff) with the City, or upon converting from a duty/non-duty disability retirement to a service retirement.
How can I start/stop my annuity contributions?
To start or stop your voluntary contributions you will have to contact the Police Payroll Office at (313) 876-0990 (for Police employees) or the Fire Payroll Office at (313) 596-2898 (for Fire employees) and complete a Voluntary Contribution Election form.
How much can I borrow from my annuity plan?
Legacy
The minimum amount you can borrow from the Annuity Loan Program is $1,000.00. The maximum amount you may obtain is the lesser of (i) one-half (50%) of your current annuity balance or (ii) $15,000.00 reduced by the outstanding balance of any loans from the annuity account.

Hybrid
The Component I (Hybrid) Annuity Loan Program is not yet available.
What happens to my annuity loan if I resign/retire from the City?

If you resign or retire from the City and you have an outstanding annuity loan, First Independence Bank will send you an “Employment Separation Letter” where you will be given the option to:

(a) default on your loans (in which case you will be issued a 1099)
(b) pay your loan balance in full
(c) continue making over-the-counter payments on your loans

If I experience a hardship (emergency), can I withdraw from my annuity early?

Hardship withdrawals from the annuity plan are not permitted.
How is the interest rate on my Defined Contribution Plan (Annuity) monies determined?
Earnings credited to a member’s voluntary annuity contributions shall be no less than zero and no greater than the lesser of (i) 5.25% or (ii) the actual investment return net of expenses of the Retirement Systems’ invested reserves for the second plan year immediately preceding the plan year in which the annual return is credited. (see PFRS POA Component II, Article C-1-20 AND PFRS POA Component I, Article 10-3)
Do I keep earning interest on my Annuity Savings Account if I leave it at the Retirement System upon separation?
No.
How can I obtain my annuity balance?
Annual annuity statements are mailed to you as soon as possible after the end of each fiscal year, June 30. However, you can request a current statement of your annuity balance at any time. You can request a statement in person, over the phone or via written request.
Can I leave my Annuity (Defined Contribution Plan) monies in my Retirement System Account after I retire?
Yes, upon retirement you may elect to “annuitize” your entire or a portion of your annuity balance. If you choose to annuitize, you will receive a monthly annuity benefit (included in your pension check) based on your contributions, your chosen pension option, and your age. You may refer to your Benefit Estimate for the monthly annuity rate
What if I become totally or permanently disabled?

DUTY RELATED DISABILITY RETIREMENT

If your disability is approved by the Board of Trustees as being duty related and you have less than 25 years of service, your disability allowance will consist of two parts:

1. A basic benefit of 50% of your final compensation on your effective date.

2. A supplemental benefit of 16.67% of your final compensation on your effective date.

If after two years on disability, and prior to your 25th anniversary, you are deemed able to perform the duties of any occupation the supplemental portion of your benefit will cease.

When you have attained 25 years of credited service, the supplemental portion of your benefit will cease. Upon obtaining 25 years of service the following options are available:

Conversion. Upon termination of disability or attainment of age 65 your disability benefit will convert to a service retirement benefit. The amount of your service benefit shall be the same amount which would have been payable if the conversion from duty disability had occurred at the date of attaining 25 years of service or your date of separation, whichever is later, plus applicable retirement allowance increases.

NON-DUTY RELATED DISABILITY RETIREMENT

You can receive a retirement allowance for a non-duty related disability if you have five or more years of credited service. Your disability retirement allowance is computed in the same manner as a regular service allowance with a minimum allowance of 20 percent of your average final compensation.

If you have less than five years of credited service at the time of your non-duty disability retirement, your Defined Contribution Plan (Annuity Savings Fund) will be returned to you, or at your option, you may select a cash refund annuity which shall be the equivalent of your accumulated contributions, including interest.

Are disability benefits offset by outside earnings?
In the event that a recipient of a disability retirement benefit receives earned income from gainful employment during a calendar year, the amount of the Member’s disability benefit payable during the next calendar year will be adjusted so it does not exceed the difference between (1) the Member’s compensation at the date of the disability, increased by the Pension Improvement Factor (Escalator, if any) during the period of disability and (2) the amount of the Member’s remuneration from gainful employment during the prior calendar year. The Board is required to adjust future pension payments to recoup all overpayments due to earned income in excess of Member’s compensation increased by applicable escalators.

How much income can I earn while on disability?

As an employee on duty/non-duty disability, you are able to earn up to your active salary, less what you receive in disability payments each calendar year.

 

Example: Annual Salary (while active) $20,000.00 Gross

Disability Benefit $ -5,000.00 Gross

Allowable Outside Earnings $15,000.00 Gross

 

 

If you exceed the allowable amount, your disability allowance shall be reduced to recover the overpayment as required in the Plan of Adjustment.

How are retirement systems funds invested?
The Board of Trustees of the Police and Fire Retirement System and the Investment Committee establish the objectives and guidelines which govern investment policy. All investments are made in accordance with the Federal, State and Local laws governing the investment of pension funds.

The System employs the services of nationally known and respected investment consulting and management firms who advise on portfolio selection and asset allocation. All funds and securities of the Police and Fire Retirement System are kept entirely separate from the funds of the City.
Can I protect myself in case my beneficiary dies before me?
Yes. You can provide lifetime protection for your designated option beneficiary by electing an alternative retirement allowance, with or without the Pop-Up Option, at the time you retire. You cannot change your election or your option beneficiary after you’ve cashed your first pension check or 180 days have passed, whichever comes first.
Joint and 100% Survivor Allowance with Pop-up

If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect the Pop-Up, would begin to receive 100% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.

To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $820.40 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.

Joint and 75% survivor allowance with pop-up:

If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 75% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.

To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $858.97 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.

Joint and 50% survivor allowance with pop-up:

If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 50% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.

To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $901.34 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.

Joint and 25% survivor allowance with pop-up:

If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 25% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.


To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $948.11 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.

What is the "Pop-Up" Option?
The "Pop-Up" Option is a retirement option that you may elect which allows for your retirement to be changed from Option II, Option A or Option III to a Straight Life Option in the event your beneficiary predeceases you. The cost for this option is borne by the retiree or his/her beneficiary.
How is retirement service credit earned?
A month of service credit is earned if you’ve been paid for 140 hours of work during a month.
A Member shall be credited with a year of vesting service for each plan year during which the Member performs 1,000 or more hours of service for the City.
Why are my years of service different? I should have more time than what is on my estimate?
Your pension is a combination of two plans, Legacy and Hybrid. The Legacy Plan is based on service time earned up to and including June 30, 2014. The Hybrid Plan is based on service time earned on or after July 1, 2014.
When will I receive my first pension check?

Refer to the chart below:

 

General City

Effective date of Retirement, First Pension Check

Police and Fire

Effective date of Retirement, First Pension Check

1-16 through 2-15

April 1

12-2 through 1-1

February 1

2-16 through 3-15

May 1

1-2 through 2-1

March 1

3-16 through 4-15

June 1

2-2 through 3-1

April 1

4-16 through 5-15

July 1

3-2 through 4-1

May 1

5-16 through 6-15

August 1

4-2 through 5-1

June 1

6-16 through 7-15

September 1

5-2 through 6-1

July 1

7-16 through 8-15

October 1

6-2 through 7-1

August 1

8-16 through 9-15

November 1

7-2 through 8-1

September 1

9-16 through 10-15

December 1

8-2 through 9-1

October 1

10-16 through 11-15

January 1

9-2 through 10-1

November 1

11-16 through 12-15

February 1

10-2 through 11-1

December 1

12-16 through 1-15

March 1

11-2 through 12-1

January 1

 

Example, if you are a Police & Fire Employee and your effective date of retirement is December 2nd; you will receive your first pension check on February 1st.

Are provisions made for increased living costs as a result of inflation after I am retired?

COLA’s are based on Collective Bargaining and the Plan of Adjustment.

  • Retirees hired before 1969 receive an increase proportionate to the annual increase received by active employees.
  • Retirees hired after 1969 receive an annual cost of living adjustment of 1.0125%, based upon the original retirement amount or compounded, depending on the bargaining unit.
  • Retiree’s with a Hybrid Retirement Plan, post June 30, 2014, may get a 1% COLA, depending on the funding status of the plan.

Rules vary by Collective Bargaining Agreement (CBA), please see your CBA for specifics.

Is my retirement allowance safe?
Under the provisions of the State of Michigan's Constitution, the City of Detroit has a contractual obligation to fund pensions and retirement allowances for each employee's entire service period. The City Charter and a City Council ordinance mandate proper funding of the General Retirement System and the Police and Fire Retirement System. The Trustees, as fiduciaries, work to protect and increase the assets of the system.
How do I change my address?
Changes to your address can be made by completing the Retiree Contact Information Form or by sending a signed correspondence with your name, pension number, old address and new address via U.S. mail. The form is located on the RSCD website {link to form}. Complete and return the form via fax or mail. Refer to the contact information. {Link to the RSCD contact form}
How do I submit an Income Verification Request?
Contact the Retirement System and request the Income Verification Form. The form will be sent to the address on file. Once completed, return the form to our office via fax or mail. Refer to the contact information. {Link to the RSCD contact info}
I have not received my pension check.  What do I do?

If you do not receive your pension check by the 10th of the month of the check’s original issue date, contact the Retirement System via phone or in-person between 8:00 am – 4:00 pm M-F {Link to the RSCD contact info} and follow these steps:

1. Request a Stop Payment on the check.
2. A Member Services Representative will generate a Stop Payment Request for you to sign in person or the form can be sent via mail to the address on file.
3. After receiving confirmation from the system’s financial institution to reissue your check, a Member Service Representative will generate a new check and send it via the preferred method indicated on the endorsed Stop Payment Request

Which department should I talk to when inquiring about the amount of the check, the reissuance of a check, or where the check was sent?

Due to privacy concerns, we cannot discuss specific details about a check over the phone.

To verify where the check was sent, contact the Retirement System’s Payroll Division via phone. For a check reissue, contact the Retirement System.

Why do I have to wait until the 10th of the month for a replacement check?
The 10-day waiting period allows time for delays in the Postal Service deliveries.
Why did my deduction increase?
Increases in deductions can be due to increases in medical benefit rates or tax rate increases. Please contact the Retirement System’s Payroll Division for additional information.
Why did my pension rate change?
Retirees are notified via mail whenever rate changes occur, however, you can contact the Payroll Division for additional information.
When will I receive my paycheck if the payday is on a holiday?
Pension payments should be received on the last business day prior to the holiday.
Where can I get a letter stating that my pension is a lifetime benefit?
Contact the Payroll Division to submit your request and the letter can be sent directly to you via mail, email or fax.
How do I enroll in Direct Deposit or change my Direct Deposit information with RSCD?

If you would like to have your pension check deposited directly into your bank account or to change your information, complete a Direct Deposit Form in-person or print the form from the website and return it via mail with a copy of a voided check from the account you intend to deposit future benefits. 

***Please note the Retirement System will not accept direct deposit information via e-mail or phone***

My account has been compromised. Can you stop or change my direct deposit immediately?
If your account has been closed or compromised, you may request a Direct Deposit Cancellation. However, you must contact the Retirement System and complete the Direct Deposit Enrollment Form before the 10th of the month to make a change to the current month’s payroll disbursement.
Do I need to notify the Retirement System if I close my bank account?
Yes, immediately, to ensure you receive your pension payments in a timely manner.
How can I get a replacement 1099R?
Replacement 1099Rs can be requested via phone or in person. Refer to the contact information.
What is the RHC Trust?
The RHC Trust was established under the Plan for the Adjustment of Debts of the City of Detroit to provide health benefits to certain eligible former City of Detroit employees. The RHC Trust is established as a tax-exempt Voluntary Employees Beneficiary Association (VEBA) under Section 501(c)(9) of the Internal Revenue Code, as amended. Pursuant to Section 501(c)(9) of the Internal Revenue Code and Section 2.1 of the RHC Trust Agreement, the RHC Trust is limited to providing health and welfare type benefits to eligible retirees and their beneficiaries.
Which retirees are eligible for the RHC Trust?

Former City of Detroit employees who retired with a City pension on or before December 31, 2014 and who were either:

(a) enrolled with City retiree health benefits as of February 28, 2014 or as a spouse on a City health benefit
(b) transitioned from active City benefits to retiree City benefits on or after November 1, 2013. Surviving spouses and surviving children currently receiving or would be eligible to receive a duty-death or survivor pension with respect to a retiree who would have qualified as an eligible retiree in the RHC Trust.

When I begin my service retirement, what happens to the fringe benefits that I currently receive?
For information regarding your fringe benefits, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
Which healthcare expenses are eligible for reimbursement?
For information regarding reimbursable healthcare expenses, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
I want to opt out of the HRA Plan so I can continue to receive federal tax credits on the public exchanges.  What do I do?  What happens if I do not opt-out of the HRA?
For information regarding the HRA, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
If I chose a Joint and Survivor Allowance Option, is my beneficiary entitled to fringe benefits?
Spouses receiving the Joint and Survivor Allowance are entitled to the same fringe benefits as the retired employee.

For information regarding your fringe benefits, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org I’ve purchased health insurance on a public healthcare exchange and received federal tax subsidies.
Will the HRA affect these subsidies?
For information regarding your HRA, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
I've qualified for and am receiving the HRA contribution of $50 and the spouse contribution of $125. Will I still receive these HRA contributions?
For information regarding your HRA, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
I'm a Medicare-eligible retiree, but my spouse qualified for the $125 additional HRA contribution. Will my spouse receive the HRA?
For information regarding your HRA, contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
I've retired prior to January 1, 2015 and I'm not eligible for Medicare.  What are my enrollment options?
Contact ABS at 800-645-9978 or via website at: www.DetHCTVeba.org
I've retired after January 1, 2015. What are my enrollment options?

Retirees that retired after January 1, 2015 are not participants in the VEBA and are not eligible for medical coverage. You will need to obtain your own health insurance coverage for you and your dependent family members.

Although you are not eligible for medical coverage in the plan, the VEBA Board of Trustees has extended the option for you to enroll in optional dental and vision benefits. The dental options available, at full cost, to you and your family are:

Dental Plan Options:

•Delta Dental High Plan PPO
•Delta Dental Low Plan PPO
•Dencap Dental DHMO
•Golden Dental DHMO
•Blue Cross Blue Shield Dental PPO

The vision options available, at full cost, to you and your family are:

Vision Plan Options:

•Vision Service Plan (VSP)
•Heritage Vision Standard Plan
•Heritage Vision National Plan

Glossary

Accumulated Contributions – the sum of all amounts deducted from the compensation of a member and credited to the member’s individual account in the Annuity Savings Fund, together with regular interest thereon.

Annuity – the portion of the retirement allowance which is paid for by a member’s accumulated contributions.

Component I(Hybrid Plan) - the portion of the Retirement System described in the Combined Plan and which consists of:

  1. the 2014 Defined Benefit Plan, which is a qualified plan and trust pursuant to applicable sections of the Internal Revenue Code; and

  2. the 2014 Defined Contribution Plan, which is a qualified plan and trust pursuant to applicable sections of the Internal Revenue Code.

Component II (Legacy Plan) – the portion of the Retirement System described in the Combined Plan and which consists of:

  1. the Frozen Defined Benefit Plan, which is a qualified plan and trust pursuant to applicable sections of the Internal Revenue Code; and

  2. the Frozen Defined Contribution Plan, which is a qualified plan and trust pursuant to applicable sections of the Internal Revenue Code.

Credited Service – a Member shall be credited with one month of Credited Service for each calendar month during which he or she performs 140 hours or more hours of service.

Defined Benefit Plan

A defined benefit plan is an employer sponsored retirement plan where employee benefits are computed using a fixed formula that considers several factors, such as length of employment and salary history.

 

Defined Contribution Plan

Our Defined Contribution plan (also known as our Annuity Savings Fund) is a retirement plan that is after-tax. Employees contribute a percentage of their paychecks in an account that is intended to fund their retirements.

Investment Committee – the committee established pursuant to Section 1.22 (POA) which shall have the powers and duties described herein. The Committee consists of five independent members, two retiree members and two employee members. 


Pension – for purposes of Component II, the portion of a retirement allowance which is paid for by contributions made by the employers into the appropriate funds and any contributions made to such by another entity.

Plan of Adjustment (POA) – the Plan for the Adjustment of Debts of the City of Detroit, which has been approved by the United States Bankruptcy Court in In re City of Detroit, Michigan, Case No. 13-5386.

Retirement Allowance – an annual amount payable in monthly installments by the Retirement System, whether payable for a temporary period or throughout the future life of a retiree or beneficiary.

Vesting –a Member shall be credited with a year of Vesting Service for each Plan Year commencing on or after July 1, 2014 during which a Member performs 1,000 or more hours of service for the City.

Loans FAQ

Who is eligible for a Plan loan?
Subject to the rules and procedures established by the Board, loans may be made to eligible Members from such Member’s Voluntary Employee Contribution Account. An eligible Member is any Member who has participated in the Retirement System for twelve months or more. Former Members, Spouses and Beneficiaries are not eligible to receive any loans from the Retirement System at any time. Additionally, a Member who has previously defaulted on a loan shall not be eligible for a loan from the Retirement System.
How does taking out a loan impact my Plan investments?
Your loan is funded directly from your Frozen Defined Contribution Account. The withdrawal will be deducted from funds in your account.

When you repay your loan, your loan payment is in after- tax dollars and is applied to the loan interest and finally to the loan principal, thereby reducing the balance owed on the loan.

The money borrowed is not considered part of the Plan assets until repaid, and is ineligible for any special dividends or interest paid to the Plan.
Can I borrow from my Hybrid Annuity Plan?
The Hybrid Annuity Loan Program is not available at this time.
What is the minimum amount of a loan?
The minimum loan amount available from the Frozen Defined Contribution Account is $1,000.
What is the maximum loan amount I can borrow?
The maximum loan amount a participant may obtain is one-half (50%) of their account value in the Frozen Defined Contribution Account or $15,000, whichever is less, inclusive of all outstanding loans from the Plan
May I have more than one loan at a time?
Yes. If you originally borrowed less than the maximum allowed, and now want to borrow up to the full amount, you may do so in a second loan. You may borrow until the total of the two loans is up to the maximum allowed. You may only borrow in a second loan if you are current on the first.

A member may not borrow funds again if they have ever defaulted on a Frozen Defined Contribution Plan loan in the past.

If you have paid off your original loan, a member may request a loan of the same type once 30 days from the payoff have expired.
What if I borrowed the maximum allowed in my first loan?
Once that original loan is paid down, you may borrow back up to maximum if you so desire.
Do I have to put up collateral and qualify for a loan in the same way I would at a bank?
No, the remaining balance in your Frozen Defined Contribution Account will secure your loan, as long as it equals or exceeds the amount borrowed.
How are loans treated for tax purposes?
Funds borrowed from the Plan under these conditions are not treated as distributions, provided they are repaid in accordance with the terms of the loan. Therefore, no taxes are withheld or due when a loan is received.

Under federal tax law, no deduction is permitted for interest paid on a loan from the plan, regardless of the purpose of the loan.
Are there other tax issues I should be aware of?
The participant is strongly advised to address any questions regarding the tax consequences of loans or loan limits to a qualified, independent tax advisor before submitting an application for a loan.
How is the interest rate determined for Plan loans?

The interest rates for plan loans will be based on the rates chosen by the Police and Fire System. Loans will also incur a 1% administrative fee applied in addition to the prime rate as interest to cover the internal costs. The loan rates are fixed for the life of the loans.

Loans initiated at different times may bear different interest rates, where, in the opinion of the Board, the difference in rates is supported by a change in market interest rates or a change in the current assumed rate of return to the pension trust. The rate will not change more frequently than annually.
Bear in mind that the interest paid in by you, except for the 1% administrative fee, gets posted back to your account as interest with each payment. It is essentially a self-directed investment.

What is the current calculated interest rate?

The current loan interest rate is 6.5%, which includes the 1% administrative fee.

What are the loan initiation and processing fees?
A loan origination fee in the amount of $75.00 shall be deducted from the loan amount approved. A $2.50 per payment processing fee will be added to the loan repayment amount to cover the third party administrator (TPA) fees. A $.30 fee is also added by the City’s Payroll Audit department to handle the deduction. The TPA for the loan program is First Independence Bank. Since with Police and Fire members, active employment is not a requirement of borrowing, those members, or members that cease employment may make payments over the counter (“OTC”) at a higher rate of $3.50 per payment. There is no City fee for OTC payments.
What are the terms of the loan?

That depends on the type of loan. There are two types:

  1. General Purpose Loan – A repayment period of one to five (1-5) years. A General Purpose Loan can be used for any purpose. Proof of the reason for the Loan is not required.

  2. Residential Loan – A repayment period of one to fifteen (1-15) years. A Residential Loan can be used only for the purchase or construction of a primary residence. Proof of purchase or a construction agreement is required.

Can I take a residential loan to refinance or pay off an existing mortgage?

No. Residential loans are only for home purchase or new construction.

The Participant Member can obtain a residential loan for constructing a new residence or purchasing an existing residence, but not for refinancing or repaying an existing mortgage, paying for renovations, buying out another person’s share in their current residence, or for the purchase of land.

What are the loan repayment rules?
Please see “Section 4: Loan Provision Agreement” on your annuity loan application for a complete list of loan provisions.
What happens to my loan and payments if I take a leave of absence?

A participant who takes a leave of absence from the City without pay for a period of greater than one month, but not exceeding one year may request that their loan repayments be suspended during the leave through the submission of an “Employee Status Change Form”. This form is provided by the city payroll office. Any delinquent payments owed prior to the date of the participant’s approved leave, must be paid by the participant, or failure will result in a delinquency and possibly a default of their loan in accordance with IRS provisions. Interest will continue to accrue during the suspension period. The participant must complete another “Employee Status Change Form” when returning to work and resume the payroll deductions. Participants who take a leave of absence without pay for a period of one year or greater must continue to make their loan payments in accordance with the original loan repayment schedule and submit the certified check or money order directly to the Bank. Failure to submit an “Employee Status Change Form” may result in a loan default.

A participant who takes a leave of absence from the City because of military service and does not receive a distribution of his or her account, such period of absence shall not be taken into account as part of the loan period even if the length of military service is greater than the original term of the loan. Upon completion of military service, the loan shall be recalculated and repaid over the original term of the loan. Also, during the absence for military service, the rate of interest shall not be greater than 6% compounded annually. The participant must complete and submit an “Employee Status Change Form” both prior to commencement of military leave and upon return.

How is the interest rate determined for Plan loans?

The interest rates for plan loans will be based on the rates chosen by the Police and Fire System. Loans will also incur a 1% administrative fee applied in addition to the prime rate as interest to cover the internal costs. The loan rates are fixed for the life of the loans.

Loans initiated at different times may bear different interest rates, where, in the opinion of the Board, the difference in rates is supported by a change in market interest rates or a change in the current assumed rate of return to the pension trust. The rate will not change more frequently than annually.

Bear in mind that the interest paid in by you, except for the 1% administrative fee, gets posted back to your account as interest with each payment. It is essentially a self-directed investment.

What is the current calculated interest rate?
The current loan interest rate is 6.5%, which includes the 1% administrative fee.
What are the loan initiation and processing fees?
A loan origination fee in the amount of $75.00 shall be deducted from the loan amount approved. A $2.50 per payment processing fee will be added to the loan repayment amount to cover the third party administrator (TPA) fees. A $.30 fee is also added by the City’s Payroll Audit department to handle the deduction. The TPA for the loan program is First Independence Bank. Since with Police and Fire members, active employment is not a requirement of borrowing, those members, or members that cease employment may make payments over the counter (“OTC”) at a higher rate of $3.50 per payment. There is no City fee for OTC payments.
What are the terms of the loan?

That depends on the type of loan. There are two types:

  1. General Purpose Loan – A repayment period of one to five (1-5) years. A General Purpose Loan can be used for any purpose. Proof of the reason for the Loan is not required.
  2. Residential Loan – A repayment period of one to fifteen (1-15) years. A Residential Loan can be used only for the purchase or construction of a primary residence. Proof of purchase or a construction agreement is required.
Can I take a residential loan to refinance or pay off an existing mortgage?

No. Residential loans are only for home purchase or new construction.

The Participant Member can obtain a residential loan for constructing a new residence or purchasing an existing residence, but not for refinancing or repaying an existing mortgage, paying for renovations, buying out another person’s share in their current residence, or for the purchase of land.

What are the loan repayment rules?
Please see “Section 4: Loan Provision Agreement” on your annuity loan application for a complete list of loan provisions.
What happens to my loan and payments if I take a leave of absence?

A participant who takes a leave of absence from the City without pay for a period of greater than one month, but not exceeding one year may request that their loan repayments be suspended during the leave through the submission of an “Employee Status Change Form”. This form is provided by the city payroll office. Any delinquent payments owed prior to the date of the participant’s approved leave, must be paid by the participant, or failure will result in a delinquency and possibly a default of their loan in accordance with IRS provisions. Interest will continue to accrue during the suspension period. The participant must complete another “Employee Status Change Form” when returning to work and resume the payroll deductions. Participants who take a leave of absence without pay for a period of one year or greater must continue to make their loan payments in accordance with the original loan repayment schedule and submit the certified check or money order directly to the Bank. Failure to submit an “Employee Status Change Form” may result in a loan default.

 

A participant who takes a leave of absence from the City because of military service and does not receive a distribution of his or her account, such period of absence shall not be taken into account as part of the loan period even if the length of military service is greater than the original term of the loan. Upon completion of military service, the loan shall be recalculated and repaid over the original term of the loan. Also, during the absence for military service, the rate of interest shall not be greater than 6% compounded annually. The participant must complete and submit an “Employee Status Change Form” both prior to commencement of military leave and upon return.

What happens if I fail to make a required loan payment?

A participant will first be notified with a “Past Due Notice Letter” from First Independence Bank that the required loan payment was not made by the due date. This first occurs when two or more payments are missed. If the Plan Administrator does not receive the payment by the last day of the calendar quarter in which it was due, the participant’s loan is delinquent and the Plan Administrator will send the participant a “Delinquent Status Letter”. The “Delinquent Status Letter” is the second notice to the participant of the delinquency on or before default date. The default date is defined as the last day of the calendar quarter following the calendar quarter for which the missed payment occurred.

To cure the delinquency, the participant must submit the amount due, via bank check or money order, directly, to the Plan Administrator in accordance with the cure period as set forth in the “Delinquent Status Letter”.

A participant’s default of one outstanding loan does not constitute a default of a second. A participant may continue to make loan payments on a second loan either via payroll deductions or with a certified check or money order made payable to the First Independence Bank indicating the Frozen Defined Contribution Plan at a Bank branch.

Please note, it is the responsibility of the member to ensure that their contact information remains current at all times. Exceptions will not be granted for members who do receive their Past Due Notice or Delinquency Notice due to an outdated member address.  

What are the consequences of a loan default?

If the Plan Administrator has not received the delinquent loan payment(s) by the date set forth in the “Delinquent Status Letter” (see definition in the answer to the question above), the loan is defaulted and the participant shall receive a “Notice of Default”. The “Notice of Default” is a confirmation to the participant that the Plan Administrator did not receive the past due loan payment(s) to cure the delinquency by the specified date and, therefore, the following have taken place:

  1. The entire outstanding balance of the loan, including accrued, but unpaid, interest up to the date of default will be a deemed distribution and is includible in gross income, subject to mandatory federal withholding requirements and reported on  Form  1099-R.  You may also owe a penalty to the IRS for premature withdrawal if you are under 59 ½ in addition to the taxes owed.
  2. The participant will be precluded from applying for future loans from his or her Frozen Defined Contribution Plan account, even if the defaulted loan is fully paid off.
How do I estimate a loan repayment amount?

Loan payments will be made through regular payroll deductions, on a minimum bi-weekly or semi-monthly basis for active employees. Loan payments will be made OTC at First Independence Bank on a minimum bi-weekly or semimonthly basis for separated or non-active employees. The payroll deduction cannot be less than $20.00 for any two-week period. The minimum payment will be required for all over the counter payments as well. You may increase your payroll deduction to pay-off the loan early. If you choose, you may elect to fully payoff your loan at any time with a certified check or money order made payable to the First Independence Bank indicating the Frozen Defined Contribution Plan. You should contact the Bank prior to submitting any full prepayment to confirm the current amount due.

 

Participants are urged to contact First Independence Bank for loan payment information.

It's my money, why do I have to pay it back?

The IRS rules require you to repay the loan as these monies are to be used for retirement and no taxes have been paid on the earnings.

The Government wants to ensure that the funds YOU have set aside for retirement are there when you retire. It is the same reason that they charge a premature distribution fee for taking refunds out of the Frozen Defined Contribution Plan before you have reached retirement age.

Why can't I offset the loan with the annuity (Frozen Defined Contribution Plan) monies I have?
Participants are never eligible to directly “offset” their loans (payoff by using the remaining balance in the Frozen Defined Contribution Plan). The IRS would consider the offset a violation of the plan unless a member is eligible for an annuity refund.
How does my loan affect my ability to get an annuity refund?

The Frozen Defined Contribution Plan does not allow in- service distributions except for the refunds that you may take after 20 or 25 years depending on the rules of withdrawal for your bargaining unit.

Participants who have an outstanding Plan loan balance will still be eligible for the twenty or twenty-five year withdrawal providing they meet all of the following criteria:

(a)          The participant is currently employed as a City of Detroit employee.

(b)          The participant is current with their outstanding plan loan, and

(c)           The remaining balance in the participants account after the issuance of their refund benefit is not less than the outstanding loan balance at the time the benefit is paid.

What happens if I get disabled, there is a layoff, or I need to quit?

When a Plan participant experiences a severance from City service, the participant will be sent an “Employment Separation Letter” where they will be given a choice of having the loan treated as a “deemed distribution” which would result in a taxable distribution to the participant on a Form 1099-R for the outstanding loan amount.

Alternately, the participant can pay the loan in full in which case no taxable event for the loan would occur, or continue to make payments as OTC transactions with the higher transaction fee per payment.

Disability retirement status will be treated like a separation from service.

What happens if I DROP while I have a loan?

For loan purposes being on DROP is NOT a separation status. You are still being actively paid.  You must continue loan payments and cannot have the loan declared a “deemed distribution”.

You may submit your application at any First Independence Bank branch office, by telefax or email.

What is the sequence of events in the loan process?

A completed Frozen Defined Contribution Plan loan application is received by the Plan Administrator.

•             The Plan Administrator verifies the participant’s eligibility for a loan and the amount of the loan.

•             If verified, the Plan’s record keeper issues a report to the Board which reviews the loan request and authorizes disbursement.

•             Subsequently loan proceeds are issued by the Bank to the participant (funds are disbursed at closing from the Bank to the participant usually within a week or two after the participants loan has been approved by the Board).

•             Repayments will be deducted from your paycheck on a bi-weekly basis, beginning shortly after you receive the loan proceeds.

Waitâ?¦ have you considered everything?
Before deciding to take a loan from your Frozen Defined Contribution Plan, make sure you understand how taking a loan can affect your retirement savings. Taking a loan from your Frozen Defined Contribution Plan can greatly impact your future account balance. Therefore, you should consider other ways to cover your unexpected expenses.

Drop FAQ

What is the Deferred Retirement Option Plan ("DROP")?
The DROP is a voluntary election by you to freeze your System pension benefit at the time of your DROP election, and to have an amount equal to System pension otherwise payable to you, as if you had then retired, instead allocated to a separate DROP Account earning interest until you actually retire. At retirement you are entitled to your frozen System pension as of your DROP election and your DROP account balance.
Who is eligible to participate in the DROP?

Eligible members are System members in the following groups:

  • Detroit Police Officers Association (DPOA)
  • Detroit Police Lieutenants and Sergeants Association (LSA)
  • Detroit Police Command Officers Association (DPCOA)
  • Detroit Fire Fighters Association (DFFA)
  • Non-Union Executives of the Police and Fire Departments

and who are immediately eligible for a 20 or 25 year service retirement (or such other DROP eligible service retirement requirement as provided in the applicable collective bargaining agreement).

When will participation in the DROP begin?
If you are otherwise eligible, you may now begin to make DROP elections.
Is there a minimum or a maximum period that I must stay in the DROP?

Members entering the DROP on or after July 1, 2014 have a five (5) year cap as outlined by Collective Bargaining Agreements and the Plan of Adjustment (POA). All changes to DROP are subject to approval of the Bankruptcy Court per the Plan of Adjustment (POA).

Once the time period expires, you must cease employment. You may choose to actually retire any time after entering the DROP and before you reach the maximum years in your Collective Bargaining Agreement. Then you will then begin receiving your frozen pension amount plus whatever amounts have accumulated in your individual DROP account.

What happens if I die or become disabled during the DROP Program?

If you die while in the DROP and before termination of employment as a police officer or fire fighter with the City, your System benefit will revert to your regular, pre-DROP “frozen pension”, plus applicable adjustments, and it will be payable in accordance with your System benefit election on file and which was made in connection with your DROP election. Your named beneficiary, or if none then your estate, will be entitled to the amounts remaining in your DROP account. When RSCD is notified of a death, beneficiary details are provided to Voya. The named beneficiary should then contact Voya at 800-584-6001 to inquire about benefits and initiate processing.

If you become disabled while an employee in the DROP and your employment as an active police officer or firefighter with the City is terminated because you are disabled, you shall immediately be retired and commence the form of System retirement selected at DROP commencement plus applicable pension improvement increases. You are also entitled to your DROP account. You will not be entitled to disability retirement benefits.

If I elect the DROP, does my employment status change?
If you elect the DROP, to the System’s knowledge, you will have the same rights and privileges as other active employees of the City. However, you will accrue no additional System defined benefit pension plan and defined contribution plan benefits, and you will have DROP allocations made to your DROP account.
If there are increases to the System's benefit formula made while I am in the DROP Program, will they apply to my frozen benefit?
No, unless the benefits are specifically made retroactive to cover prior years of service before your DROP election.
If I am promoted while I am participating in the DROP, will my System pension change when I retire?
No. Upon your DROP election your System pension freezes and will not change (except for applicable escalators).
How may I take distributions from my DROP account?
You can take distributions in any form that you wish as long as it is permitted by the IRS. You can withdraw all your amounts in a lump sum (which may be rolled over to an IRA), take periodic distributions, purchase an annuity or any combination of the above. You may also refrain from taking immediate distributions and leave your account to accumulate until you are required to take distributions at age 70-1/2. If you elect this option you must keep your contact information updated. Again, you may rollover all or a part of your DROP account into an IRA or a qualified plan that accepts such rollovers.
What are the tax consequences of taking distributions from my DROP account?

Basically, DROP account distributions are subject to income tax when withdrawn unless rolled over to an IRA or another employer’s plan. Additionally, there is a 10% penalty on distributions, or withdrawals taken before age 59-1/2 (unless rolled over). However, there are many exceptions to this rule. There may be no penalty if:

  • You separate from service (i.e., retire), and are age 50;
  • You are any age and take withdrawals “on a periodic basis over your life, or joint life, expectancy” (like an annuity).
  • If you die, become disabled, or have a severe medical necessity for yourself or your dependents.

We recommend you speak with a tax specialist for any tax related questions.

Am I able to take a loan from my DROP account?
No.
What if I am in the process of getting divorced, or I get divorced in the future?
DROP assets, like other forms of pension benefits, may be considered marital property subject to division in a divorce proceeding. While DROP assets are not subject to distribution until a member terminates active employment as a police officer or fire fighter with the City, pursuant to a domestic relations order a court can award all or part of your DROP account to a former spouse in the same manner as it can assign other retirement payments to a former spouse.
How do I process a Qualified Domestic Relations Order (QDRO) from my Drop Account?

Court documents should be mailed directly to:

Voya Retirement Insurance and Annuity Company
P.O. Box 990063
Hartford, CT 06199-0063
*Please reference the Drop Plan Account Number: VFG492
Voya will provide the form that is required to process a QDRO to the participant and Alternate Payee (former spouse), as per the court document.

What if I am divorced, there is a domestic relations order in effect, and I want to elect to DROP?
If you are eligible to make a DROP election, you are divorced, and your System pension is subject to a domestic relations order currently in effect, you are strongly advised to review the specific terms of the domestic relations order that is in effect. You may also want to seek assistance from your attorney. With respect to those DROP eligible members whose benefits are subject to a domestic relations order, if they elect to DROP the System plans to review such orders on a case by case basis to determine if the order affects the amount of their DROP election or assigns all or part of their DROP account.
Can I withdraw my defined contribution plan contributions (Annuity Savings Fund) in a lump sum, and still participate in the DROP program?
Yes.
Can I take a withdrawal from my Drop Plan Account while still employed as a police officer or fire fighter with the City?
No.
Can I request a Hardship Withdrawal from my Drop Plan Account?
No.
Can I find out more about how the DROP is invested?

VOYA Life Insurance and Annuity Company, the designated administrator and investment provider for the DROP Plan will conduct thorough group and individual education sessions concerning all aspects of the DROP investment vehicle.

The decision is left to you whether to DROP. You are urged to also consult with your personal financial advisor.

How can I get more information?

Entering the DROP is a big decision. Once a decision is made to enter and approved, it is FINAL. Before entering the DROP you are encouraged to contact your Union representative with your questions about DROP procedures.

If you have questions about your DROP account and how it is invested, contact Drop Plan Representative:
Mark Woolhiser, at 734-207-8800

If you’d like to request a distribution and/or a rollover (once separated from service/retired), contact: Voya at 800-584-6001.

If you wish to update or change your Beneficiary Designation, contact: RSCD at 313-224-3362.

The DROP is a valuable benefit, but like anything, it does not meet everyone's needs in the same way. Before you elect to participate in the DROP, be sure of your rights and make careful plans for your future. It would be wise to consult with your own financial adviser concerning the choices that are most advantageous for your specific circumstances.