If you work at least one year beyond the date you are eligible for an unreduced retirement benefit, you may elect to receive a one-time Partial Lump-Sum Option Payment (PLOP). This option reduces your monthly benefit. You can elect this option with the Basic Benefit or Survivor Option.

What is the plop in the Virginia Retirement System?

If you work at least one year beyond the date you are eligible for an unreduced retirement benefit, you may elect to receive a one-time Partial Lump-Sum Option Payment (PLOP). This option reduces your monthly benefit. You can elect this option with the Basic Benefit or Survivor Option.

What is a plop payment?

What is a PLOP? At retirement, you may be able to elect a partial lump-sum distribution in exchange for a reduction in your lifetime retirement allowance. Your age, the amount of the lump sum, and your choice of retirement option are used to determine the reduction to your retirement allowance.

Is VRS plop taxable?

What are the tax consequences of PLOP? The partial lump-sum payment is subject to taxes (20 percent federal and 4 percent state) at the time you receive the payment. If you are younger than 55, you must also pay a 10 percent penalty on the amount of the lump-sum payout for early distribution from a pension plan.

Is plop a good idea?

Ideally you should take the PLOP in conjunction with a thorough tax and financial planning analysis. If you need the money to pay off bills, the PLOP may be an answer. If you want to rollover the PLOP into an IRA for your heirs, that may also work.

How long does VRS retirement last?

The VRS Plan 1 is a defined benefit plan. This plan provides a lifetime monthly benefit during retirement based on your age, total service credit and average final compensation. Average final compensation is the average of your 36 consecutive months of highest creditable compensation as a covered employee.

What is drop retirement?

A DROP is an option provided to active participants of certain retirement plans. It allows members who elect DROP the option to continue to work beyond their Normal Retirement Date and convert part of their retirement benefit into a lump sum.

Can you borrow from your Virginia retirement?

Account Withdrawal You may withdraw from your account only when you meet one of these conditions: Terminate employment from the employer that offers the plan. Use your plan account to purchase VRS service credit, if approved. Experience an unforeseeable emergency that is approved by the Plan Administrator.

How long do you have to work for the VA to get a pension?

five years
VA employees are part of the Federal Employees Retirement System (FERS). Under FERS, you are eligible for monthly retirement benefits after just five years of federal service. This retirement system is portable — if you leave federal employment, the Social Security component carries over to your new employment.

Is it better to take a partial lump sum from my pension?

By taking a partial lump sum of money, you eliminate future taxes on your retirement savings. The amount of money you withdraw will be subject to income tax, but may be rolled over from your retirement account into a Roth IRA to avoid future tax.

Do teachers get a lump sum when they retire?

If you’ve final salary service with a Normal Pension Age of 60 you’ll receive an automatic lump sum when you take your final salary benefits. If you’ve final salary service with a Normal Pension Age of 65, or career average pension, you’ll not receive an automatic lump sum when you take those benefits.

What is the Plop option for teachers?

One of the most common questions we receive from clients who are teachers or state employees revolves around the PLOP. The PLOP, or Partial Lump Sum Option, provides qualified Virginia Retirement System employees with the flexibility to take a portion of their benefit as a lump-sum cash payment at the time they retire.

Is the Plop tax deductible in Virginia?

If you have the PLOP paid directly to you, VRS will deduct 20% for federal income tax and, if you live in Virginia, 4% for state income tax. The Internal Revenue Service (IRS) also may impose an additional 10% tax penalty if you receive the PLOP before age 59½; there are exceptions to this rule.

What is a lump-sum option payment (Plop)?

If you work at least one year beyond the date you are eligible for an unreduced retirement benefit, you may elect to receive a one-time Partial Lump-Sum Option Payment (PLOP). This option reduces your monthly benefit. You can elect this option with the Basic Benefit or Survivor Option.

How is a plop distribution made?

A PLOP distribution will be made as a single payment at the time your first monthly benefit is paid. Based on the amount of the PLOP, your monthly retirement benefit is then reduced to be the actuarial equivalent of the retirement benefit without a lump-sum distribution.