DROP Overview
Withdrawal Limit: 12 total, 4 annually
Withdrawal Deadline: 15th day of month
Interest: 5% annual interest, compounded monthly
FAQs
Your DROP balance can be obtained by calling the AFRF office at (512) 454-9567.
You are allowed a total of 12 withdrawals from your DROP account, with an annual limit of 4 withdrawals.
All distributions from your DROP account are subject to a mandatory 20% withholding for federal income tax unless the distribution is transferred directly by the Fund to an Individual Retirement Account, an Individual Retirement Annuity, or a qualified trust. A form W-4R must be submitted with your DROP Distribution Form if you elect for the Fund to withhold greater than 20% for federal income tax.
The manner in which funds are withdrawn can have serious tax consequences. AFRF recommends that you consult a qualified tax advisor before making any decisions about withdrawing your funds.
DROP account withdrawals are processed monthly. The DROP distribution election form must be received by the AFRF office by the 15th
day of the month to receive the distribution by the end of the month. Forms received after the 15th will be processed and paid by the end of the following month.
Withdrawals are available following the Board approval of your retirement benefits. The Board approves benefits at the monthly meeting following the month of your retirement. Please note, some restrictions apply if you have not yet reached 50 years of age.
You must withdraw your entire DROP account no later than April 1 of the year after you reach age 70 ½. AFRF will send reminders by mail to notify you when this date is approaching, starting 18 months in advance.
If you are a DROP beneficiary, you are entitled to a maximum of 4 withdrawals within 37 months of the retiree's passing. If you are a DROP beneficiary of a member who passed while in active service, you are required to take an immediate withdrawal or lump sum rollover to a qualified plan or IRA. If you were awarded a DROP account through a QDRO, you are entitled to a maximum of 4 withdrawals with no time limitation. The 70 ½ age limitation for final withdrawal still applies (see FAQ above). Please use the appropriate form below to request a withdrawal from your DROP account.