Senate Bill S10392

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10392
 
                             I N  S E N A T E
 
                               May 15, 2026
                                ___________
 
 Introduced  by  Sen.  COONEY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN ACT to amend the retirement and social security law, in  relation  to
   establishing  a  deferred retirement option plan for certain municipal
   police and fire employees;  and  providing  for  the  repeal  of  such
   provisions upon the expiration thereof

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The retirement and social security law is amended by adding
 a new section 384-f to read as follows:
   § 384-F. DEFERRED RETIREMENT OPTION PLAN PAYABLE TO ANY MEMBER OF  THE
 RETIREMENT SYSTEM WHO IS A FIREFIGHTER, POLICE OFFICER OR OFFICER OF ANY
 ORGANIZED FIRE DEPARTMENT OR ORGANIZED POLICE FORCE OR POLICE DEPARTMENT
 OF  ANY  COUNTY, CITY, TOWN, VILLAGE, FIRE DISTRICT, OR POLICE DISTRICT.
 A.  DEFERRED RETIREMENT OPTION PLAN. DEFERRED  RETIREMENT  OPTION  PLAN,
 (HEREINAFTER REFERRED TO AS "DROP"), IS A RETIREMENT PLAN UNDER WHICH AN
 ELIGIBLE  MEMBER  MAY ELECT TO PARTICIPATE, DEFERRING RECEIPT OF RETIRE-
 MENT BENEFITS WHILE CONTINUING EMPLOYMENT WITH THEIR MUNICIPAL POLICE OR
 FIRE DEPARTMENT OR DISTRICT.  FOR  THE  PURPOSES  OF  THIS  SECTION,  AN
 "ELIGIBLE  MEMBER" IS ANY MEMBER OF THE RETIREMENT SYSTEM WHO IS A FIRE-
 FIGHTER, POLICE OFFICER OR OFFICER OF ANY ORGANIZED FIRE  DEPARTMENT  OR
 ORGANIZED  POLICE  FORCE OR POLICE DEPARTMENT OF ANY COUNTY, CITY, TOWN,
 VILLAGE, FIRE DISTRICT, OR POLICE DISTRICT. DURING THE PERIOD OF CONTIN-
 UED EMPLOYMENT, THE ELIGIBLE MEMBER'S MONTHLY RETIREMENT  BENEFIT  SHALL
 BE  DEFERRED  AND  HELD BY THE RETIREMENT SYSTEM ON BEHALF OF THE MEMBER
 PLUS INTEREST AT AN EFFECTIVE RATE OF ONE-HALF PERCENT FOR THE  SPECIFIC
 PERIOD  OF  PARTICIPATION  IN  DROP AS PROVIDED IN SUBDIVISION C OF THIS
 SECTION.  UPON COMPLETION OF THE DROP PERIOD, THE ELIGIBLE MEMBER  SHALL
 RECEIVE  THE  TOTAL  AMOUNT  OF  RETIREMENT BENEFITS DEFERRED UNDER DROP
 WITHOUT OPTIONAL MODIFICATION AS PERMITTED BY SUBDIVISIONS D  AND  E  OF
 THIS SECTION AND SHALL BEGIN TO RECEIVE THE PREVIOUSLY DETERMINED NORMAL
 SERVICE   RETIREMENT  BENEFIT  WITH  OPTIONAL  MODIFICATION  AS  FURTHER
 PROVIDED IN SUBDIVISION D OF THIS SECTION.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD15888-01-6
              

 S. 10392                            2
 
   B. PARTICIPATION  IN  DROP.  ANY  ELIGIBLE  MEMBER  WHO  IS  CURRENTLY
 EMPLOYED  BY THE DIVISION OF STATE POLICE AND QUALIFIES TO RETIRE PURSU-
 ANT TO SECTION THREE HUNDRED EIGHTY-FOUR-D OF THIS TITLE  BY  REASON  OF
 COMPLETING  TWENTY  YEARS OF CREDITABLE SERVICE MAY ELECT TO PARTICIPATE
 IN DROP.
   C.  ELECTION IN DROP. SUCH ELECTION SHALL BE ON A FORM PREPARED BY THE
 COMPTROLLER AND MAY BE FOR ANY PERIOD  OF  TIME  NOT  LESS  THAN  TWELVE
 MONTHS OR MORE THAN THIRTY-SIX MONTHS DURATION. ANY MEMBER WHO ELECTS TO
 PARTICIPATE IN DROP SHALL BE CONSIDERED RETIRED ON THE DAY FOLLOWING THE
 EXPIRATION  OF  THE  DROP  PERIOD, PROVIDED, HOWEVER, THAT ALL LOANS AND
 EXCESS CONTRIBUTIONS SHALL BE RESOLVED BY THE DATE OF ENTRY  INTO  DROP.
 UPON EXPIRATION OF THE TIME PERIOD SELECTED BY THE ELIGIBLE MEMBER, SUCH
 MEMBER'S PARTICIPATION IN DROP SHALL TERMINATE.
   D. BENEFITS PAYABLE UNDER DROP. (1) EFFECTIVE WITH THE DATE OF PARTIC-
 IPATION IN DROP, THE ELIGIBLE MEMBER'S NORMAL SERVICE RETIREMENT BENEFIT
 SHALL  BE  CALCULATED, USING CREDITABLE SERVICE AND FINAL AVERAGE SALARY
 AS IF THE EFFECTIVE DATE OF RETIREMENT WAS THE DATE OF ENTRY INTO  DROP.
 THE  AMOUNT DEFERRED PURSUANT TO DROP SHALL BE CALCULATED BASED UPON THE
 ELIGIBLE MEMBER'S ZERO OPTION RETIREMENT ALLOWANCE UNTIL SUCH MEMBER HAS
 OBTAINED THE APPLICABLE MAXIMUM  SERVICE  RETIREMENT  LIMIT  BASED  UPON
 YEARS  OF  SERVICE.  ANY ADDITIONAL PARTICIPATION IN DROP AFTER A MEMBER
 HAS OBTAINED THE MAXIMUM SERVICE RETIREMENT LIMIT BASED  UPON  YEARS  OF
 SERVICE  SHALL  BE  CALCULATED  BASED UPON SIXTY PERCENT OF THE MEMBER'S
 FULL ANNUAL RETIREMENT ALLOWANCE. IN ADDITION, FOR THE PURPOSES OF  THIS
 SECTION,  THE  ANNUAL  RETIREMENT  ALLOWANCE  FOR ANY MEMBER ELECTING TO
 PARTICIPATE IN DROP SHALL BE CALCULATED USING A THREE-YEAR FINAL AVERAGE
 SALARY AS DEFINED ELSEWHERE IN THIS ARTICLE. THE ELIGIBLE MEMBER  SHALL,
 HOWEVER,   ELECT  SUCH  MEMBER'S  OPTIONAL  RETIREMENT  BENEFIT  AT  THE
 COMPLETION OF THE DROP PERIOD.
   (2) IF THE ELIGIBLE MEMBER DIES PRIOR TO COMPLETION OF THE  PERIOD  OF
 PARTICIPATION  IN  DROP, THE ELIGIBLE MEMBER SHALL BE TREATED AS IF SUCH
 DROP ELECTION DID NOT EXIST. IN LIEU OF THE DROP PAYMENT, A DEATH  BENE-
 FIT  SHALL  BE PAYABLE CONSISTENT WITH THE TERMS OF THIS CHAPTER AND ALL
 SALARY AND SERVICE REPORTED FOR SUCH ELIGIBLE  MEMBER  DURING  THE  DROP
 PERIOD  SHALL  BE  CONSIDERED IN CALCULATING THE ELIGIBLE MEMBER'S DEATH
 BENEFIT.
   (3) IF  THE  ELIGIBLE  MEMBER  IS  APPROVED  FOR  DISABILITY  BENEFITS
 PROVIDED  IN  THIS  CHAPTER  DURING THE DROP PERIOD, THE ELIGIBLE MEMBER
 SHALL BE TREATED AS IF THE DROP ELECTION DID NOT EXIST. IN LIEU  OF  THE
 DROP  PAYMENT, A DISABILITY RETIREMENT BENEFIT SHALL BE PAYABLE CONSIST-
 ENT WITH THE TERMS OF THIS CHAPTER AND ALL SALARY AND  SERVICE  REPORTED
 FOR  SUCH  ELIGIBLE MEMBER DURING THE DROP PERIOD SHALL BE CONSIDERED IN
 CALCULATING THE ELIGIBLE MEMBER'S DISABILITY RETIREMENT BENEFIT.
   (4) IF AN ELIGIBLE MEMBER OTHERWISE FAILS TO  COMPLETE  SUCH  MEMBER'S
 PERIOD  OF SERVICE AS ELECTED PURSUANT TO SUBDIVISION C OF THIS SECTION,
 THE ELIGIBLE MEMBER SHALL BE TREATED AS IF SUCH DROP  ELECTION  DID  NOT
 EXIST.  IN LIEU OF THE DROP PAYMENT, THE NORMAL SERVICE RETIREMENT BENE-
 FIT SHALL BE PAYABLE CONSISTENT WITH THE TERMS OF THIS CHAPTER  AND  ALL
 SALARY  AND  SERVICE  REPORTED  FOR SUCH ELIGIBLE MEMBER DURING THE DROP
 PERIOD SHALL BE CONSIDERED IN CALCULATING THE ELIGIBLE MEMBER'S  SERVICE
 RETIREMENT BENEFIT.
   (5) IF AN ELIGIBLE MEMBER REMAINS EMPLOYED AFTER SUCH MEMBER'S PARTIC-
 IPATION  IN DROP IS TERMINATED, SUCH MEMBER SHALL FORFEIT ALL DROP BENE-
 FITS AND CONTINUE EMPLOYMENT AS IF SUCH DROP  ELECTION  DID  NOT  EXIST.
 SUCH  MEMBER  SHALL  THEN  BE ELIGIBLE TO ELECT DROP CONSISTENT WITH THE
 TERMS OF THIS SECTION.
 S. 10392                            3
 
   (6) IF AN ELIGIBLE MEMBER IS APPROVED FOR  DISABILITY  BENEFITS  AFTER
 BENEFITS  PAYABLE  PURSUANT  TO DROP HAVE BEEN PAID, THE ELIGIBLE MEMBER
 MAY ELECT TO RECEIVE THE DISABILITY BENEFITS IN LIEU OF  DROP  BENEFITS,
 BUT SUCH DISABILITY BENEFITS SHALL BE ACTUARIALLY ADJUSTED FOR ANY BENE-
 FITS PAID UNDER DROP.
   E.  METHOD OF PAYMENT. AT THE CONCLUSION OF THE MEMBER'S PARTICIPATION
 IN DROP, THE RETIREMENT SYSTEM SHALL PAY THE DEFERRED SERVICE RETIREMENT
 BENEFITS IN ONE OF THE FOLLOWING METHODS AS ELECTED BY THE MEMBER:
   (1) LUMP SUM: ALL ACCRUED DROP BENEFITS, PLUS INTEREST, LESS WITHHOLD-
 ING AS REQUIRED BY THE INTERNAL REVENUE SERVICE, SHALL BE  PAID  TO  THE
 DROP  PARTICIPANT  OR ELIGIBLE BENEFICIARY OR AS OTHERWISE DETERMINED BY
 OPERATION OF LAW;
   (2) DIRECT ROLLOVER: ALL ACCRUED DROP BENEFITS, PLUS  INTEREST,  SHALL
 BE  PAID  FROM  THE  RETIREMENT  SYSTEM  TO  A CUSTODIAN OF THE ELIGIBLE
 RETIREMENT PLAN OR OTHER ELIGIBLE PLAN OR ACCOUNT AS  PROVIDED  PURSUANT
 TO THE INTERNAL REVENUE CODE AS DIRECTED BY THE MEMBER OR ELIGIBLE BENE-
 FICIARY; OR
   (3)  PARTIAL LUMP SUM: A PORTION OF THE DROP BENEFITS SHALL BE PAID TO
 THE DROP PARTICIPANT OR ELIGIBLE BENEFICIARY, LESS WITHHOLDING  REQUIRED
 BY  THE  INTERNAL REVENUE SERVICE AND THE REMAINING DROP BENEFITS MAY BE
 ROLLED OVER AS OTHERWISE PERMITTED BY THE INTERNAL REVENUE CODE.
   FOR PURPOSES OF THIS SUBDIVISION, THE TERM "ELIGIBLE  BENEFICIARY"  IS
 ONE  WHO QUALIFIES TO ROLLOVER BENEFITS FROM A QUALIFIED BENEFIT PLAN OR
 ACCOUNT AS PROVIDED BY THE INTERNAL REVENUE CODE. THE FORMS  OF  PAYMENT
 PROVIDED  BY THIS SUBDIVISION SHALL COMPLY WITH THE MINIMUM DISTRIBUTION
 REQUIREMENTS OF THE INTERNAL REVENUE CODE.
   F. REGULATIONS. THE COMPTROLLER SHALL PRESCRIBE SUCH RULES  AND  REGU-
 LATIONS  AS MAY BE NECESSARY FOR THE EFFECTIVE ADMINISTRATION AND IMPLE-
 MENTATION OF THE PROVISIONS OF THIS SECTION.
   § 2. This act shall take effect  immediately  and  shall  expire  five
 years  after  it  shall  have  become  a  law  when  upon  such date the
 provisions of this act shall be deemed repealed; provided, however, that
 the expiration of this act shall not  prevent  a  member  who  has  duly
 elected  to  participate  in DROP pursuant to the provisions of this act
 from completing the full period of DROP selected.