LUMP SUM PROP
APRS PROP Policy
The PROP account is an investment vehicle that allows retiree's to elect to roll their lump sum DROP monies into it and earn a rate of return this is established by APRS annually. It is a notional account that does not actually contain cash, stocks, bonds or other securities like a 457-plan account. The PROP account is a bookkeeping account only and a member's PROP balance is invested right along with the other assets of APRS.
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MONTHLY ANNUITY PROP
Under the rules adopted by the Board of Trustees, retiring and retired members may elect to defer receipt of all or a portion of their monthly annuity in order to defer the taxation of the deferred payments and to have the deferred benefits accumulate for later disbursement and later taxation in a PROP account.
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FAQs
What is a PROP account?
The PROP account is an investment vehicle that was established on September 1, 2001 to allow members to elect to roll their lump sum DROP monies into it and earn a rate of return to be established by APRS annually. It is a notional account that does not actually contain cash, stocks, bonds or other securities like a 457-plan account. The PROP account is a bookkeeping account only and a member's PROP balance is invested right along with the other assets of APRS.
Under the rules adopted by the Board of Trustees, retiring and retired members may elect to defer receipt of all or a portion of their monthly annuity in order to defer the taxation of the deferred payments and to have the deferred benefits accumulate for later disbursement and later taxation in a PROP account.
Does the PROP account earn interest?
Yes. The interest credit rate for the 2025 plan year is 4.19%.
If I choose to defer my monthly annuity into the PROP, am I still eligible for retiree health insurance?
Yes, members can still receive health insurance from the City as a Retiree who is deferring their monthly annuities into the PROP however, they must work with City Benefits to self-pay the insurance premiums if their deferral amount exceeds the insurance premium.
As a DROP member, I have chosen to retire before age 50. I need access to my DROP monies immediately to support my current needs. Can I roll my DROP account into PROP and then take periodic distributions from PROP as needed?
Yes, the PROP policy allows members to make two partial distributions a year with a total withdrawal option after a 90 day inception period. Members could suffer severe and adverse financial consequences as a result. Members who retire before age 50 and take distributions from their PROP account prior to age 59 ½ will be required to rollover their distribution to another qualified retirement plan and may be subject to a ten percent (10%) early distribution tax penalty on monies withdrawn in addition to regular income taxes on any amounts withdrawn. The taxes will apply to all withdrawals whether from contributions or any accumulated earnings.
Upon retirement, can I defer part of my monthly annuity into the PROP?
Yes, a member can make an election to defer all or a specified portion of their monthly annuity into the PROP. In the event that the member elects to only defer a portion of each payment into PROP, the portion so deferred may not be less than $250.00 per month.
I am contemplating retirement, a QDRO has been filed on my retirement account with APRS and a part of my DROP balance and monthly retirement annuity has been assigned to my ex-spouse. If I allocate my DROP account to PROP can I delay the payment of any monies to my ex-spouse that are payable pursuant to the QDRO?
No. Acceptance of a QDRO by the APRS entitles a member's ex-spouse to receive any monies payable pursuant to the QDRO at the time the member actually terminates employment with the APD and is entitled to a distribution of funds from the APRS.