For determining the applicability of the Government Pension Offset (GPO) provision
of the Social Security Act (Act) to widow’s insurance benefits (WIB) for the number
holder, you have asked whether Florida’s Deferred Retirement Option Program (DROP)
is separate from Florida’s defined benefit plan, the Florida Retirement System Pension
Florida’s DROP is a part of Florida’s defined benefit plan.
According to the information provided, Sheila, the number holder (NH), applied for
WIB in June 2000. The Social Security Administration (SSA) awarded NH WIB beginning
July 2000. In her application, NH had stated she was eligible for a pension from earnings
not covered by Social Security. SSA requested information about her pension plan.
After NH did not respond to the SSA’s requests for information, SSA suspended her
WIB in September 2005. NH also had become eligible for Medicare Part B benefits beginning
July 2002, but after SSA suspended NH’s WIB, she was billed quarterly for her Medicare
Part B benefits.
In June 2013, NH’s Medicare Part B benefits were terminated because her premium was
unpaid. She then visited her local Social Security office requesting reinstatement,
and SSA asked her to provide documentation regarding her pension plan. NH provided
information showing she participated in a DROP through the State of Florida. SSA determined
NH had earnings covered by Social Security in her last month of employment.
The widow of an individual who died fully insured is entitled to WIB based on the
deceased individual’s primary insurance amount, provided the widow meets certain criteria.
See Act § 202(e)(1)-(2); 20 C.F.R. §§ 404.335, 404.338(a).  However, a widow’s benefit may be reduced if her benefit is subject to the GPO in
section 202(k)(5) of the Act. See Act § 202(e)(2)(A); 20 C.F.R. §§ 404.304(e), 404.408a; Program Operations Manual
System (POMS) GN 02608.100. The GPO generally applies to a widow’s benefit who receives
a government pension based on her state or local government service in a position
not covered by Social Security. See Act § 202(k)(5); 20 C.F.R. § 404.408a(a); POMS GN 02608.100A.1. If applicable, the
GPO reduces the widow’s benefit in any month for which she receives a pension based
on her earnings from government service in a position not covered under Social Security.
See Act § 202(k)(5)(A); 20 C.F.R. § 404.408a(a); POMS GN 02608.100A.1.
Under certain circumstances, a widow’s benefit may be exempt from the application
of the GPO. See Act § 202(k)(5)(A)-(B); 20 C.F.R. § 404.408a(a), (b); POMS GN 02608.100A.1. One exemption is the “Last Day of Employment Covered Under Social Security and
State or Local Periodic Government Benefits” (“last day” exemption). See POMS GN 02608.102. Currently, the Act’s GPO provision requires that state and local government workers’
employment be covered by Social Security throughout their last sixty months of employment
to be exempt from the GPO. See Act § 202(k)(5)(A). However, this provision took effect through a legislative amendment
that Congress enacted in 2004. See Social Security Protection Act of 2004, 108 Pub. L. No. 108-203, 118 Stat. 493 (amending
Section 202 of the Act). Before that amendment, state and local government workers’
pensions were exempt from the GPO if their “last day” of employment was in a position
covered by Social Security. See POMS GN 02608.102A.1. Thus, the GPO does not apply if, on the widow’s last day of
state or local government service, she was: (1) in a position covered under Social
Security and by the state or local government pension plan; and (2) either performed
her last day of covered government employment prior to July 1, 2004, or filed for
WIB before April 1, 2004, and was entitled to WIB based on that filing. See POMS GN 02608.102B.1.
In this case, the information provided shows that NH participated in Florida’s DROP.
A DROP is a retirement plan offered to employees who are eligible to retire and receive
benefits under the employer’s defined benefit retirement plan  but continue to work while the state employer places their retirement distributions
into a DROP account. See POMS GN 02608.102B.3.a. Continued work does not increase the years of service and compensation used in the
defined benefit formula. Id. DROPs can take many forms and can be either a separate plan or part of the defined
benefit plan. See POMS GN 02608.102B.3.a. If the DROP is part of the defined benefit retirement plan, the “last day” exemption
from GPO applies to the payments from both the DROP and the defined benefit retirement
plan. See POMS GN 02608.102B.3.b. If the DROP is a separate pension plan, the “last day” exemption applies only to
the pension plan that the individual was participating in on the last day of government
service that qualifies for the “last day” exemption. See id.
SSA determined that NH had earnings from a position covered by Social Security during
the last month of her employment in the DROP program. Her last day of employment with
the state was before July 1, 2004, and she applied for benefits prior to April 1,
2004. Thus, it appears the GPO does not apply to NH’s DROP benefits due to the “last
day” exemption. See POMS GN 02608.102B.1. However, you have asked us whether Florida’s DROP is separate from the state’s
defined benefit plan. The answer to this question can determine whether NH’s benefits
from the defined benefit plan also qualify for the “last day” exemption to GPO. See POMS GN 02608.102B.3.b. 
Florida statutes designate the Florida Retirement System (FRS) Pension Plan as the
state’s defined benefit plan. See Fla. Stat. Ann. § 121.021(3) (2014). Florida’s DROP
is a “program under which an eligible member of [FRS] may elect to participate.” See
Fla. Stat. Ann. § 121.091(13) (2014). Under Florida’s DROP, a participating member’s
monthly FRS benefits are deferred and accrue in the FRS on behalf of the member. See id. A member who participates in DROP “is a retiree under [FRS] for all purposes,” with
limited exceptions not relevant to this opinion. See Fla. Stat. Ann. § 121.091(13)(b)3. This statute defines participation in DROP equal
to participation in the defined benefit plan. Therefore, the DROP is part of the defined
The FRS website also indicates that Florida’s DROP is part of the defined benefit
plan. The website explains that an eligible member of FRS may elect to participate
in DROP, during which time the member’s retirement benefits are deferred until the
employee stops working. See http://www.myfrs.com/portal/server.pt/community/pension_plan/233/drop (last visited Mar. 10, 2014). The website links to a brochure published by FRS that
states DROP allows employees to “effectively retire” under FRS while delaying their
termination. See https://www.rol.frs.state.fl.us/forms/drop-guide.pdf (last visited Mar. 10, 2014). Therefore, Florida’s DROP is part of the FRS pension
plan for the purposes of determining the applicability of the GPO “last day” exemption.
Florida’s DROP is part of Florida’s defined benefit program.
Mary Ann Sloan
Regional Chief Counsel
Jeffrey S. Wilson
Assistant Regional Counsel