This memorandum responds to your request for an opinion regarding whether the Social
Security Administration (SSA) should treat the Louisiana Sheriffs’ Pension and Relief
Fund’s (LSPRF’s) Deferred Retirement Option Plan (DROP) and Back-Deferred Retirement
Option Plan (Back-DROP) as separate retirement plans from LSPRF, or whether they are
part of LSPRF. After reviewing the facts and relevant law, we have determined that,
since the date of its inception in 1990, SSA should treat LSPRF’s regular DROP as
part of the overall LSPRF retirement system and not as a separate plan. In addition,
since the date of its inception on July 1, 2001, SSA should treat LSPRF’s Back-DROP
as part of the overall LSPRF retirement system and not as a separate plan.
In 1946, the Louisiana legislature created LSPRF for each parish, and for the civil
and criminal sheriffs for the parish of Orleans, and for their deputies. See La. Rev. Stat. Ann. § 11:2171 (formerly codified at La. Rev. Stat. Ann. § 33:1451,
pursuant to La. Acts 1946, No. 327 § 1). In 1990, Louisiana authorized a DROP as an
option under LSPRF. See La. Acts 1990, No. 12, § 1 (codified at La. Rev. Stat. Ann. § 33:1456(M), redesignated
at La. Rev. Stat. Ann. § 11:2178(M)).
In 2001, the legislature repealed this provision of the law and provided that, on
or after July 1, 2001, statutory authority for enrolling members of LSPRF in the regular
DROP ceased. See La. Acts 2001, No. 867, § 2. In its place, the legislature created the Back-DROP,
effective on July 1, 2001. See La. Rev. Stat. Ann. § 11:2178.1 (added by La. Acts 2001, No. 867, §§ 1-2). 
Generally, the DROP and Back-DROP are optional benefit programs of LSPRF that provide
a mechanism for members who are eligible for normal retirement to continue working
for a finite period of time,  accumulate money in an individual account based on the monies that the participant
would otherwise receive as a monthly retirement benefit, and, if the participant
so chooses, receive a lump sum payment from the DROP account upon actual retirement.
La. Rev. Stat. Ann. § 11:1312.1.; La. Acts 1990, No. 12, § 1 (amended by La. Acts
1991, No. 66, § 1; La. Acts 1992, No. 895, § 1; La. Acts. 1995, No. 1113, § 1; La.
Acts. 1997, No. 1394, § 1).
Regarding the regular DROP, until July 1, 2001, the law provided that in lieu of terminating
employment and accepting a service retirement, any member of LSPRF who was eligible
for normal retirement could elect to participate in the DROP and defer the receipt
of retirement benefits. See La. Acts 1990, No. 12, § 1 (codified at La. Rev. Stat. Ann. § 33:1456(M), redesignated
at La. Rev. Stat. Ann. § 11:2178(M)). The law provided that active membership in the
regular LSPRF plan terminated once participation in the DROP began. See La. Acts 1990, No. 12, § 1. Regarding the Back-DROP, after July 1, 2001, the law provides
that in lieu of receiving a service retirement allowance, an eligible member of LSPRF
may elect at the time of retirement to receive a Back-DROP benefit. See La. Rev. Stat. Ann. § 11:2178.1(A)(2). The Back-DROP is a retirement benefit of LSPRF.
See LSPRF Member Handbook, p. 22 (2007 ed.). In the regular DROP, a member of LSPRF elected
to “enter” the DROP and continue working during the DROP participation period, whereas
in the Back-DROP, a member elects to “take” the Back-DROP at the time of separation
from employment to retire. See id. Significantly, the law refers to both the regular DROP and the Back-DROP as optional
programs for “members” of LSPRF. See La. Rev. Stat. Ann. § 11:2178.1; La. Acts 1990, No. 12, § 1. Thus, the DROP and Back-DROP
are programs for members of LSPRF, and SSA should treat them as part of the overall
LSPRF retirement system.
Since 1998, courts in Louisiana have treated the DROP plans as part of the public
employee’s retirement plan. These rulings were made in the context of dividing retirement
benefits at divorce. Although the main issue in these cases was not whether the DROP
plans are part of the overall retirement system, nonetheless, the cases shed light
on how Louisiana state courts view the DROP plans in relation to the overall retirement
plans of public employees. For instance, in 1998, the Louisiana Supreme Court noted
that employees in the Louisiana State Employees Retirement System (LASERS) were eligible
to participate in the DROP, which allowed payment of earned retirement benefits into
a DROP account based on a “fictitious retirement” while the employee continued to
work. Bailey v. Bailey, 708 So.2d 354, 355 (La. 1998). The court noted that the statutory provisions governing
LASERS’s DROP program referred repeatedly to the DROP benefits as “retirement benefits”
and that such benefits were “fixed” as of the date of entry into the DROP. Id. at 358-59. Hence, the court ruled that the DROP funds were part of an employee spouse’s
retirement benefits and were to be apportioned, like other retirement benefits, at
divorce. Id. at 357-58.
Another Louisiana court observed that the Teachers’ Retirement System of Louisiana’s
(TRSLA’s) DROP funds are “derived from the retirement benefits” and are apportioned
like the other retirement benefits at divorce. Sullivan v. Sullivan, 801 So.2d 1093, 1096 (La.App. 2001). Likewise, another Louisiana court noted that
a teacher’s retirement benefits under TRSLA “obviously included her DROP benefits,
which are taken in lieu of a retirement allowance and treated as one ‘subaccount’
in the retirement system.” McKinstry v. McKinstry, 824 So.2d 1260, 1262 (La.App. 2002). Hence, Louisiana courts treat the DROP plans
as part of a public employee’s retirement plan.
In summary, we have determined since the date of its inception in 1990, SSA should
treat LSPRF’s regular DROP as part of the overall LSPRF retirement system and not
as a separate system or plan. In addition, since the date of its inception on July
1, 2001, SSA should treat LSPRF’s Back-DROP as part of the overall LSPRF retirement
system and not as a separate system or plan. We note that SSA may need to update or
amend several provisions in the Program Operations Manual System (POMS) to reflect
this determination. See POMS GN 02608.102.B.3 (stating that a DROP is a separate pension plan), RS DAL00605.360 (discussing Louisiana’s DROP plans).
Regional Chief Counsel
Anne L. H~
Assistant Regional Counsel