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Florida Retirement System

The Florida Retirement System (FRS) is an extremely inclusive program that, for the most part, doesn’t require small sects of employees to enroll in specific retirement plans. Instead, it combines major portions of the state’s workforce to exist within the same systems, which has seemingly done wonders for the financial health of the FRS. Financial advisors also have the ability to impact your retirement planning process, and the SmartAsset SmartAdvisor tool can pair you with advisors in your area.

Types of Retirement Systems in Florida

The state of Florida uses very general retirement systems and pension plans that include massive groups of employees. This has likely aided its overall retirement system in performing well, as the pool from which it pulls plan contributions is not solely limited to less common state positions as in other states. However, just because these plans cover large sects of individuals, doesn’t mean all of the benefits associated with them are the same. Instead your age, personal service credit and other factors come into play to determine exactly what you’re going to receive in retirement.

Florida Retirement Systems
Plan Title Eligible Employees
Florida Retirement System Investment Plan – All full- and part-time employees of the state of Florida
Florida Retirement System Pension Plan – All full- and part-time employees of the state of Florida
State University System Optional Retirement Program (SUSORP) – The president of each state university
– The chancellor of the Division of Colleges and Universities of the State Board of Education
Senior Management Service Optional Annuity Program (SMSOAP) – Senior managers employed by the state of Florida, the Florida State Board of Administration, the Judicial Branch, the Legislature, the Executive Director of the Ethics Commission and the Auditor General
Deferred Retirement Option Program – FRS Pension Plan members

Overview of Florida’s Retirement Systems

Florida Retirement System

Florida Retirement System Investment Plan – This investment plan the FRS offers is a defined contribution plan, which means that the size of your monthly retirement payments is pre-determined by law. However, if you want lifetime cost of living increases, you can choose to purchase them from the state.

Florida Retirement System Pension Plan – Your average overall compensation, service time and membership class within Florida’s state employee system are the combining factors that dictate your retirement distributions. Those who were enrolled in this program prior to 7/1/2011 will receive an additional cost-of-living increase every July as well.

Deferred Retirement Option Program – This program was created as a temporary alternative to the FRS Pension Plan. It enables participants to transfer their retirement assets to DROP so they can earn interest in the FRS Trust Fund. Once you decide to cancel this, the money will be rolled over back to you likely as a lump sum.

State University System Optional Retirement Program – The Florida Department of Management Services built SUSORP as a defined contribution plan wherein which you can make your own retirement investments. You can choose from one of five investment companies to do this through, with mutual funds and annuities being some of the more common choices. These firms include MetLife, TIAA, AXA, VALIC and VOYA.

Senior Management Service Optional Annuity Program – SMSOAP is essentially the same system as SUSORP, just for a different group of eligible employees. Annuities and mutual funds again comprise the vast majority of these investments. However, only VOYA, TIAA, AXA and VALIC are available for participants to work with.

Retirement Taxes in Florida


Any funds that are placed into a pension plan during your working years are tax deferred, meaning they are not subject to the federal income tax. However, once you begin withdrawing that money, it becomes yours, and therefore you must claim it on your federal tax return. Depending on which way you prefer, you can either pay the IRS in regular withholding installments or via estimated tax payments.

Withholding is likely how you’ve been paying taxes your entire working life, as money gets pulled from your regular checks as needed based on your exemptions and legal status. But if you choose to make estimated tax payments, you’ll need to calculate what you owe and pay quarterly.

In some cases, you may be able to rollover your pension distributions into another one of your retirement accounts, like an individual retirement account (IRA). Doing this will again shield you from federal income taxes, but not forever. Once you pull this money from the secondary account, the income tax will kick in. This will hold true, unless you have a Roth IRA, for which your taxes will need to be paid beforehand.


Because Florida does not impose a state income tax, what you receive from your pension each month will not be taxed outside of what the federal government expects. Because of this, the state has the highest percentage of senior residents in the U.S., and is generally regarded as one of the best places to retire.

Current Financial Health of the Florida Retirement System

Florida Retirement System

The FRS and its pension fund investment decisions have performed consistently above benchmark for over the last 20 years. It has around $184 billion involved within the fund, across over one million members and retirees who are receiving benefits.

The investment types that Florida utilizes to grow its pension funds are fixed income securities, real estate, global equities, private equities, cash, cash equivalents and strategic investments. There is nothing out of the norm about these investments, although diversification is key to maintaining success.

Tips to Adequately Prepare for Retirement

  • When many people think of retirement, they imagine an amorphous time that usually involves relaxing and family. But to be sure that you’ve developed the right amount of funding necessary for your retirement, it’s incredibly important to take things beyond that point. So sit down and take minute to outline exactly what you want out of your non-working years.
  • There are tons of factors to worry about when you’re taking on the planning of your retirement, so any aid is likely welcome. SmartAsset’s financial advisor matching tool is able to get you paired up with financial advisors in your area that have ample experience dealing with retirement and pension planning, as well as the outside financial components that can affect it.

Photo credit: ©iStock.com/ceazars, ©iStock.com/kali9, ©iStock.com/aphotostory

Chris Thompson, CEPF® Chris Thompson is a retirement, savings, mortgage and credit card expert at SmartAsset. He has reviewed hundreds of credit cards and loves helping people find the one that best matches their financial needs. Chris is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. He graduated from Montclair State University where he received the Journalism Achievement Award. Chris’ articles have been featured in places like Yahoo Finance, MSN and Bleacher Report. He lives in New Jersey and is a Mets, Jets and Nets fan.
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