(a)    Effective with the date of DROP participation, the DROP member’s initial normal monthly benefit, including creditable service, optional form of payment, and highest average salary, and the effective date of retirement shall be fixed.  The beneficiary established in Sections 18-47 or 18-72, respectively, shall be the beneficiary eligible to receive any DROP benefits payable if the DROP member dies prior to the completion of the period of DROP participation. In the event a joint annuitant predeceases the DROP member, the DROP member may name a beneficiary to receive accumulated DROP benefits payable.  Such retirement benefit, any annual cost of living adjustments and interest shall accrue monthly in the trust fund.  Such interest shall accrue at an effective annual rate of four percent (4.0%) compounded monthly, on the prior month’s accumulated ending balance, up to the month of the termination or date of death.

    (b)    The effective date of DROP participation of a DROP member shall be the first day of the month selected by the DROP member to begin participation in the DROP, provided such date is properly established, with the written confirmation and the approval of the administrator, on forms required by the administrator.

    (c)    Normal retirement benefits and interest thereon shall continue to accrue in the DROP until the established termination date of the DROP, or until the DROP member terminates employment or dies prior to such date.  Although individual DROP accounts shall not be established, a separate accounting of each DROP member’s accrued benefits under the DROP shall be calculated and provided periodically to DROP members.

    (d)    At the conclusion of the member’s DROP, the administrator shall distribute the DROP member’s total accumulated DROP benefits, subject to and in accordance with the following provisions:

    (1)    The administrator shall receive written verification that such DROP member has terminated employment.

    (2)    The terminated DROP member or, if deceased, such DROP member’s named beneficiary, shall elect on forms provided by the administrator to receive payment of the DROP benefits in accordance with one of the options listed below.  For a DROP member or beneficiary who fails to elect a method of payment within sixty (60) days of termination of the DROP, the administrator will pay a lump sum as provided in subparagraph (I) below.

(I)    Lump sum.  All accrued DROP benefits, plus interest, less withholding taxes remitted to the Internal Revenue Service, shall be paid to the DROP member or surviving beneficiary.

(II)    Direct rollover.  All accrued DROP benefits, plus interest, shall be paid from the DROP directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code.

(III)    Partial lump sum.  A portion of the accrued DROP benefits, plus interest, shall be paid to the DROP member or surviving spouse, less withholding taxes remitted to the Internal Revenue Service, and the remaining DROP benefits shall be transferred directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code.  The proportions shall be specified by the DROP member or surviving beneficiary.

(3)    The form of payment selected by the DROP member or surviving beneficiary shall comply with the minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code.

(4)    A DROP member who fails to terminate employment at the conclusion of the DROP period shall be deemed not to be retired, and the DROP election shall be null and void. The covered employee shall be eligible to receive, upon termination of employment, his or her normal retirement benefit determined immediately prior to the effective date of the DROP election, including creditable service accumulated after the date of the DROP election, and using the highest average salary as determined immediately prior to the effective date of the DROP election.

    (e)    The accrued benefits of any DROP member, and any contributions accumulated under the DROP, shall be subject to Sections 18-51 or 18-76, respectively.

    (f)    DROP members shall be eligible for disability retirement benefits, as provided for in Sections 18-43 or 18-68, respectively, and shall receive the DROP benefits, plus interest, accrued to the date of disability in accordance with the election made under subsection (d)(2).

    (g)    A DROP member shall not be eligible for refunds as provided for under Sections 18-50 and 18-75.