Texas HB3987 amends rules for distributions from deferred retirement option plans for police and firefighters, allowing lump-sum distributions in.

Texas HB3987 modifies the rules governing distributions from deferred retirement option plans (DROP) for police and firefighters in certain municipalities. The bill allows for partial or full lump-sum distributions from a DROP account, either reducing annuity payments or closing the account. It also permits assigning the distribution to a third party if the pension system receives a favorable ruling from the Internal Revenue Service. The board must adopt rules to define financial hardship and provide flexibility for lump-sum distribution requests. The bill takes effect September 1, 2025.

Texas HB3987 amends rules for distributions from deferred retirement option plans for police and firefighters, allowing lump-sum distributions in.

Texas HB3987 modifies the rules governing distributions from deferred retirement option plans (DROP) for police and firefighters in certain municipalities. The bill allows for partial or full lump-sum distributions from a DROP account, either reducing annuity payments or closing the account. It also permits assigning the distribution to a third party if the pension system receives a favorable ruling from the Internal Revenue Service. The board must adopt rules to define financial hardship and provide flexibility for lump-sum distribution requests. The bill takes effect September 1, 2025.