OPERS PLOP: How the Partial Lump Sum Option Payment Works

What the PLOP Is (and Isn't)

The Partial Lump-Sum Option Payment lets OPERS Traditional Pension Plan and Combined Plan retirees take a one-time lump sum distribution at retirement, in exchange for a permanently reduced monthly pension. It's not an advance on your pension — it's a structural trade that changes your benefit for the rest of your life.

The PLOP is available only at retirement. You elect it on your application (Form SR-1), and OPERS disburses the lump sum no sooner than 90 days after your first monthly benefit check. You cannot add a PLOP later if you initially declined it, except for one narrow window before benefit finalization.

How the Calculation Works

Your PLOP amount equals between 6 and 36 times your unreduced monthly Single Life benefit. You pick the multiplier. OPERS won't let you choose an amount that would reduce your remaining monthly pension below 50% of the unreduced Single Life rate.

Here's the math in plain terms: if your unreduced Single Life monthly benefit is $3,000, you can take a PLOP of $18,000 (6x) up to $108,000 (36x). But at 36x, you'd check whether the remaining monthly payment stays above $1,500 (50% of $3,000). If the actuarial reduction drops your monthly below that floor, OPERS caps your PLOP at whatever multiplier keeps you above it.

The actuarial reduction is permanent. Your monthly pension is recalculated as if you retired with a smaller benefit, and that's the base for all future payments.

The 90-Day Wait Is Real

The most common misunderstanding about the PLOP: the money doesn't arrive on your first day of retirement. OPERS holds the lump sum and releases it no earlier than 90 days after your first monthly benefit check is disbursed. This waiting period lets OPERS verify your final account calculations before cutting a six-figure check.

Plan for this gap. If you're counting on PLOP funds to pay off a mortgage, fund a home purchase, or cover a large expense, you won't have access until roughly four months after retirement. Your monthly pension starts on schedule — just the lump sum is delayed.

Tax Withholding and Rollover Options

You have two choices for receiving the PLOP:

Direct cash distribution: OPERS withholds 20% for federal income tax and sends you the remainder. The full PLOP amount counts as taxable income in the year you receive it. If you're under 59½, you may also owe a 10% early withdrawal penalty on the taxable portion.

Direct rollover to a qualified plan: You can roll the PLOP directly into a traditional IRA, a Roth IRA (taxes due on conversion), the Ohio Deferred Compensation 457(b) plan, or another eligible employer plan. A direct rollover avoids the 20% mandatory withholding entirely. The 457(b) rollover is particularly relevant for Ohio public employees who already contribute to deferred comp — it keeps the funds in a tax-advantaged vehicle with no early withdrawal penalty at any age for 457-specific distributions.

You can also split — roll part into a qualified plan and take the rest as cash. OPERS allows the split on your election form.

The COLA Impact Most People Miss

Here's the detail that changes the math: OPERS annual cost-of-living adjustments (COLAs) are calculated as a simple percentage of your initial base benefit amount. Taking a PLOP permanently lowers that base, so future COLA dollar adjustments are calculated from a smaller amount rather than compounded on prior years' adjustments.

The total effect depends on the selected PLOP and the resulting reduction to the initial benefit. Compare OPERS estimates over your intended retirement horizon before choosing.

When the PLOP Makes Sense

The PLOP works when you have a specific, high-value use for the lump sum that exceeds the long-term cost of the pension reduction: eliminating high-interest debt, funding a bridge until Social Security kicks in (especially now that WEP and GPO are repealed), or front-loading retirement account contributions through a rollover.

It's a harder case when the PLOP would sit in a savings account earning less than the actuarial cost of the pension reduction — which is effectively OPERS's assumed rate of return on their portfolio.

The OPERS Retirement Guide includes a PLOP Decision Worksheet that maps the lump sum against the pension reduction and projected COLA losses across 10, 20, and 30 year horizons, so you can see the break-even point before you commit.

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