STRS Ohio PLOP Survivor Rules

What PLOP Means for Survivors

The Partial Lump-Sum Option Plan lets STRS Ohio retirees take an upfront cash payment at retirement in exchange for a permanently reduced monthly annuity. That trade-off follows the family after death — survivor benefits under Plan II or Plan III are calculated from the reduced amount, not the original full benefit.

If the retiree elected PLOP and you're now claiming survivor benefits, here's what you need to understand.

How PLOP Reduces Survivor Benefits

At retirement, a member who elects PLOP receives a one-time lump sum equal to 6 to 36 times the monthly Single Life Annuity benefit. In return, the monthly pension is permanently reduced using actuarial factors.

When the retiree dies, the survivor's continuing benefit under Plan II (Joint and Survivor Annuity) is based on the PLOP-reduced monthly amount, not the pre-PLOP figure.

Example: A retiree's unreduced Plan II Option 1 benefit would have been $3,200 per month. After a 12-month PLOP election, the monthly benefit drops to $2,850. When the retiree dies, the surviving spouse receives $2,850 per month (100% continuation under Option 1) — not $3,200.

The same reduction applies to Plan II Options 2, 3, and 4, and to Plan III Annuity Certain guaranteed payments. The PLOP reduction is permanent and irrevocable once the first payment is issued.

The PLOP Lump Sum Is Already Gone

A common misconception: families sometimes expect to receive the PLOP amount as a separate death benefit. The PLOP lump sum was paid at retirement and is not recoverable or payable again at death. The $1,000 statutory death benefit and any optional death benefit are separate and unaffected by the PLOP election.

What survivors receive:

• Plan II continuation: Monthly benefit based on the reduced annuity
• Plan III remaining guaranteed payments: Based on the reduced annuity
• $1,000 statutory death benefit: Separate, tax-free, unaffected by PLOP
• Optional death benefit ($1,000 or $2,000 if purchased): Separate, taxable

The PLOP lump sum itself is not a death benefit. It was a retirement election.

Tax Implications of the PLOP

The retiree's PLOP payout was subject to mandatory 20% federal tax withholding unless it was directly rolled over to a traditional IRA or eligible employer plan. If the retiree took a direct cash distribution, taxes were withheld at the time of payment.

For survivors, the ongoing monthly pension payments are taxable as ordinary income and reported on IRS Form 1099-R. Any after-tax member contributions are excluded from taxable income under the applicable IRS rules; STRS Ohio reports the taxable portion on Form 1099-R.

If the retiree rolled the PLOP into an IRA and that IRA still holds a balance at death, the IRA follows its own inherited-IRA distribution rules, completely separate from STRS Ohio. Surviving spouses can roll an inherited IRA into their own IRA; non-spouse beneficiaries use an Inherited IRA and follow the applicable distribution rules.

What to Ask STRS Ohio

When you receive the Survivor Benefit Packet after reporting a death, review the monthly benefit continuation amount and compare it to what the retiree was receiving. If the retiree elected PLOP, the survivor benefit should match the reduced monthly amount under the applicable Plan II or III option.

If the numbers don't look right, call STRS Ohio at 888-227-7877 and ask:

• What was the PLOP election amount and how many months were taken?
• What is the PLOP-reduced monthly benefit that applies to survivor continuation?
• Was the PLOP rolled over or taken as cash?

For the full decision framework covering all Plan of Payment options, the benefit comparison worksheets, and step-by-step claim instructions, see The STRS Ohio Survivor Benefits Guide.

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