IL HB2796

Establishes a Deferred Retirement Option Plan (DROP) for downstate firefighters, available beginning January 1, 2026, allowing eligible participants to continue working while their retirement pension accumulates in a special account

Eligibility requires active service, age 50 or older, and at least 20 years of creditable service; firefighters must elect to participate within 3 years of becoming eligible and may only participate once

DROP participation lasts up to 3 years, during which monthly pension amounts, employee contributions, and 7% annual interest are deposited into the firefighter's DROP account; participants must submit an irrevocable resignation letter effective at the end of participation

Upon retirement, firefighters receive their accumulated DROP account balance as either a lump sum (eligible for rollover to IRA or qualified plan) or an actuarially equivalent lifetime annuity, in addition to their regular pension

Retirement pension calculations for DROP participants are based on salary and service at the time of entering DROP, not at actual retirement; the State Mandates Act is amended to exempt local governments from reimbursement requirements