FRS Investment Plan Distribution Rules: The 1-Month vs. 3-Month Waiting Period Explained

For Florida Retirement System (FRS) members in the Investment Plan, one of the most misunderstood parts of retiring is when you’re actually allowed to take money out.

Many people assume that once they stop working, they can immediately access their Investment Plan balance. In reality, FRS has specific waiting-period rules that determine how soon you can take a distribution — and how much you can take.

The big distinction comes down to this:

Are you eligible for normal retirement, or not?

That’s what determines whether you fall under the 1-month rule or the 3-month rule.

Step One: You Must Terminate FRS Employment

Before any distribution is allowed:

• You must end employment with an FRS-participating employer
• Your employer must report your termination to FRS
• You must satisfy the required waiting period before taking money out

Until those steps happen, you are not considered retired for FRS purposes — even if you stopped working.

The Two Waiting Periods Explained

The 1-Month Rule (For Members Who Meet Normal Retirement)

If you have met FRS normal retirement requirements, you may:

• Take up to 10% of your Investment Plan balance
• After one full calendar month following your termination date

Then:

• You must wait until three full calendar months have passed
• After that, you may access the remaining balance

So in short:

• After 1 month → up to 10% available
• After 3 months → full balance available

The 3-Month Rule (For Members Who Have NOT Met Normal Retirement)

If you have not met normal retirement eligibility:

• You must wait three full calendar months after termination before taking any distribution at all

There is no 10% early access under this rule.

What Counts as “Normal Retirement”?

Normal retirement depends on your FRS class and service (for example, Special Risk vs Regular Class), and typically includes combinations like:

• Reaching a certain age with enough service
• Or completing a certain number of years of service

If you’re not sure whether you meet normal retirement, it’s important to confirm this before planning distributions.

What Does “One Full Calendar Month” or “Three Full Calendar Months” Mean?

This part trips people up.

FRS counts full calendar months, not 30 days.

Example:

• If your termination date is June 15:
  • Your first full calendar month is July
  • Your second is August
  • Your third is September

So:

• The 10% option (if eligible) would become available after July
• Full access would become available after September

Your exact eligibility date depends on your official termination date as reported by your employer.

Important: Taking a Distribution Triggers “Retired” Status

Once you take any Investment Plan distribution:

• You are considered officially retired under FRS
• The reemployment restrictions (6-month or 12-month rule) begin
• You cannot “undo” that retirement status

This is true even if you only take a small amount.

Tax and Withholding Considerations

Distributions from the Investment Plan are generally:

• Taxable if they come from pre-tax sources
• Subject to withholding rules unless rolled over
• Potentially subject to penalties if IRS age rules are not met

A direct rollover to an IRA or another qualified plan typically defers taxation, but the waiting-period rules still apply before the money can move.

Common Mistakes FRS Members Make

• ❌ Assuming they can take money out immediately after their last day
• ❌ Confusing the 1-month rule with full access to the account
• ❌ Not realizing the 10% limit applies in the first month
• ❌ Miscounting “full calendar months”
• ❌ Triggering retirement status without realizing it affects reemployment

How This Fits Into Your Retirement Timeline

The waiting-period rules affect:

• When you can roll over your Investment Plan balance
• How you coordinate cash flow with your pension, DROP, or other savings
• When your reemployment clock starts

For many retirees, this is just a short administrative delay — but it’s one that’s important to plan around.

Final Thoughts

The FRS Investment Plan distribution rules aren’t complicated — but they are easy to misunderstand. Knowing whether you fall under the 1-month or 3-month rule, and how the calendar is counted, can prevent delays, surprises, and unintended consequences.

For FRS members, retirement isn’t just about how much you have — it’s also about when you’re allowed to access it.

Planning around these rules can help make the transition from work to retirement less stressful.