Situation guide
Roth conversions for police and firefighters: pensions, DROP and the age-50 rule
By Secure Retirement PlannerUpdated
If you're a police officer or firefighter, you can convert your 457(b), DROP payout or pension lump sum to a Roth. What's different for you in 2026 is an early withdrawal rule. If you leave at 50 or older, or with 25 years of service under the plan, money from your governmental plan avoids the 10% penalty. But that protection ends once you roll the money into an IRA.
Many public safety workers retire in their early 50s with a large pension. In some states, they also have no Social Security. Your pension fills the low tax brackets first. A common worry is rolling everything to an IRA too soon and then paying a penalty to reach it. This page covers the age-50 rule, DROP accounts, the $3,000 health premium exclusion and a 2026 example for a retired firefighter.
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The short version
- Leave at 50 or older, or after 25 years of service under the plan. Then you can take money from your governmental plan without the 10% penalty.
- That exception does not follow your money into an IRA. If you roll a DROP balance to an IRA at 52, the 10% penalty is back on withdrawals until 59½.
- A Roth conversion itself never owes the 10% penalty. The question is where your money to pay the tax comes from.
- As a retired officer, you can exclude up to $3,000 a year of plan money used for health or long-term care premiums. Rolling everything to an IRA gives that up.
- Your large pension fills your low brackets. So your best conversion years are often after a working spouse retires.
Can police and firefighters withdraw retirement money at 50 without a penalty?
Yes, from a governmental plan. Normally, money you take from a retirement plan before 59½ owes a 10% extra tax. Qualified public safety employees get an exception. It applies if you leave your job in or after the year you turn 50. It also applies if you have 25 years of service under the plan, whichever comes first.
The SECURE 2.0 Act added the 25-year test for distributions after December 29, 2022. Say you were hired at 22 and leave at 47 with 25 years. You could take money from that plan without the 10% penalty. Some experts read the law to mean the 25 years must be under the same plan. Ask your plan to confirm how it counts your service.
Who counts? Police, firefighters and emergency medical workers for a state or local government. So do corrections officers and forensic security employees. Federal law enforcement officers and federal firefighters are covered too. So are customs and border protection officers and air traffic controllers. If you're a private-sector firefighter, you get the same exception in your employer's plan.
| Where the money is | Penalty-free before 59½? | Notes |
|---|---|---|
| Governmental pension or DROP account | Yes, if you left at 50+ or with 25 years under the plan | Applies to the plan you separated from |
| Governmental 401(a) or other defined contribution plan | Yes, same test | Check with the plan administrator |
| Governmental 457(b) | Yes, at any age once you leave | Except money rolled in from other plans or IRAs |
| Traditional IRA (including money rolled from any of the above) | No | Only general IRA exceptions apply |
| Roth IRA conversion amounts | No, for 5 years after each conversion | Each conversion has its own 5-year clock |
What should I do with my DROP account when I retire?
A DROP (deferred retirement option plan) lets you lock in your pension while you keep working a few more years. Your monthly pension goes into a DROP account instead of being paid to you. When you leave, you get the balance, often a six-figure sum.
Most systems give you three choices: a direct rollover to an IRA or another plan, a cash payment, or part of each. A cash payment is fully taxable that year. Plans usually withhold 20% of it for federal tax. A direct rollover has no tax and no withholding.
Rolling your DROP balance to an IRA gives you the most freedom to convert it in pieces, over several low-income years. But if you're under 59½, IRA withdrawals owe the 10% penalty again. Will you need some of the money before 59½? Then think about leaving part of it in the plan. Or roll only what you plan to convert.
Converting from an IRA is not a withdrawal
Moving money from a traditional IRA to a Roth IRA doesn't owe the 10% penalty at any age. The penalty comes in if you take money out of the IRA to pay the tax. It also comes in if you take converted money out of the Roth within five years. See The 5-year rules.
What is the $3,000 HELPS exclusion for retired officers?
As a retired public safety officer, you can leave up to $3,000 a year of plan payouts out of your taxable income. The money has to pay for health insurance or long-term care insurance. The rule comes from the HELPS part of the Pension Protection Act of 2006. It covers police, firefighters, chaplains and rescue or ambulance crews. You must have retired for disability or at normal retirement age.
Until the end of 2022, your plan had to send the money straight to the insurer. The SECURE 2.0 Act dropped that rule for payouts after December 29, 2022. Now your plan can pay you, and you pay the premium.
The money must come from a governmental retirement plan. An IRA payout doesn't qualify. So if you roll your whole pension or DROP balance to an IRA, you can lose this exclusion. At a 22% tax rate, $3,000 excluded is worth about $660 a year.
How does a public safety pension affect a Roth conversion?
Your pension is taxed as ordinary income, and it counts first. Say you're married with a $75,000 pension. It uses up your $32,200 joint standard deduction and $42,800 of the 12% bracket before any conversion. If you're single, it already reaches the 22% bracket.
In several states, police and fire departments don't take part in Social Security. If that's you, your pension may be most of your income for life. That can make your tax rate later about the same as now. Keep that in mind when you decide how much to convert.
Did you also earn Social Security from other jobs? The Social Security Fairness Act ended the cuts to those benefits for people with a non-covered pension. Teachers explains that change. Larger benefits later can mean more of your income is taxed later.
When is the best time for a retired officer to convert?
Often it is the years after your working spouse retires. It is also before Social Security and required minimum distributions (RMDs, the yearly withdrawals the IRS requires from 73 or 75). If you retire at 50 to 55, you may have 20 or more years before RMDs.
Look at one year at a time. Your spouse's paycheck may push you into the 22% bracket now. If so, waiting until they retire may let you convert the same amount at 12%. For sizing each year's amount, see How much to convert each year.
Medicare comes later for you. Its premiums use your income from two years earlier, so your conversions before 63 don't affect them.
Example: a retired firefighter whose wife still works
Mike is 52. He retired in January 2026 after 27 years with a city fire department. The department doesn't take part in Social Security. His pension is $78,000 a year. The plan pays $3,000 of his health insurance premiums from his pension. He excludes that under HELPS, so $75,000 is taxable. His wife Lisa is 50 and earns $55,000. She plans to retire in 2028.
He has $310,000 in a governmental 457(b). He rolled his $180,000 DROP balance directly to an IRA, so nothing was withheld. He plans to convert from the IRA and pay the tax from savings. IRA withdrawals before 59½ would owe the 10% penalty.
In 2026, their taxable income before converting is $97,800 ($130,000 minus the $32,200 standard deduction). Only $3,000 fits in the 12% bracket. A $50,000 conversion now would add about $10,700 in federal tax. Once Lisa retires, their taxable income drops to $42,800. Then the same $50,000 would add about $6,000, using 2026 figures.
If your spouse is still working, a small conversion now and bigger ones after they retire may cost you less. Look at each year on its own.
| When and how much | Taxable income after | Added federal tax | Top rate on the conversion |
|---|---|---|---|
| 2026: convert $3,000 | $100,800 | about $360 | 12% |
| 2026: convert $50,000 | $147,800 | about $10,700 | 22% |
| After Lisa retires: convert $50,000 | $92,800 | about $6,000 | 12% |
| After Lisa retires: convert $58,000 | $100,800 | about $6,960 | 12% |
Hypothetical example using 2026 federal brackets and the joint standard deduction from IRS Rev. Proc. 2025-32 for every year shown, so the only change is Lisa's paycheck. Assumes Mike qualifies for the $3,000 HELPS exclusion, no other income and no state tax. Later years will use different brackets. Your numbers will differ.
Common questions
Does the age-50 rule apply to my IRA?
No. It applies only to payouts from the governmental plan you left. Once you roll money to an IRA, your withdrawals before 59½ can owe the 10% penalty.
Can I retire before 50 and avoid the 10% penalty?
Yes, if you have 25 years of service under the plan. The SECURE 2.0 Act added this test for distributions after December 29, 2022.
Can I roll my DROP account into a Roth IRA?
Yes. A direct rollover of your pre-tax DROP balance to a Roth IRA counts as a conversion, so the whole amount is taxable that year. If you roll to a traditional IRA first, you can convert in smaller pieces.
Is my DROP payout taxed?
A cash payout is taxable in the year you get it, and plans usually withhold 20%. A direct rollover to an IRA or another plan is not taxed until you withdraw or convert.
Can I use the HELPS exclusion if I roll my pension to an IRA?
No. The money must come from a governmental retirement plan. IRA distributions don't qualify for the $3,000 exclusion.
Do corrections officers qualify for the public safety exception?
Yes. Corrections officers and forensic security employees of a state or local government are covered, along with police, firefighters and emergency medical workers.
Does a Roth conversion owe the 10% penalty if I'm under 59½?
No. The conversion itself doesn't. But you can owe it if you take converted money out of the Roth within five years, or take IRA money to pay the tax.
Sources
Facts on this page were last checked on November 9, 2026.
- IRS Publication 575, Pension and Annuity Income (2025) · Qualified public safety employees, the age 50 or 25 years of service test, and the $3,000 insurance premium exclusion with the direct payment repeal for payouts after Dec 29, 2022. Read Nov 9, 2026.
- IRS: Retirement topics, Exceptions to tax on early distributions · Public safety exception applies to governmental plans, not IRAs; covered groups including private-sector firefighters. Read Nov 9, 2026.
- IRS: Rollovers of retirement plan and IRA distributions · 20% withholding on payouts made to you; none on direct rollovers. Read Nov 9, 2026.
- Florida Retirement System: DROP tax notice · Example of DROP payout choices (rollover, lump sum, partial) and 20% withholding on lump sums. Read Nov 9, 2026.
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) · 2026 brackets and standard deduction. Read Nov 9, 2026.
Who wrote this
This guide was written and fact-checked by the Secure Retirement Planner editorial team using IRS, CMS and Social Security sources listed above. We update guides when the law or yearly limits change. How we research.