OP&F Ohio Police and Fire Pension Fund to Gold IRA Rollover

Ohio police officers and firefighters covered by OP&F occupy a distinct position when planning retirement. The pension fund, governed by Ohio Revised Code Chapter 742, operates as a defined benefit plan with a Deferred Retirement Option Plan (DROP) component that creates a rollover-eligible lump sum separate from the ongoing monthly pension. That distinction matters because many members near DROP payout assume either everything is rollable or nothing is.

This guide covers the exact mechanics of OP&F rollover eligibility, how the DROP participation clock works, what happens to member contributions if you separate before retirement, and how to move eligible funds into a self-directed gold IRA while staying within IRS rules. Ohio state income tax considerations are also addressed. Consult your tax advisor and the OP&F benefits staff at op-f.org before making any distribution decision.

What OP&F Members Can Roll Over

OP&F is a defined benefit pension plan with two distinct components that carry different tax and rollover treatment. Understanding the difference between them is the starting point for any rollover planning.

Component 1: The DROP lump sum (eligible for rollover)

The Deferred Retirement Option Plan allows eligible OP&F members to continue working while their pension benefit accumulates in a separate account instead of being paid monthly. At the end of the DROP period, the member receives this accumulated balance as a lump sum. That lump sum is treated as an eligible rollover distribution under Internal Revenue Code Section 402(c).

Because it is paid as a single sum rather than as a series of periodic payments, the DROP distribution does not fall under the IRC 402(c)(4) exclusion that covers annuity-style payments. The result: it can be moved to a traditional IRA (including a self-directed gold IRA), a qualified plan, a 403(b), or a 457(b) governmental plan through a direct or indirect rollover. A direct trustee-to-trustee transfer avoids mandatory federal withholding.

Component 2: The monthly pension benefit (NOT eligible for rollover)

The regular OP&F monthly pension is paid for life. It is a series of substantially equal periodic payments based on the member’s years of service and final average salary. Under IRC Section 402(c)(4)(A), periodic payment streams of this type are specifically excluded from the definition of eligible rollover distributions. The monthly pension check goes directly to the retiree and cannot be redirected into any IRA or retirement plan.

Component 3: Member contribution refund (eligible for rollover upon separation)

OP&F members who separate from service before they are eligible to retire and who choose a refund of their accumulated member contributions receive a lump sum. Under IRC Section 402(c)(2), a distribution of employee contributions from a qualified plan (including a government pension fund) is generally an eligible rollover distribution if it would otherwise be includible in income. This makes the refund rollable to a traditional IRA. Consult your tax advisor about the tax basis of any after-tax contributions included in your refund.

The DROP Participation Clock: Key Eligibility Mechanic

Before a DROP lump sum becomes available, OP&F requires members to satisfy a minimum participation period. The length of that minimum period depends on when the member’s DROP enrollment took effect.

Verify these tiers against the current OP&F plan document at op-f.org, as benefit rules may be updated by the OP&F Board of Trustees. The participation clock starts on the date the member’s DROP enrollment becomes effective, not the date they apply.

What happens during the DROP period

During the DROP period the member continues working in their department. Their monthly pension benefit is calculated as of the DROP effective date and credited monthly to their DROP account rather than paid in cash. Interest accrues on the accumulating balance. The member continues contributing to OP&F during this period under the rules in Ohio Revised Code Section 742.436 (verify the current citation at codes.ohio.gov).

What happens at DROP exit

When the member retires at the end of DROP participation, they have two decisions to make about the lump sum: take it as a taxable distribution or roll it over. Taking it as a direct payment triggers federal income tax in the year of distribution and a possible 10 percent early withdrawal penalty if the member is under age 59½ and does not qualify for an exception. Rolling it over to a traditional IRA defers that federal tax until the member takes IRA distributions later.

Maximum DROP participation period

OP&F also sets a maximum period a member can remain in DROP. Verify the current maximum at op-f.org or with your OP&F benefits counselor, as maximum periods may differ by fund membership class (police vs fire). Members who exceed the maximum are typically required to retire and receive the lump sum regardless of their preference.

Member Contribution Refund: A Second Rollover Path

Not every OP&F member reaches retirement or DROP payout. Officers and firefighters who leave service before reaching retirement eligibility may choose between leaving their contributions on account (if eligible for a deferred pension later) or receiving a refund of accumulated member contributions.

What the refund represents

OP&F members contribute a percentage of their salary to the fund each pay period. The refund of those contributions is a lump-sum distribution. Because these are employee contributions to a government pension plan (rather than an employer-funded benefit), the refund is taxable as ordinary income in the year received unless rolled over. Under IRC Section 402(c), the refund qualifies as an eligible rollover distribution to the extent it is otherwise includible in income.

After-tax contributions in the refund

Some OP&F members may have made contributions on an after-tax basis, depending on the plan rules in effect during their service years. After-tax contributions are returned tax-free (they already bore income tax). Only the pre-tax portion of the refund is includible in income and eligible for rollover to a traditional IRA. The after-tax portion can be rolled to a Roth IRA or taken in cash without income tax consequence. Consult your tax advisor to identify the basis breakdown in your specific refund amount.

The rollover decision for separating members

A member who separates before retirement and takes the contribution refund loses any future OP&F pension benefit based on those service years. Rolling the refund to a traditional IRA preserves the tax deferral on the pre-tax portion and keeps the funds growing in a retirement vehicle. Whether the rollover makes sense relative to leaving the contributions on account for a future deferred pension depends on the member’s years of service, age, and future employment plans. Speak with an OP&F benefits counselor and a licensed financial advisor before making this decision.

Why the Monthly Pension Cannot Be Rolled Over

This is the most common point of confusion for OP&F members researching rollover options. The monthly pension is not a lump sum; it is an annuity paid for the life of the retiree (with survivorship options for a qualifying spouse or beneficiary).

Under IRC Section 402(c)(4)(A), a distribution that is one of a series of substantially equal periodic payments made not less frequently than annually over the life of the employee, or over the joint lives of the employee and their beneficiary, is excluded from the definition of an eligible rollover distribution. The OP&F monthly pension fits squarely within that exclusion. The IRS does not provide a mechanism to convert an annuity stream from a defined benefit plan into an IRA rollover after retirement payments have begun.

Practically: once an OP&F member retires and begins receiving the monthly pension, those checks are reportable as ordinary income in the year received. The retiree may contribute the after-tax proceeds to a taxable brokerage account or to a Roth IRA (subject to income and contribution limits), but the pension payment itself cannot be redirected to a traditional IRA or any other retirement plan. The same rule applies to survivor benefit payments received by a beneficiary after the retiree’s death.

Step-by-Step: Rolling OP&F Funds into a Gold IRA

A gold IRA is a self-directed traditional IRA that holds IRS-approved physical precious metals instead of (or alongside) stocks and bonds. The rollover process from an OP&F DROP lump sum or contribution refund follows the standard IRS rollover rules in IRS Publication 590-A.

1. 1
   Choose a self-directed IRA custodian

   A self-directed IRA requires a custodian approved by the IRS to hold alternative assets including physical precious metals. Standard brokerage IRAs do not hold physical gold. Confirm the custodian is IRS-approved and familiar with government pension fund rollovers before opening the account.

2. 2
   Open the self-directed gold IRA

   Complete the custodian’s new account application. For a rollover from a traditional (pre-tax) OP&F distribution, open a traditional self-directed IRA. Converting to a Roth at this step creates a taxable event equal to the full converted amount in the year of conversion. Consult your tax advisor before choosing Roth conversion.

3. 3
   Request a direct trustee-to-trustee transfer from OP&F

   Contact OP&F benefits staff and provide the receiving custodian’s wire instructions. A direct transfer bypasses mandatory 20 percent federal withholding and avoids the 60-day rollover window. OP&F sends the funds directly to the new custodian on your behalf.

4. 4
   Select IRS-approved metals with your gold IRA provider

   Once funds arrive at the custodian, you work with a precious metals dealer to select eligible coins or bars. Your custodian then purchases the metals and directs them to an IRS-approved depository. You do not take personal possession of the metals while they are inside the IRA.

5. 5
   Confirm depository storage and annual reporting

   The IRS-approved depository holds the metals on behalf of your IRA. Your custodian will file IRS Form 5498 each year reporting the fair market value of the IRA. You receive annual statements from both the custodian and the depository. No annual action is required from you beyond reviewing those statements.

Ohio State Income Tax and Your OP&F Rollover

Ohio taxes retirement income received by Ohio residents, including OP&F pension distributions and DROP lump-sum payouts. Ohio law provides certain tax credits that may reduce the Ohio income tax owed on retirement income, including credits for taxpayers over specific age thresholds. The Ohio Department of Taxation publishes current credit details and income thresholds at tax.ohio.gov.

How a rollover changes the Ohio tax picture

A rollover from OP&F to a traditional gold IRA is not taxable at the federal level in the year the rollover completes, provided the rollover meets the IRS requirements in IRS Publication 590-A. Ohio generally follows federal adjusted gross income as the starting point for state income tax. Because a qualifying rollover is excluded from federal AGI, it is also generally excluded from Ohio taxable income in the rollover year. Future distributions from the traditional gold IRA will be taxable as ordinary income in both federal and Ohio returns in the year you take them.

Ohio retirement income credit

Ohio provides a retirement income credit for taxpayers who receive qualifying retirement income and meet certain age and income criteria. The specific credit amounts and eligibility thresholds are set annually by the Ohio General Assembly and published by the Ohio Department of Taxation. Verify current credit amounts at tax.ohio.gov or with your tax advisor before filing. Consult your tax advisor for your specific situation.

Municipal income tax in Ohio

Ohio municipalities may impose a local income tax on residents. Retirement income treatment varies by municipality. Many Ohio municipalities exempt pension income from local income tax, but rules differ across the state’s hundreds of taxing districts. Confirm with your local municipality or a licensed Ohio tax preparer whether OP&F distributions or gold IRA distributions in retirement are subject to local tax in your city or township. Consult your tax advisor for your specific situation.

IRS Metal Eligibility Rules for a Self-Directed Gold IRA

Not every gold or silver product qualifies for IRA inclusion. The IRS specifies purity standards in IRS Publication 590-A and the Internal Revenue Code. Purchasing a non-qualifying product inside an IRA can be treated as a distribution, with immediate tax and potential penalty consequences.

Minimum fineness requirements (IRS standards)

• Gold: 99.5 percent pure (0.9950 fineness) or higher. Common qualifying coins include the American Gold Eagle (exception noted below), the American Gold Buffalo, the Canadian Gold Maple Leaf, and Austrian Gold Philharmonic. American Gold Eagles are statutory exceptions: they qualify despite being 91.67 percent pure because Congress specifically authorized them in IRC Section 408(m)(3)(A)(i).
• Silver: 99.9 percent pure (0.9990 fineness) or higher. American Silver Eagles qualify under the same statutory exception as Gold Eagles.
• Platinum and Palladium: 99.95 percent pure (0.9995 fineness) or higher.

What does not qualify

• Collectible coins (most pre-1933 U.S. gold coins, most foreign coins outside the statutory exceptions).
• Gold jewelry, gold ETFs, gold futures contracts, or shares in gold mining companies.
• Metals below the IRS fineness threshold, regardless of face value or historical significance.

Per IRS Notice 2007-54 and the rules in IRS Publication 590-A, the metals must be held by an IRS-approved trustee or depository, not in the account holder’s personal possession. Home storage gold IRA arrangements are not recognized by the IRS and are treated as distributions.

Choosing a Gold IRA Provider for Your OP&F Funds

OP&F members rolling over a DROP lump sum or contribution refund should evaluate gold IRA companies on the factors that matter most for government pension rollovers: custodian qualifications, fee transparency, metal selection, depository partnerships, and experience handling lump-sum government plan distributions.

Three companies are covered on Goldiew with verified user reviews. Read the full review for each before deciding.

Read full company reviews on Goldiew: Augusta Precious Metals review and Birch Gold Group review.

Questions to ask any gold IRA provider before committing

Additional context for government plan rollovers: 457(b) to Gold IRA Rollover: Government Plan Guide (many Ohio police and fire departments also offer 457(b) plans alongside OP&F).

Who This Is NOT a Good Fit For

See also: SERS Ohio to Gold IRA Rollover for a comparable guide covering the School Employees Retirement System of Ohio, which operates under a different plan structure.