We have a number of clients in the DROP plan (Deferred Retirement Option Plan), or those that have retired and taken their funds out. You have a number of things to consider as you plan for your retirement. If you decide to take a distribution of the funds you will incur a very hefty tax bill and likely pay significantly more in taxes than you might if you take it out in smaller amounts over time. 
You could choose to roll the funds into your existing Deferred Compensation Plan and invest the funds in the options offered by the plan. The one issue with this option is that you are limited to a small number of funds to select from. These options are selected by the City.
An additional option you have is to roll your Deferred Compensation Plan (including your DROP fund proceeds) into a Rollover IRA. This choice gives you a much larger set of investment choices including thousands of mutual funds and exchange traded funds, individual stocks and bonds, and an array of annuity options – fixed, variable or equity-indexed. It also allows you the opportunity to work with a financial planner or wealth manager who can help you setting and achieving the goals that are important to you.
Do not hesitate to contact us or give us a call at 215-633-8020 if you want to discuss these options. Since we are tax practitioners we can assist you in evaluating and all options and help you calculate what you may owe in taxes.