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Procedures Manual

9.0: Purchase of Service Credit

Last Revised: Jun 1, 2012


Purpose

This procedure should be used for members wishing to consider the purchase of service credit. Louisiana R.S. 11:158 requires the calculation of all purchases of service credit to be an actuarial cost with the exception of repayment of refunded contributions. The actuarial cost method requires that identified questionable years of service credit be correctly certified. This may necessitate additional certification of periods other than the time being purchased. The member must pay the greater of the actuarial cost or the employee and employer contributions, plus interest computed from the time the contributions would have been paid.

Rollovers from an eligible plan from one of the following sections of the Internal Revenue Code can be accepted as payment for the purchase of service credit: 401(a), 401(k), 403(a), 403(b), 408(a), 408(b), or 457(b). All purchases of service must be paid in full at the time of purchase (excluding military purchases and USERRA). A member’s retirement or DROP date would not be effective until payment is received. Members should apply for purchases at least six months before their retirement or DROP date.
 


Sections

Action to be Taken
  1. Refunded Service Credit
  2. Legal Leaves
  3. Sabbatical Leave
  4. Military Service (non-USSERA)
  5. Military Service (USSERA)
  6. Out-of-State Service
  7. Non-public School Service
  8. Non-TRSL participating
    Charter School Service
  9. Other Eligible Service For Which
    Contributions Were Not Made
  10. Involuntary Furlough
  11. Payment of employee and employer contributions when compensation
    is not paid
  12. U.S. Dependents School
How Costs Are Computed

Related Forms

Application for Purchase of In-State Service 
(Form 9)

Application for Purchase of Out-of-State Public School Employment (Form 9A)

Application for Purchase of Military Service 
(Form 9B)

Application for Purchase of U.S. Dependent School Teaching Service (Form 9C)

Application for Purchase of Refunded Service (Form 9D)

Application for Purchase of In-state
Private/Charter School Service
(Form 9E)

Rollover/Trustee-to-Trustee Transfer Acceptance (Form 9R)

Action to be Taken

  1. Refunded Service Credit ‑ Credit for which the member has received a refund of contributions. A completed Application for Purchase of Refunded Service (Form 9D) must be submitted to TRSL.
     
  2. Legal Leaves ‑ Official leaves of absence which are certified by the employer, such as maternity leave and leave without pay. An active, contributing member may purchase a maximum of one year of official leave credit for each five years of actual service credit or a maximum of one-half year of official leave credit with two and one-half years of service credit. No more than two consecutive years of leave may be purchased. The following must accompany the member’s written request:
    • Completed Application for Purchase of In-State Service (Form 9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes Professional Improvement Program (PIP) increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  3. Sabbatical Leave ‑ A member is allowed to contribute on the full rate of pay while on sabbatical leave. If contributions are made on less than the full rate of pay, the member is credited with less than a full year of service credit. To gain a full year, the additional service credit may be purchased. The following must accompany the member’s written request:
    • Completed Application for Purchase of In-State Service (Form 9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  4. Military Service (non-USERRA) ‑ Retirement credit for military service may be purchased by payment of the actuarial cost. A maximum of four years may be purchased provided the member was honorably discharged and is not receiving any retirement benefit based on military service. The member will be required to pay a nonrefundable fee to TRSL’s actuary for the computation of the actuarial cost. Once purchased, the military credit may not be used to meet eligibility requirements for disability or survivor benefits or any regular retirement with 20 years or less.

    Retirement credit may also be purchased for state national guard, coast guard, and reserve forces. To purchase the service, the member must pay the actuarial cost for receiving such credit under the provisions of LSA-R.S. 11:158. This may be a lump-sum payment, or an installment payment option is offered for the purchase of military service not to exceed 36 months.  A Purchase of Military Service Installment Payment Agreement will be included as an option when the cost invoice is mailed. The employee must submit an official copy of the employee’s retirement points as maintained by their respective military branch. The member may purchase one day of retirement credit for each point, not to exceed four years. The member must pay for the system actuary to calculate the cost of the purchase.

    The following must be received by TRSL in order to purchase military service:
    • Application for Purchase of Military Service (Form 9B).
       
    • Copy of certification of release or discharge from active duty, Form DD-214.
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  5. Military Service that Interrupts TRSL Employment (USERRA) - Retirement credit may be purchased by a member of the uniformed services of the United States who left employment or who leaves employment in order to perform military service. The member must meet certain eligibility criteria for purchasing the military service credit. Those criteria are honorable discharge and return to employment after release from military service. A maximum of five years may be purchased. The following must be received by TRSL:
    • Copy of certification of release or discharge from active duty, Form DD-214;
       
    • Certification of the salary the member would have earned if not on leave (provide monthly breakdown and annual rate);
       
    • Member’s current mailing address; and
       
    • Employee contributions that would have been payable if the member had continued in service (paid by employee);
       
    • Employer contributions that would have been paid by the employer if the member had continued in service (paid by the employer within 30 days after the employee payment);
       
    • All payments must be made within the greater of (1) or (2) below:
      • Four years of reemployment; or
      • Three times the period of uniformed service, not to exceed five years.

        Note: If (1) is greater, both employer and employee must also pay interest at TRSL’s actuarial valuation rate at the time of payment.
         
  6. Out-of-State Service ‑ Any service rendered in a position which meets the definition of “teacher” (LSA-R.S. 11:701[33]), in a public school system of any other state or possession or territory of the United States. The following information must be received by TRSL:
    • Application for Purchase of Out-of-State Public School Employment (Form 9A).
       
    • Certification from out-of-state retirement system administrator stating all contributions have been withdrawn from that system. See reverse side of the Application for Purchase of Out-of-State Public School Employment (Form 9A).
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  7. Nonpublic School Service - Any service in an accredited private educational institution in Louisiana rendered in a position which meets the definition of “teacher” (LSA-R.S. 11:701[33]). The following information must be received by TRSL:
    • Application for Purchase of In-State Service (Form 9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  8. Non-TRSL participating Charter School Service - Any teaching service rendered in any Louisiana charter school. The following information must be received by TRSL:
    • Application for Purchase of In-State Service (Form 9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  9. Other Eligible Service For Which Contributions Were Not Made - Any period of employment with a city, parish, or state governmental entity in Louisiana. The following information must be received by TRSL:
    • Application for Purchase of In-State Service (Form 9).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  10. Involuntary Furlough - Salary credit for which a member was involuntarily furloughed without pay due to closure of his employer. The following information must be received by TRSL:
    • Certification of the salary the member actually earned for the fiscal year of the furlough.
       
    • Certification of number of days worked, number of days furloughed, and number of days which constituted a full year.
       
    • Certification of the member’s total salary rate for the fiscal year of the furlough. This includes all funds on which contributions were due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  11. Payment of employee and employer contributions when compensation is not paid - When no compensation is paid and the employer does not place the employee on official leave without pay. The following information must be received by TRSL:
    • Certification of the salary the member actually earned for the fiscal year in question.
       
    • Certification of the number of days worked, number of days for which salary was not paid, and number of days which constituted a full year.
       
    • Certification of the member’s total salary rate on which contributions were due for the fiscal year in question. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.
       
  12. U.S. Dependents School - Service while teaching the equivalent of kindergarten through high school classes at a United States dependents’ school.
    • Application for Purchase of U.S. Dependent School Teaching Service (Form 9C).
       
    • All questionable years must be certified using the online correction processes by all employers. Refer to Index 6.0.
       
    • Certification of the member’s total current fiscal-year salary rate on which contributions are due. This includes PIP increments, summer school earnings, and any other earnings from employment meeting the definition of earnable compensation in accordance with LSA-R.S. 11:701(9).
       
    • Cashier’s check, personal check, certified check, or money order in the amount of $150 or more made payable to Teachers’ Retirement System of Louisiana.

How Costs Are Computed

  1. Refunded service costs are computed using amount refunded plus compound interest at TRSL’s actuarial valuation interest rate, which is subject to change annually.
     
  2. Costs for military service that interrupts TRSL employment are computed using contributions due.
     
  3. All other costs will be calculated by use of the actuarial funding method, assumptions, and tables in use by TRSL at the time the request for the cost is made. However, the member must pay the greater of the actuarial cost or the employee and employer contributions, plus interest computed from the time the contributions would have been paid.
Employer Checklist

Members must apply for purchasing service credit in writing. The application to be submitted will depend on the type of service credit the member wishes to purchase. Costs for purchasing TRSL refunded service are calculated in-house; therefore, no actuarial fee is required. All other costs are calculated by TRSL’s actuary and will require a nonrefundable fee. Members must purchase service credit before the effective date of their retirement or DROP.

Application for Purchase of Refunded Service (Form 9D)

  • Have member complete all sections on the form.
  • Send form to TRSL.

NOTE: TRSL will request all questionable years, covering the period of refunded service, be certified using the Member Audit letter from appropriate employer(s) after receipt of Form 9D.

Applications for Purchasing Service Credit at Actuarial Cost

  • Determine appropriate form to be completed (Form 9, 9A, 9B, or 9C).
  • Have member complete Section 1.
  • Complete Section 2, except on Form 9A.
  • If applicable, complete Section 3. Otherwise, instruct member to forward form to appropriate employer(s) for completion of Section 3. (NOTE: On Form 9A, Section 2 must be completed by the out-of-state employer, and Section 3 must be completed by the out-of-state retirement system.)
  • Certify all questionable years using the online correction processes.
  • Have payee attach nonrefundable fee  by check made payable to Teachers’ Retirement System of Louisiana.
  • Keep a copy of all completed forms for the member’s personnel file.
  • Give a copy of all completed forms to the member.
  • Send all forms and required documents to TRSL.
(click to enlarge)


Related Forms

Application for Purchase of In-State Service (Form 9)

Application for Purchase of Out-of-State Public School Employment (Form 9A)

Application for Purchase of Military Service (Form 9B)

Application for Purchase of U.S. Dependent School Teaching Service (Form 9C)

Application for Purchase of Refunded Service (Form 9D)

Application for Purchase of In-state Private/Charter School Service (Form 9E)

Rollover/Trustee-to-Trustee Transfer Acceptance (Form 9R)
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