purchase price. A. The State Board shall adopt rules or procedures for computation of the purchase price for transferred credited service. These rules or procedures shall base the purchase price for each year purchased on the actuarial cost of the incremental projected benefits to be purchased. The purchase price shall represent the present value of the incremental projected benefits discounted according to the member's age at the time of purchase. Incremental projected benefits shall be the difference between the projected benefit said member would receive without purchasing the transferred credited service and the projected benefit after purchase of the transferred credited service computed as of the earliest age at which the member would be able to retire. Said computation shall assume an unreduced benefit and be computed using interest and mortality assumptions consistent with the actuarial assumptions adopted by the Board of Trustees for purposes of preparing the annual actuarial evaluation. B. A member wishing to purchase transferred credited service from another retirement system must be an active paid member at the time of purchase and must have been an active paid member for a minimum of thirty (30) months so as to establish an adequate salary history for the computation of the purchase price of transferred credited service. Upon application by an eligible member to purchase transferred credited service, the State Board shall provide the member with a computation of the purchase price for transferred credited service. The computed purchase price shall be good for ninety (90) days from the date the computed purchase price is provided to the member and, except as otherwise provided in subsection F of this section, must be paid within such ninety-day period. After the expiration of the ninety-day period without payment by the member, or payment commencing as provided in subsection F of this section, the member must reapply to purchase transferred credited service, a new purchase price must be computed and provided to the member by the State Board, and a new ninety-day period shall commence. C. Transferred credited service shall be taken into account only if payment is received prior to the commencement of benefits, except as otherwise provided in subsection F of this section. D. Members who pay the purchase price in cash by the due date described in subsection B of this section may make payment by: 1. A trustee-to-trustee transfer of non-Roth funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), and/or a Code Section 401(a) qualified plan, provided that after-tax funds in retirement plans shall not be used to purchase transferred credited service; 2. A direct rollover of tax-deferred funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), a Code Section 401(a) qualified plan, and/or a Code Section 408(a) or 408(b) traditional or conduit Individual Retirement Account or Annuity (IRA), provided that Roth accounts, after-tax funds in retirement plans or IRAs, and Coverdell Education Savings Accounts shall not be used to purchase transferred credited service; or 3. Certified check. A combination of payment methods described in paragraphs 1 through 3 of this subsection may be used. The State Board shall promulgate such rules or procedures as are necessary to implement the provisions of this subsection. E. Members amortizing the purchase price and making amortized payments by payroll deduction on an after-tax basis, pursuant to subsection F of this section, shall have the option of making a cash payment for the balance of the actuarial purchase price with interest due through the date of payment by: 1. A trustee-to-trustee transfer of non-Roth funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), and/or a Code Section 401(a) qualified plan, provided that after-tax funds in retirement plans shall not be used to purchase transferred credited service; 2. A direct rollover of tax-deferred funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), a Code Section 401(a) qualified plan, and/or a Code Section 408(a) or 408(b) traditional or conduit Individual Retirement Account or Annuity (IRA), provided that Roth accounts, after-tax funds in retirement plans or IRAs, and Coverdell Education Savings Accounts shall not be used to purchase transferred credited service; or 3. Certified check. A combination of payment methods described in paragraphs 1 through 3 of this subsection may be used. F. In the event that the member does not pay the purchase price provided for in this section by the due date established in subsection B of this section as provided for in subsection D of this section, the State Board may permit the member to amortize the purchase price over a period not to exceed sixty (60) months or other method approved by the State Board. Such amortized payments shall be made by payroll deductions on an after-tax basis and shall not be picked up by the member's employer. The amortized payments shall include interest at a rate not to exceed the actuarially assumed interest rate adopted by the State Board for investment earnings each year. Any member who ceases to make payment, terminates, retires or dies before completing the payments provided for in this section shall receive transferred, credited service prorated for only those payments made, not including interest, unless the unpaid balance, including interest, is paid by the member, the member's surviving spouse, the member's beneficiary, or the member's estate or successor in interest within ninety (90) days of the first to occur of said member's termination, retirement, or death; provided that no retirement benefits shall be payable until the earliest of the date the unpaid balance is paid in full or ninety (90) days after the first to occur of the member's termination, retirement, or death. G. The State Board shall promulgate such rules or procedures as are necessary to implement the provisions of this section. Added by Laws 1990, c. 340, § 3, eff. July 1, 1990. Amended by Laws 1993, c. 322, § 2, emerg. eff. June 7, 1993; Laws 2002, c. 398, § 7, eff. July 1, 2002; Laws 2003, c. 128, § 8, eff. July 1, 2003; Laws 2004, c. 546, § 6, eff. July 1, 2004; Laws 2005, c. 203, § 3, emerg. eff. May 20, 2005; Laws 2016, c. 37, § 2, eff. July 1, 2016; Laws 2025, c. 142, § 4, emerg. eff. May 12, 2025.
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