The amount of time you work and contribute to your retirement plan affects the amount of your retirement benefit. The monthly benefit you receive will depend on the number of years you work in a covered position, whether you work full or part-time, your compensation and any purchase of service.
If eligible, active and inactive vested members may purchase some types of service that will count as membership service and service credit at any time before retirement. Be aware, any delay may increase the cost because of added interest or higher salaries. You may not buy any service that will make you eligible for a retirement from another public retirement system until you receive a refund of the service from the other public system.
The only service purchase in the Defined Contribution Retirement Plan (DCRP) allowed is USERRA.
TYPES OF SERVICE WHICH MAY BE PURCHASED
Refund: A member who terminates their job and requests a refund of the accumulated contributions (contributions plus interest) may purchase the refunded service if they return to work in a covered position. To purchase the refund, you must repay the contributions plus interest received as a refund. The interest the refund would have earned if it had been left on deposit must also be repaid. Refund service is both membership service and service credit. (§ 19-2-603, MCA)
Retroactive: Retroactive service is service with a covered employer that wasn't credited to PERS at the time. A member who has retroactive service may buy all or part of that service. Retroactive service is both membership service and service credit. (§ 19-3-505, MCA) This type of service purchase is only available to PERS-DBRP members.
Montana Public Service: Members may buy service refunded from (or for which they are eligible to receive a refund) other Montana statewide retirement systems administered by MPERA. Other full-time public service employment with the state or a political subdivision of the state may also qualify. Members may also buy service from the Teachers Retirement System for which they have received, or are eligible to receive, a refund. All service referenced in this paragraph is both membership service and service credit.
Absence Due to Illness or Injury: Time that a member is absent from work due to a work related injury or illness is considered membership service. To qualify, the illness or injury must be work-related. The time which can be purchased may not exceed five years. If the member is eligible and pays the contributions and interest, the absence will also count as service credit. Upon return to work, the employee and the employer must file a written application to buy the time. MPERA must receive certification the injury was work-related within one year of the member's return to work. Members lose the right to contribute for the absence if they received a refund of their account during the absence. The service is both membership service and service credit.
"One-for-Five" Service: For each five-year period of membership service, you may buy one year of additional service. You may buy no more than five years of additional service credit. Members eligible to buy one year may buy less than a full year.
"One-for-Five" service is not membership service and cannot make you eligible to retire or to purchase other types of service. Your total service credit on your annual membership statement will not include the "One-for-Five" service purchased; however, it will be added to your service credit when we calculate your retirement benefit. If you meet the 25 year requirement for early retirement without the "One-for-Five" service, you can use that service to reduce or eliminate the early retirement reduction of your monthly benefit.
Military/Reserve Military Service: When you have at least five years of membership service, you may at any time prior to retirement, purchase up to five years of active military service or reserve military service. Both active and reserve military service is purchased at actuarial cost.
You may not purchase your military time if you are receiving a retirement benefit from the military or from another retirement system or plan for that time. You may not purchase your reserve military service if you have received service credit under USERRA for the same period. You may purchase your reserve military time prior to separation from the services in the reserves. This service is both membership credit and service credit.
Volunteer in a U.S. Service Program: Vested members may, at any time prior to retirement, buy membership service and service credit for up to five years of the member's volunteer service in a United States service program, such as the Peace Corps. You may also purchase any documented, successfully completed required term of service in the AmeriCorps Vista, AmeriCorps National Community Conservation Corps, or any other Nation and Community Service Act (NCSA) program that requires the volunteer to enroll for a specific term of service.This type of service purchase is only available to PERS-DBRP members.
Other Public Service: Vested members may buy service covered by another state, local, or federal government retirement system. If you received a refund of your account with another system, you may buy up to five years of that service in PERS. You may also buy the service if it occurred before the employer adopted a public retirement system. You may not use this service to qualify you to buy military service. Also, you may only count it as service credit if your last five years of service are with a PERS employer. This type of service purchase is only available to PERS-DBRP members.
Limitations: Current law limits your purchase of active military, reserve military, "One-for-Five", volunteer in U.S. service program, and other public service to a combined total of five years. For example, suppose you had twenty years of state service and three years of military service. Without any limit, you would be eligible to buy seven years: four years of "One-for-Five" service and three years of military service. However, current law limits you to only five years, but it can be any combination of the above service.
When purchasing service, the most recent service must be purchased first.
PAYING FOR SERVICE PURCHASES
You may pay for a service purchase in one lump-sum or you may make monthly payments. Active members can make monthly payments by pre-tax payroll deduction. You may also purchase service through a rollover of funds from an eligible employer plan. Inactive vested members, active members not paid monthly, or active members who wish to self-pay, may send payments directly to MPERA. (These payments are not made pre-tax.) If you fail to make regular payments, you give up the right to make any more payments. Your service purchase will be prorated.
MPERA will track your monthly payments in an additional contribution account until you complete the service purchase contract. We will then transfer the money to your regular account and credit your account with the service. You must complete all service purchases before your retire or the service purchase will be prorated.
You must pay the lump-sum cost or start monthly payments within 30 days of receiving your cost statement.
A cost statement provides the amount required to purchase service as well as payment options. You must provide the following written information:
- your full name (including any former names);
- a current mailing address;
- social security number;
- the type of service you wish to purchase.
If you are sending your request via email, include all of the above information; however, provide only the last four digits of your social security number. You should also send any documents that relate to the service, including the approximate dates of service. We will review the request and send you a cost statement for buying any eligible service. Only MPERA can give you a cost statement. A cost statement from any other source may not be used.