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Ways to Increase Service Credit
General Information
Purchasing credit that was previously withdrawn, credit for military, out-of-state
service, Peace Corps, leave of absence, substitute, part-time, or fractional
service can increase your retirement annuity.
Credit and cost statements are prepared upon your request, with the
purchase of the service being optional. The Kentucky Teachers' Retirement
System (KTRS) can only accept lump sum payments. Service credit cannot
be used in calculating retirement benefits unless payment has been made
before the effective date of retirement. You should have your service credit
payments to KTRS at least 60 days prior to the effective date of your retirement.
If you die while in service, your beneficiary has the privilege of purchasing
these types of eligible service credit. When a purchase is delayed, your
cost increases, and your eligibility for purchase may change.
Reinstatement of Withdrawn Account
If you are an active contributing member with current service equal to
one year, you may regain service credit that has been withdrawn from KTRS.
After the canceled service is reinstated, your membership status is the
same as if the account had not been withdrawn.
Cost: You must repay the amount withdrawn plus eight percent
interest compounded annually from the date of withdrawal to the date of
redeposit.
Service Verification: A statement of service credit and cost
will be furnished to you upon request. Please furnish your Social Security
number and identify the service that you wish to reinstate. If you are
a member of the KERS, CERS, SPRS, etc. with the necessary service credit,
you may reinstate your account in KTRS. You must complete a new membership
application.
Current Leave of Absence
You may pay contributions while on current leave of absence in accordance
with the provisions of the statutes at the time the leave is granted. The
leave must be granted by the governing board of the school district or
institution. The leave must be certified to KTRS by the employing district
or agency, and contributions must be paid by June 30 of the fiscal year
following the year for which the leave was granted. Interest is charged
on leaves purchased during the year following the year in which the leave
occurred.
Non-Current Leave of Absence
You may be eligible to purchase service credit for a non-current leave
of absence when the leave was granted for health reasons or to improve
your educational qualifications. A non-current leave of absence is a leave
that has occurred since July 1, 1964 and prior to the fiscal year preceding
the current fiscal year.
The leave must be certified to KTRS by supplying a copy of the
board minutes which granted the leave. You shall pay the required contribution
based upon the annual salary received for the year immediately preceding
the leave plus 8% interest compounded annually from the beginning of the
fiscal year following the leave of absence and by depositing an amount
equal to this total in the state accumulation fund. You cannot receive
credit for more than two years under this provision.
Substitute/Part-Time Service Credit
If you are a KTRS member doing substitute or part-time teaching, you may
be a ble to secure some credit under regulations of the Board of Trustees.
If you substitute 20 or more days in any school year, or if you are employed
on the basis of at least 3/10 time or more but less than a regular full-time
employee, you should contact KTRS concerning your eligibility to purchase
credit for such service. All contributions must be made by December 31
following the close of the fiscal year in which the substitute or part-time
service occurred. You may receive service credit for substitute service
in no more than four school years.
Fractional Service Credit
If you are employed as a regular full-time teacher but, for some reason,
actually work less than the regular contract year, you will receive a proportionate
fraction of a year of service credit. If your employment continues for
seventy percent of a regular contract year or more, but less than the full
year, you have the privilege of making a personal contribution which will
provide a full year of service credit. If your employment began after the
start of a contract year, you are not eligible to purchase credit from
the beginning of the fiscal year until the time of your employment. All
such payments must be made by December 31 following the fiscal year in
which the fractional service occurred.
Military Service Credit
As an active contributing KTRS member who has rendered active military
service in the United States Armed Forces, you may receive up to six years
credit for such service. Such service may be credited only if the discharge
was other than dishonorable. Military service is considered as Kentucky
teaching service except that it may not be used toward acquiring a vested
interest or for meeting disability retirement requirements. If you have
at least twenty years of military service and are receiving or are qualified
to receive military retirement benefits, you are not eligible to obtain
this type of credit. No credit shall be granted for military service which
has been or will be used in qualifying for annuity benefit payments from
another retirement system financed wholly or in part by public funds.
Cost: Your cost is based on your most recent salary multiplied
by an actuarial factor which is determined by you age at the time of purchase.
This figure is then multiplied by thirty-five percent, which produces the
cost to purchase a year of credit. Thirtyfive percent is utilized because
the law requires you to contribute thirty-five percent of the actuarial
cost of each year of service so credited.
Service Information: To secure a statement of cost and
service credit, send KTRS a certified copy of your military records. These
records will establish your date of entry and release from active duty.
You will be furnished the cost and service credit for which you qualify.
Under current law, purchase of military service may be made at any time
prior to retirement. However, the cost will increase as your salary and
age increase.
Special Condition: If your active military service was
involuntary and occurred on or after August 2, 1990 you may be eligible
to have your employer pay for the cost of the service. KTRS will need a
certified copy of your military discharge papers (DD214) in order to determine
if you qualify.
Out-of-State Service Credit
You may purchase retirement credit for out-of-state teaching service if
you taught under contract in the public schools of another state. Employment
at the Universities of Kentucky, Louisville, and Northern Kentucky is considered
as out-of-state service for retirement purposes. Out-of-state credit counts
the same as Kentucky service when calculation your retirement benefit,
but it does not count as part of the five years of Kentucky service that
is required for a vested interest. Also, if you want to use out-of-state
service in qualifying for 21 year early retirement, there will be an additional
charge required at the time of retirement. The additional charge is computed
by multiplying 8.00 percent time your average high salary at retirement
for each year of out-of-state service that is used in qualifying of 27
year early retirement. Members age 60 or older are not required to pay
the additional charge. No credit shall be granted for service which is
being or will be used in qualifying for annuity benefits form another state.
You may purchase up to ten years of acceptable out-of-state service.
Member Eligibility: If you contributed to KTRS prior to
July 1, 1976, you are eligible to purchase credit for out-of-state service
if you have at least one year of current Kentucky service credit.
If you entered KTRS on or after July 1, 1976, you are eligible to purchase
one year of out-of-state credit for each two years of Kentucky service.
If you have at least ten years of Kentucky service, you may purchase up
to ten years of acceptable out-of-state service. Cost: Your cost
for each out-of-state service is based on the current contribution rate
at the time of purchase, unless the out-of-state service was performed
prior to January 1, 1984. In this event, the contribution rate shall be
7.84 percent. University faculty members pay 7.84 percent contribution
regardless of when the service was performed.
The contribution rate is multiplied by your first annual salary
in Kentucky following the out-of-state service, plus eight percent compounded
interest, from date of service to date of payment. Payments must be made
in a lump sum for each year of service purchased.
Service Verification: To obtain retirement credit for out-of-state
service, you must certify this service on KTRS forms. Upon receipt of the
forms, the service will be verified by KTRS. You will then be informed
of the cost and amount of service that may be purchased. Out-of-state service
may be purchased at any time if you are an active contributing member;
however, interest charges increase monthly.
Peace Corps Service Credit
If you have completed service as a federal Peace Corps volunteer you may
be eligible to purchase retirement system credit for your service. Members
who are eligible may purchase up to two years of qualifying credit. The
cost is determined on the same basis that is used for the calculation of
the out-of-state service. To obtain a statement of your cost and purchasable
credit, send KTRS a certified copy of your Certification of Peace Corps
Volunteer Service. No credit shall be qualifying for annuity benefits from
another retirement system financed wholly or in part with public funds.
For more information see www.ktrs.state.ky.us
Comments or questions about this section of Western
Online should be directed to Beth
Littrell
Last Modified: September 22, 1998
All contents copyright (C) 1995.
Western Kentucky University.