Sections 3-12-83.2, 3-12-84 - Purchase of prior service credit by member of tax-qualifying purchase unit. Purchase of prior service credit for public service not covered by retirement plan
3-12-83.2. Purchase of prior service credit by member of tax-qualifying purchase unit. The provisions of § 3-12-83 notwithstanding, a member who is employed by a tax-qualifying purchase unit may purchase credited service pursuant to the procedures outlined in §§ 3-12-83 and 3-12-84 on a tax-deferred basis pursuant to § 414(h)(2) of the Internal Revenue Code, as in effect on January 1, 1996. The purchase shall be in the nature of a credited service purchase under the provisions of § 3-12-83, except that:
(1) The purchase shall be pursuant to an irrevocable employer contribution agreement entered into between the member and the tax-qualifying purchase unit and shall be executed prior to the period of contribution;
(2) The irrevocable employer contribution agreement may not exceed a period of ten years;
(3) The contributions may represent reductions in the member's compensation but shall be deemed employer contributions pursuant to § 3-12-71;
(4) The contributions may be for any period of uncredited service;
(5) No other purchase of uncredited service pursuant to § 3-12-83 or other provision of this chapter, may take place while an irrevocable employer contribution agreement is in effect pursuant to this section; and
(6) The irrevocable employer contribution agreement shall be for an amount that, when discounted for interest at the assumed rate of return, equals the total purchase cost.
In no event may a member receive the contributions directly. If a member dies or terminates employment prior to completion of the member's irrevocable employer contribution agreement, the member's credited service shall be adjusted by the system on the basis of that portion of the agreement that was completed prior to the death or termination.
A member who is participating in an installment credited service purchase pursuant to § 3-12-87 on the date that the member's employer unit becomes a tax-qualifying purchase unit shall either terminate the purchase or complete the purchase as a tax-deferral purchase pursuant to this section. If the member elects to continue the purchase, the original purchase agreement shall be deemed an irrevocable employer contribution agreement.
Source: SL 1996, ch 30, § 3; SL 2008, ch 20, § 11.