Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
16.645(20), (26), (29),
(31),
61.543,
61.552,
61.5525,
61.555,
61.592,
78.545(6),
(31), (35), (43),
26
U.S.C. 415
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
61.645(9)(g) requires the
Board of Trustees of Kentucky Retirement Systems to promulgate all
administrative regulations necessary or proper to carry out the provisions of
KRS
16.510 to
16.652,
61.515
to
61.705,
and
78.520
to
78.852.
KRS
16.645(20), (26), (29),
(31),
61.543,
61.552,
61.555,
61.592,
and
78.545(6),
(31), (35), and (43) provide for purchasing
service credit. This administrative regulation establishes the documentation
required from the employee as proof of eligibility for purchasing service
credit, the filing deadlines on which the cost calculation will be made, and
the procedures for purchase of service credit.
Section 1.
(1) The cost calculation date for determining
the cost of the service to be purchased shall be the later of:
(a) The last day of the month in which the
request for the cost of the service is received at the retirement
office;
(b) The last day of the
month the employee designates as the intended purchase date;
(c) The last day of the month in which
documentation of the service is filed at the retirement office;
(d) The last day of the month in which the
member attains sufficient service credit to be eligible to make the purchase;
or
(e) The last day of the month in
which the member terminates employment if the member files a completed Form
4172, Notice of Intent to Transfer Lump Sum Payment(s) to Qualified Employer
Sponsored Plan, at the retirement office indicating that the member intends to
defer the member's lump sum payment for accrued compensatory and annual leave
to be paid to the member at termination to the Kentucky Public Employees
Deferred Compensation Authority or other qualified employer sponsored plan. The
member shall then rollover the funds from the Kentucky Public Employees
Deferred Compensation Authority or other qualified employer sponsored plan to
Kentucky Retirement Systems as payment, in whole or in part, for the member's
service purchase.
(2)
The purchase deadline date shall be the later of the cost calculation date or
thirty (30) days from the date the purchase cost is mailed to the employee,
unless day thirty (30) is a weekend or federal or state holiday, then the
purchase deadline date shall be the next business day.
(3) An employee may not make a new request
for cost calculation for purchase of service previously requested until the
purchase deadline date has passed.
(4) Except as provided in
KRS
61.552(16), payment for
purchase of service credit shall be filed at the retirement office while the
employee is participating in an eligible retirement system and prior to the
employee's termination date.
(5) If
the member elects to purchase only a portion of the service for which he has
requested a cost calculation, the member shall be required to obtain a new cost
calculation for the remaining service unless the remaining service is service
under
KRS
61.552(1) or (23).
Section 2.
(1) The employee shall provide documentation
necessary for the retirement system to determine that the service meets the
eligibility requirements for purchase of service. The documentation may be in
the form of:
(a) A statement or letter signed
by the reporting official, personnel director or agency head, or if the service
is with the university, federal government or military, a statement or letter
signed by an authorized employee of the university, federal government or
military, except that no employee shall certify his own service. The retirement
system may require that the statement be made under oath; or
(b) Copies of personnel and wage records
supplied by the agency.
(2) If the retirement system determines that
the agency records are not sufficient, the retirement system may require the
employee to supplement the agency records with copies of check stubs, W-2
forms, personnel action forms or payroll records in the employee's
possession.
(3) If the employee
does not have additional documentation of the service, the employee may submit
a report of detailed earnings from the Social Security Administration for the
period of service, along with two (2) affidavits completed by individuals who
earned, or were eligible for, service for the same period in a state
administered retirement system with the same employer. Each affiant shall
detail the employee's employment status and length of service.
(4) The retirement office shall determine if
all or part of the service is eligible for purchase and shall notify the
employee in writing of its determination.
Section 3.
(1) For service with a public agency, other
than a school board, participating in one (1) of the systems administered by
the Kentucky Retirement Systems or with a nonparticipating agency whose service
is authorized by statute, the employee shall submit the following documentation
and may be required by the system to provide additional information, if
necessary for determination:
(a) The beginning
and ending dates of the service and any breaks which may have occurred during
the service, listed by fiscal year;
(b) The number of calendar months
worked;
(c) The position title and
status, including full time, part time, probationary, emergency, seasonal,
temporary or interim; and
(d) If
the employee participated in a retirement plan, and if so, if the plan was a
defined contribution or defined benefit plan, and if the employee has taken a
refund of contributions to the plan.
(2) For service with a school board, the
employee shall provide the following documentation and may be required by the
system to provide additional information, if necessary for determination:
(a) The beginning and ending dates of the
service and any breaks which may have occurred during the service, listed by
fiscal year;
(b) The number of
calendar months worked;
(c) The
number of days in the employee's employment contract and the actual number of
days worked;
(d) The hours worked
per day;
(e) The position title and
status, including full time, part time, probationary, emergency, seasonal,
temporary or interim; and
(f) If
the employee participated in a retirement plan, and if so, if the plan was a
defined contribution or defined benefit plan, and if the employee has taken a
refund of contributions to the plan.
(3) For active duty service in the Armed
Forces of the United States, the employee shall provide a copy of the federal
form DD-214 or other official military documents clearly indicating:
(a) The date of entry into active duty
service;
(b) The date of discharge
from active duty service; and
(c)
The type of discharge.
(4) For service in the reserve forces,
including periods of active duty training, or for service in the National
Guard, the employee shall provide copies of official military documents clearly
indicating the date of entry and current participation or date of
discharge.
(5) For service with the
federal government, the employee shall provide the following documentation:
(a) The name of the federal agency where the
employee worked;
(b) The beginning
and ending dates of the service and any breaks which may have occurred during
the service;
(c) The job
title;
(d) If the individual worked
an average of 100 or more hours per month and if the position was temporary,
seasonal or regular full time; and
(e) If the employee participated in a
retirement plan and if the employee has taken a refund of contributions to the
plan.
(6) For a period
when the member was on leave, including educational, maternity and sick leave
without pay, the member shall submit documentation of the beginning and ending
dates of the period of leave and the type of leave designated by the
employer.
(7) For service with one
(1) of the state universities in Kentucky, the employee shall provide the
following documentation:
(a) The name of the
university where the employee worked;
(b) The beginning and ending dates of the
service and any breaks which may have occurred during the service;
(c) The job title;
(d) If the individual worked an average of
100 or more hours per month and if the position was temporary, seasonal or
regular full time; and
(e) If the
employee participated in a benefit plan during the period of
employment.
(8) An
employee wishing to purchase service credit for out-of-state public service
under
KRS
61.552(17) and (18) shall
request a copy of the "Form 4140, Certification of Out-of-State Service".
(a) The employee shall mail the "Form 4140,
Certification of Out-of-State Service", to his former employer and retirement
plan for completion, and if the employee wishes to purchase hazardous service
in KERS, CERS, or SPRS, he shall also obtain a copy of the description of his
duties in the out-of-state position from his former employer. Service credit
shall be eligible for purchase as hazardous duty if the position is the same as
or substantially similar to positions for which hazardous duty credit has been
approved under
KRS
61.592;
(b) The employee shall be responsible for
obtaining the information requested regarding the period of out-of-state
service, and the completed "Form 4140, Certification of Out-of-State Service",
and job description shall be submitted to the retirement office;
(c) The retirement system shall determine how
much service is eligible for purchase under the statute and shall notify the
employee of the full actuarial cost of the service which qualifies for
purchase; and
(d) If the retirement
system determines that the service is not eligible for purchase, the retirement
system shall notify the employee of the reasons.
Section 4. For a purchase based on
the actuarial cost, in accordance with
KRS 61.5525, the
higher of the current rate of pay, final rate of pay, or final compensation
times the actuarial age factor shall be determined as follows, except that for
an employee of a local school board paid under an employment contract, the
current rate of pay shall be equal to the final compensation as of the cost
calculation date:
(1) Except for a classified
employee of a local school board, current rate of pay shall be determined as
follows:
(a) For an hourly employee paid on a
seven and one-half (7 1/2) hour day, the hourly rate times 1,950;
(b) For an hourly employee paid on an eight
(8) hour day, the hourly rate times 2,080;
(c) For an employee paid by the day, the
daily rate times 260;
(d) For an
employee paid by the week, the weekly rate times fifty-two (52);
(e) For an employee paid by the month, the
monthly rate times twelve (12);
(f)
For a part-time employee who averages 100 or more hours per month, the hourly
rate times hours per day times 260. If the number of hours worked per day is
not fixed by the employer, seven and one-half (7 1/2) hours shall be
used;
(g) For an employee who
receives a fixed amount in addition to an hourly, daily, weekly, monthly, or
annual rate, the current rate shall include all fixed amounts, averaged into
the same period;
(h) For an
employee simultaneously employed in more than one (1) retirement system
administered by the Kentucky Retirement Systems, the higher of the combined
current rate of pay, combined final rate of pay, or combined final compensation
shall be used as of the cost calculation date.
(2) Final compensation shall be determined as
of the cost calculation date, except that the final compensation of
nonhazardous members of the County Employees Retirement System or Kentucky
Employees Retirement System shall be based on the three (3) fiscal years with
the highest average monthly earnings if the sum of the employee's service when
added to his age would equal at least seventy-five (75), assuming the
employee's service includes:
(a) All service
remaining on an active installment purchase agreement;
(b) All service which the employee is
eligible to purchase under
KRS
61.552(1) and (23)(a) and
(b); and
(c) All service the employee would accrue if
employment continued through December 31, 2008.
(3) The employee's age rounded to the nearest
year as of the cost calculation date shall be used.
(4) The benefit factor used to determine the
actuarial cost, in accordance with
KRS 61.5525, shall be
the benefit factor to which the employee is entitled on the first day of the
month following the cost calculation date, except that the benefit factor for
nonhazardous employees of the County Employees Retirement System and the
Kentucky Employees Retirement System shall be the highest benefit factor to
which the employee would be entitled, assuming:
(a) An effective retirement date no later
than January 1, 2009; and
(b) Total
service as determined in subsection (2) of this section.
Section 5.
(1) After the employee has purchased service,
the retirement system may recalculate the cost of the service if, upon audit,
the retirement system determines that any of the information utilized to
calculate the cost of the service was incorrect.
(2) If the recalculation results in an
increase in the cost of $100 or more, the employee shall have thirty (30) days
to pay the additional amount.
(3)
If the employee fails to pay the additional amount, the employee's service
shall be reduced to the next lower increment or number of months for which the
employee is eligible based on the original payment, and the difference shall be
refunded to the employee.
Section
6.
(1) The wages associated with
service purchased under the provisions of
KRS
61.552(1) to (5)(a) and
(24), which would have qualified as
creditable compensation, shall be added to the employee's account and shall be
used in determining the employee's final compensation.
(2) An employee purchasing service under the
preceding paragraph by increments or by installment purchase agreement shall
have the service credited in chronological order beginning with the earliest
service.
Section 7.
Incorporation by Reference.
(1) The following
material is incorporated by reference:
(a)
Form 4140, "Verification of Out-of-State Service", July 2000;
(b) Form 4172, "Notice of Intent to Transfer
Lump Sum Payment(s) to Qualified Employer Sponsored Plan", May 2008;
and
(c) Form 4170, "Direct
Transfer/Rollover Authorization Form", April 2002.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at the Kentucky Retirement
Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky 40601,
Monday through Friday, 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
61.645(9)(g)