Nebraska Administrative Code
Topic - PUBLIC EMPLOYEES RETIREMENT SYSTEMS
Title 303 - PUBLIC EMPLOYEES RETIREMENT BOARD
Chapter 15 - PURCHASE OF SERVICE CREDIT
Section 303-15-007 - Payment Methods
Universal Citation: 303 NE Admin Rules and Regs ch 15 ยง 007
Current through March 20, 2024
007.01 Installment Method
007.01(a) Members electing to purchase
optional service credit with the installment method may choose tax deferred
payroll deduction or direct after-tax installment payments. Payments made are
subject to IRS code section 415 annual limits. If the contributions qualify as
a repayment of original mandatory contributions as described under section 002
of this regulation the section 415 limits do not apply.
007.01(b) Before direct after-tax installment
payments can be accepted for purchase of service each year during the
installment period, the member must substantiate his or her current
compensation in such manner as may be required by NPERS. If a member's direct
after-tax installment payments exceed the applicable code section 415 limit,
the excess shall be refunded to the employee and the service credit adjusted
accordingly.
007.01(c) Direct after
tax installment payments made to NPERS by the member must be by cashier's
check, bank draft or money order. Personal checks will not be accepted except
for de minimus amounts in order to meet a purchase cost.
007.01(d) A member may elect to purchase
service through payroll deduction pursuant to an irrevocable payroll deduction
agreement with the member's employer that authorizes the employer to deduct the
payment from the employee's compensation. One copy of the agreement must be on
file with the employer and one copy with NPERS before payments may begin. In
the event a member elects to purchase service by payroll deduction, the covered
employer shall be responsible for making timely remittances of the member's
contributions for his or her service purchases.
007.01(e) Notwithstanding anything to the
contrary in this Chapter 15, NPERS will accept payments made via payroll
deduction after the member's last working day, through and including the
member's final paycheck, if the members employment contract calls for part of
the member's compensation to be paid in arrears after the member's last working
day.
007.01(f) In the event a
member's irrevocable purchase agreement becomes inoperative due to the
employee's death, disability, or other termination of employment before full
payment for the employee's service purchase has been completed, no further
contributions for the purchase of creditable service shall be accepted and the
employee's retirement benefit under the applicable retirement system shall be
computed with service credit equal to the amount of service credit acquired in
proportion to the amount of the installment payments paid by the member under
the irrevocable purchase agreement.
007.01(g) In the case of the School Employees
Retirement System, termination of employment for the employee does not include
ceasing work at one school district and then providing successive contributory
service at another school district that participates in the School Employees
Retirement System. If the employee transfers to another school district
administered by the Retirement Board, then the employee shall continue, without
interruption, direct after tax 6. monthly installment payments or monthly
payroll deductions, whichever was specified in the member's irrevocable
purchase agreement. In the case of payroll deductions, upon notification by the
member, NPERS will contact the successor employer in order to make arrangements
to continue, without interruption, monthly payroll deductions specified in the
originating irrevocable purchase agreement.
007.01(h) The finance interest rate used for
the direct after tax installment payments and tax deferred payroll deductions
shall be the actuarial interest rate assumption based on the expected long-term
rate of return for each plan, recommended by the state's actuary and adopted by
the Retirement Board.
007.01(i) A
late fee may be charged when direct payments are not received by the payment
deadline. The fee will be based on the finance interest rate as defined by this
section.
007.02 Rollovers
007.02(a) Consistent with the
Internal Revenue Code, NPERS will accept rollovers in payment for lump-sum
purchases of service credit, provided the money is an eligible rollover
distribution received from one of the following:
007.02(a)(i) A code section 401(a) or 401(k)
tax qualified plan.
007.02(a)(ii) A
code section 403(a) or (b) tax sheltered annuity account.
007.02(a)(iii) A code section 408(a)
individual retirement account (IRA) or a code section 408(b) individual
retirement annuity.
007.02(a)(iv) A
code section 457(b) deferred compensation plan.
007.02(b) A rollover or transfers from a
qualifying tax-deferred account will not be accepted by NPERS without the
member certifying that the originating rollover/transfer account has maintained
its proper tax qualification conditions under the applicable sections of the
Internal Revenue Code.
007.02(c) A
direct rollover payment for purchase of service may be made by check from the
transferring institution to the Nebraska Public Employees Retirement Systems,
or a check delivered to the member but negotiable only by the Nebraska Public
Employees Retirement System will be accepted as a direct rollover.
007.02(d) The amount of the rollover payment
accepted by NPERS will be based on the cost of the service purchased and
determined only by NPERS. Funds in excess of the actual purchase cost will not
be accepted.
007.02(e) All other
federal tax laws governing eligible rollover distributions shall
apply.
007.03 Lump Sum Payments
007.03(a) A lump sum payment is a
one-time, direct payment by the member for the purchase of eligible service
credit.
007.03(b) In all cases,
except for eligible rollover distributions, the payment shall be on an
after-tax basis and subject to the code section 415 defined contribution annual
limits. If the contributions qualify as a repayment of original after-tax,
mandatory contributions as described under section 002 of this regulation the
code section 415 limits do not apply.
007.03(c) Before a lump sum after-tax payment
can be accepted as a purchase of service, the member must substantiate their
current compensation in such a manner as may be required by NPERS. If a
member's lump sum after-tax payment ultimately exceeds the applicable code
section 415 limit, the excess shall be refunded to the employee and the service
credit adjusted accordingly.
007.03(d) If a member elects to purchase
service by lump sum after-tax payments and such purchase exceeds the annual
code section 415 limits, the member may be permitted to make payments in
immediate succeeding periods to complete the member's purchase of service.
Members who are unable to make a lump sum payment due to the limitations of
code section 415 may be required by NPERS to use the installment method to
complete the payments.
007.03(e)
Payments will only be accepted via cashier's check, bank draft or money order.
Personal checks will not be accepted as payment except for de minimus amounts
in order to meet a purchase cost.
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