(1)
Lump sum purchase. In order for a member to purchase service credit through a
lump sum purchase all of the following shall apply:
(a) The retirement system will provide the
member with a cost statement indicating the amount of service credit eligible
for purchase and the current cost based on the factors described in paragraph
(B) of this rule.
(b) The member
must return the completed and signed cost statement with the first
payment.
(c) A member must complete
the service credit purchase on the cost statement by the earlier of the end of
the month following the ninetieth day after the retirement system receives the
first payment or June thirtieth.
(d) No service credit will be posted to a
member's account until all funds for the total purchase of service credit have
been received by the retirement system.
(e) If the member does not complete the
purchase by the deadline established under paragraph (D)(1)(c) of this rule and
indicated on the cost statement, then all payments received by the retirement
system will be returned.
(2) Installment purchase plan. The following
plan for purchase of service credit by payroll deduction is hereby established
pursuant to sections 3307.70 and
3307.701 of the Revised Code:
(a) A member who has applied for the purchase
of service credit pursuant to section
3307.73,
3307.74,
3307.751,
3307.76, or
3307.771 of the Revised Code may
elect to make payment to purchase one year of service credit, or the full
amount of service credit eligible for purchase if the member is only eligible
to purchase less than one year of service credit, by payroll deduction over a
period of up to three years if the member will receive regular periodic
payments of salary or wages by the employer over that period in an amount after
taxes and other deductions that is at least equal to the payment to be
deducted.
(i) Where eligible service has been
certified, the retirement system will provide to the member a form for the
member's use in initiating purchase of service credit by payroll deduction and
a statement setting forth the total cost of such purchase and a statement of
the monthly deductions necessary to spread payment over periods ranging from
one to three years.
(ii) If a
member wishes to elect payment by payroll deduction, the member shall complete
and sign the form so provided to indicate the amount to be deducted monthly and
file it with the member's employer.
(b) A form so filed with an employer shall be
completed by the employer to indicate the date deductions will begin, which
date shall be agreed upon by the member and the employer but in no case shall
it be later than three months after the form is filed with the employer, and
the monthly amount to be deducted. The employer shall transmit the form to the
retirement system no later than the last day of the month preceding the month
in which deductions will begin, except that the form may be transmitted with
the first month's payroll deduction if the monthly deduction equals or exceeds
the minimum payment specified in paragraph (D)(2)(d) of this rule.
(c) Amounts deducted by an employer shall be
transmitted monthly to the retirement system no later than the fifteenth day of
the month following deduction. Employers will be charged interest on amounts
not received by such time at the rate specified in rule
3307:1-3-01
of the Administrative Code.
(d)
Monthly payments shall not be less than the amount specified to purchase
service credit over the maximum period allowable under paragraph (D) (2)(a) of
this rule, and shall not be less than fifty dollars. Deducted payments in an
amount less than the applicable minimum will be returned to the employer and
that payroll deduction plan will be cancelled.
(e) Except for purchase under a tax-deferred
plan as provided in paragraph (D)(2)(k) of this rule, the amount of deduction
selected by a member may be changed by written notice given by the member to
the employer; however, the monthly payment deducted shall not be less than the
minimum specified in paragraph (D)(2)(d) of this rule.
(f) Except for purchases under a tax-deferred
plan as provided in paragraph (D)(2)(k) of this rule, a member may elect to
terminate payroll deduction at any time by notice to the employer in such
manner as the employer may specify. Termination of employment or the grant of a
disability benefit under section
3307.63 or
3307.631 of the Revised Code
shall terminate payroll deduction. In the event a member who has been
purchasing service credit by payroll deduction terminates employment and
becomes employed as a teacher by a different employer, a new application for
payroll deduction will be required and it shall be the member's responsibility
to file such application with the new employer to complete the purchase during
the time period specified under the original payment schedule. The member shall
have until the end of the month after the ninetieth day following termination
of employment to file the application with the new employer. If the member does
not resume the payroll deduction plan with a new employer or complete the
purchase through a lump-sum payment by the deadline specified in this
paragraph, then all funds will be returned as specified in paragraph (D)(2)(m)
of this rule.
(g) A member will be
eligible for payroll deduction by any employer for restoration or purchase
under only one cost statement at any given time. If employed by more than one
employer, a member may not simultaneously participate in more than one payroll
deduction plan. No portion of qualifying service credit being purchased
pursuant to this rule under a tax-deferred plan as provided in paragraph
(D)(2)(k) of this rule shall be purchasable under provisions of rule
3307:1-3-02 of the Administrative Code unless
payroll deductions under this rule are first terminated.
(h) Changes in the interest rate applicable
under rule
3307:1-3-01
of the Administrative Code will result in the recalculation of a new payroll
deduction schedule for the remaining balance of service credit as of the
effective date of the change in interest rate. A member participating in
payroll deduction will be sent a recalculation in the event of such a change
and may then either reselect the amount to be deducted in order to maintain the
original payment schedule or alter the period of time involved, up to a maximum
of three years from the date the original payroll deduction plan began. In all
cases the member must pay at least the minimum monthly payment as specified in
paragraph (D)(2)(d) of this rule.
(i) The retirement system will prepare a
monthly listing of participating employees based upon the payroll deduction
forms and designated changes thereto previously submitted by an employer. Such
listing shall be sent to the employer monthly and shall set forth the expected
deduction for each participant. The employer shall enter the amount actually
deducted and return the listing and deducted amounts to the retirement system
by the fifteenth of each month.
(i) If the
actual deduction is less than the minimum deduction, the payroll deduction plan
will be terminated. Purchase of additional service credit by payroll deduction
will require a new application. Should the payroll deduction plan not resume
with an employer or the payment for the service credit not be completed with
the retirement system by the earlier of the end of the month following the
ninetieth day from the last payment made by payroll deduction or June
thirtieth, then all funds will be returned as specified in paragraph (D)(2)(m)
of this rule.
(ii) Participating
members may be added by an employer if accompanied by the application form and
the actual deduction equals or exceeds the minimum deduction as of the month
the deduction begins.
(j) Accumulated deductions for the purchase
of service credit shall be refundable only upon termination of covered
employment and withdrawal of accumulated contributions pursuant to section
3307.56 of the Revised Code,
except that upon the request of the member, the cost of service credit
purchased by payroll deduction may be refunded for the reasons set forth in
paragraph (G) of rule
3307:1-3-02
of the Administrative Code.
(k) An
employer may adopt a plan in compliance with section 414(H)(2) of the Internal
Revenue Code for the purchase of service credit by payroll deduction with
payments designated as picked-up by the employer. An employer shall notify the
retirement system of its adoption of any such plan at least sixty days before
it goes into effect on a form provided by the retirement system. A member who
has chosen to participate in such a plan may not terminate or alter payroll
deduction until the service credit at a cost of one hundred percent of the
actuarial liability is fully purchased or employment is terminated.
(l) In lieu of payroll deduction, the
retirement system will accept from the employer lump-sum payments for certified
purchasable service credit for a member. The employer must submit a document
indicating if the payment is from after-tax or tax-deferred funds. Tax-deferred
funds will only be accepted by the retirement system if the employer has
adopted a plan in compliance with section 414(H)(2) of the Internal Revenue
Code as specified in paragraph (D)(2)(k) of this rule.
(m) If there is a refund of only the
purchased service credit within two years of receipt, the funds will be
returned to the employer unless the employer requests distribution to the
member; upon such request by the employer, the funds will be
returned to the member and federal taxes will be withheld as required under
federal law and regulations, if the money was tax-deferred.
(n) If a member purchasing service credit
through payroll deduction applies for service retirement, the retirement system
will notify the employer to stop the deductions the month before the member's
benefit effective date and will send the member a cost statement for any
remaining amount due to complete the purchase of service credit at a cost of
one hundred per cent of the actuarial liability created by such purchase.
Should the payroll deduction plan not be completed with the retirement system
within three months of the retirement date, then all funds will be returned as
specified in paragraph (D)(2)(m) of this rule.