Rates Rising for Retirement Credits Purchases
Posted: March 24, 2004 at 1:00 am, Last Updated: November 30, -0001 at 12:00 am
George Mason employees who previously were unable to accrue retirement credits for prior public or federal service have a limited time to purchase those credits for the Virginia Retirement System (VRS) at the current 5 percent rate. To qualify for the lower rate, an employee must initiate purchase within three years of his or her employment date or by June 30, 2004, whichever is later, and must purchase service credit while actively employed in a covered position.
Prior service is a period of employment not credited to an employee’s VRS account because he or she may have taken a refund of the contributions made; may have been on active duty military service; may have taken educational, birth, adoption, or certain other types of leave; or may have accumulated credit for service under another public retirement system. Other types of noncovered service with a participating employer may include wage or student employment. All prior refunded service can be purchased, and some VRS members are eligible to purchase all or part of prior service periods.
For those wishing to purchase credits by payroll deduction, the deadline is May 25. June 30 is the deadline for lump sum purchasers and those making trustee-to-trustee transfers—rolling funds from a 403(b) or a deferred compensation plan to VRS. After June 30, the purchase will be at actuarial cost, which is a much higher rate.
The cost to purchase prior service is 5 percent of current salary, if that is the highest salary earned in a VRS-covered position. If not, the purchase cost is based on the higher of the average of 36 consecutive months of highest creditable compensation or the average final compensation (AFC). The amount that can be purchased is capped at 48 months for each type of service that is available.
Both service purchased at the 5 percent rate and service purchased at actuarial cost can be used in qualifying for an unreduced benefit and in determining what, if any, early retirement factor applies in calculating a retirement benefit. They also can be used for establishing eligibility for the health insurance credit.
More information is available at the Human Resources web site or by calling 703-993-2600 to contact a benefits administrator.