Home

Service Purchase

What You Should Know About Service Purchase

The Service Purchase Program allows active members of the ASRS, as well as members who are receiving benefits under the ASRS Long Term Disability Income Plan, to purchase past service time under specific qualified categories. Purchasing additional service credit may increase your lifetime monthly benefit and/or qualify you for retirement at an earlier date.

A request for service purchase must be initiated prior to termination of employment. A member whose membership  date is on or after July 1, 2010 must have five years of credited service in the ASRS Plan before initiating a Service Purchase request. Active members who have a membership date prior to July 20, 2010 may request to purchase service at any time.

Additionally, members with a membership date prior to July 20, 2011 may purchase any and all eligible service for each type of service. Members with a membership date on or after July 20, 2011 are limited by state statute to five years of service for each service type, except for forfeited service, which has no limitation.

Members may not purchase service credit for which they are receiving, or are eligible to receive, other retirement benefits.

Types of Service Available for Purchase:

Other Public Service (OPS)

Service credit can be purchased if you were previously employed with a public employer (federal, city, county, state, political subdivision, school or university). If you participated in the public employer’s retirement system, you must relinquish your right to any benefit prior to receiving service credit.

Military Service

Active duty and active Reserve (including National Guard) may be purchased as long as you were honorably discharged. If you are eligible for or are receiving a military retirement, you cannot purchase the active duty service. Ready Reserves service is not eligible.

Leave of Absence (LOA)

You may purchase service credit for up to one year of each approved, unpaid leave of absence taken when you worked for an ASRS employer. You must not have received a return of your contributions from the ASRS and you must have returned to work with the same ASRS employer at the end of your leave, unless the position was no longer available or you were disabled and could not return to work.

Forfeited Service 

If you were formerly a member of the ASRS and you received a return of your contributions when you terminated your employment (otherwise called a refund), you may reinstate (buy back) that forfeited service credit.

Contributions Not Withheld (CNW)

If within the last 15 years you worked 20 or more hours per week for 20 or more weeks in a fiscal year and your ASRS employer failed to withhold ASRS contributions, a Contributions Not Withheld error may have occurred. If it is determined that contributions were not required to be withheld, then you may be eligible to purchase this time as Other Public Service.

Download this form and follow the instructions to begin the process.

  Verification of Contributions Not Withheld

Cost of Buying Service

Other Public Service, Military Service, and Leave of Absence use the Actuarial Present Value (APV) method to calculate costs of providing future benefits. Actuarial Present Value is defined as the value of a benefit in terms of the amount of money the ASRS must have on hand today to pay for the benefit in the future, based upon actuarial assumptions used by the ASRS.

In applying this calculation method, the ASRS determines the APV of the member’s benefit including the purchased service, and the APV excluding the purchased service. The member pays the difference between these two values, thereby fully funding the additional benefit derived from the service purchase.

Factors used in the calculation include the member’s age, annual compensation, years of service, and years of service requested to purchase. As a result, the cost of service purchase varies for each member.

Forfeited Service is calculated by taking the amount(s) of the total distribution issued at the time of the member's return of contributions, plus accrued interest on the amount(s) through the date of request at the interest rate assumption approved by the board.

Contributions Not Withheld member cost is calculated on the compensation earned during the period in which the member was determined eligible for participation and the ASRS retirement and LTD contribution rates at that time. The member pays their contributions, both retirement and LTD. Accrued interest could apply if the invoice is not paid in full by the due date.

Payment Options

The ASRS offers several payment options to purchase your new service credit. You may purchase your eligible service credit with a rollover from an eligible plan or IRA, with an after tax payment, through a Payroll Deduction Authorization (PDA) using pre-tax dollars, or part of your lump sum termination pay (vacation, sick, overtime pay).

Getting Started

The Service Purchase process involves online requests for Service Purchase invoice and additional information for your specific request. You may wish to first get a cost estimate using our online estimator.

The Service Purchase Estimators allow you to quickly calculate an estimate of how much purchasing service will cost. They cover Military Service, Other Public Service, Forfeited Service, and Leave of Absence Service.

Service Purchase Estimator 

The Service Purchase Request Wizard will help you through the process of purchasing certain types of credited service that may be applied toward your ASRS account. You will be able to make your request on-line.

Secure Request Wizard 

Frequently Asked Questions

Can I purchase service any time?

No. See the first section of this page for more details and restrictions.

Once I submit a request, what are the next steps?

  1. After you submit the request online, the ASRS will send you a service purchase packet, which includes a form you will need to complete. (If you are requesting to buy forfeited serviced, the ASRS has your information on file so no form is required).
  2. You submit the completed form within 90 days of the request.
  3. ASRS will process a Cost Invoice for the service purchase within 15 business days of receipt of the form. The Cost Invoice letter will include the following forms: Service Purchase Payment Request and Direct Rollover Transfer Certification to Purchase Service Credit (this form is ONLY required if payment is made using a rollover).
  4. You select the payment method(s) on the Service Purchase Payment Request form and send form via FAX or regular mail to the ASRS within 30 days of the cost invoice date.
  5. Once your payment is processed or the PDA is established with your employer, the ASRS will send you a confirmation letter for the purchase.

Do I have to buy all the service credit on the invoice?

No, you don't. The ASRS creates an invoice for all eligible service credits, but you do not have to purchase all of it. If you want to only purchase some of the service credit (ie. you are eligible to buy 3 years, but only need 1 year to reach your goal) call the ASRS for a quote to purchase just the amount of service you need.

What are the steps for completing a rollover?

  1. Select the payment method(s) on the Service Purchase Payment Request (SPPR) form and send form via FAX or mail to the ASRS within 30 days of the cost invoice due date, as indicated on the invoice.
  2. The rollover payment itself must be received within 90 days of invoice date with a Direct Rollover Transfer Certification to Purchase Service Credit (DRTC) form included for each rollover.
  3. Refer to the 1st and 2nd page of the DRTC form for the processing timeframes and instructions for both you and the financial institution where the money is coming from. It is your responsibility to contact this institution to initiate this rollover and to ensure the funds are received by ASRS by the due date.
  4. After-tax checks will be applied after rollovers (within 30 days) , but must be marked on the SPPR form as TBD after rollover.

What is a “Letter of Acceptance”?

Your financial institution may request this letter before sending the funds for a Direct Rollover. A Letter of Acceptance is proof that the ASRS is a qualified plan per the IRS guidelines. A Letter of Acceptance will be sent to you upon review of a correctly completed Direct Rollover Transfer Certification form that is received, but did not include payment. After you receive the Letter of Acceptance, you can direct the financial institution to forward the payment to the ASRS.

What are the steps for a Payroll Deduction Agreement (PDA)?

  1. Select the payment method(s) on the Service Purchase Payment Request (SPPR) form and send form via FAX or mail to the ASRS within 30 days of the cost invoice due date, as indicated on the invoice.
  2. The PDA is mailed to you within 7 business days of receipt of the SPPR form (unless combined with a rollover, in which case we will wait to receive the rollover funds first).
  3. You must review, sign and return the signed PDA (3 pages) within 30 days of the PDA contract issue date for the agreement to be processed.
  4. Once ASRS receives the signed irrevocable PDA contract, the ASRS generates an Employer Agreement and sends it to your employer and they begin taking deductions out of your paycheck.

What happens with my Payroll Deduction Agreement (PDA) when I retire?

  • If your retirement date is within 14 days of your employment termination, the retirement application serves as notification for a PDA Payoff letter. A PDA Payoff Letter will be issued when your termination date has been verified and the final Pay Period Ending (PPE) date has been posted.

      Checklist for Retiring with PDA

  • If your retirement date is later than 14 days from the day you terminated you will have to follow the same procedure as if you were not retiring. (See the next question for specifics).

    What happens with my Payroll Deduction Agreement (PDA) when I terminate my job (not retiring)?

    Per IRS regulations you must notify the ASRS in writing that you wish to receive a calculation indicating the balance of the PDA within 14 days (before or after) of your termination date. A PDA Payoff Letter will be issued when the termination date has been verified by your employer and the final Pay Period Ending (PPE) date has been posted.

    What happens with my Payroll Deduction Agreement PDA when I transfer to another ASRS employer?

    If you are transferring to another ASRS employer, then A.R.S. 38-747 (B.7) mandates your PDA continues with the new employer using the original terms. You should see deductions from your paycheck for the PDA begin soon after employment begins.

    Do I receive a letter confirming my PDA is paid in full?

    No, the ASRS does not send confirmation when a PDA is completed.

    How much will my pension go up if I buy service?

    You can determine what your monthly pension will be with your additional service by logging in to your secure login and selecting the Benefit Estimate link.

    myASRS Login 

    Can I download a copy of a form?

    Was this page helpful?: 
    Average: 4.1 (73 votes)