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 1, 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.

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 invoices and additional information for your specific request.

After logging into your account, select Service Purchase in the left hand navigation and it will take you through the Service Purchase request process.

myASRS Login

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. Issuing your invoice will take approximately 10-15 business days to process. Exceptions to this time frame occur when we are waiting for either additional information from you such as supporting military documentation or information from your current/former employer.
  2. When the invoice is issued you will receive an email notifying you have a secure message waiting for you.
  3. The secure message will include instructions on how to review your invoice online and start the payment process.
  4. You are provided 14 days from when the invoice is issued to indicate whether or not you are interested in purchasing the time.
  5. If you elect to purchase all or a portion of the invoice, the system will walk you through the payment options available to you.
  6. You are provided 60 days from the date the invoice was issued to complete your 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. During the payment election process, and if applicable, you are given the option to purchase less than the full amount presented and the cost of the partial amount is provided.

What are the steps for completing a rollover?

  1. After you elect to purchase all or some, if applicable, of the issued invoice, you will be asked to provide some information regarding the rollover(s) you will be initiating.
  2. Upon providing the information you will be able to download/print a Direct Rollover Transfer Certification to Purchase Service Credit form on both the last screen in the process and the confirmation secure message you will receive.
  3. The rollover payment itself must be received within 60 days of invoice date with a Direct Rollover Transfer Certification to Purchase Service Credit (DRTC) form included for each rollover.
  4. 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.

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. The ASRS includes a statement at the top of the Direct Rollover Transfer Certification form in place of a separate Letter of Acceptance.

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

  1. During the online payment process for a PDA you will be given the opportunity to determine the terms of the Authorization (amount of time to purchase, over what period of time, etc.).
  2. Upon agreement of those terms the Authorization is forwarded directly to both the ASRS and your employer to start the deductions.

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.
  • 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 through your myASRS secure account 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?

The ASRS will send you all applicable forms related to your request, but if you need additional copies the forms are available for download here.
Was this page helpful?: 
Average: 3.9 (199 votes)