Mo. Code Regs. tit. 16 § 10-6.045
Current through Register Vol. 49, No.12, June 17, 2024
Section 16 CSR 10-6.045 - Payment for Reinstatement and Credit PurchasesPURPOSE: This rule complies with provisions of Chapter 169, RSMo, relating to the payments made of funds to the retirement system for reinstating and purchasing credit.
(1) Payments to reinstate or to purchase credit shall be made in a manner acceptable to the Public Education Employee Retirement System of Missouri.(A) Consistent with the Internal Revenue Code, the system may accept rollovers and in-service trustee-to-trustee transfers in payment for reinstatement and credit purchases provided that acceptance of any funds from any such authorized plan or account will not jeopardize the tax-qualified status of the retirement system and the money is from one (1) of the following: 1. A 401(a) tax-qualified plan (including a Keogh plan which meets additional requirements pertaining to owner-employees);2. A 401(k) profit-sharing plan;3. A 403(a) qualified-annuity plan;4. A 408(a) individual retirement account (IRA) or a 408(b) individual retirement annuity to the extent that the IRA contains funds that have not previously been taxed;5. A 403(b) qualified plan;6. A state and local government 457(b) qualified plan;7. Such other plans or accounts as may be authorized as a source of eligible funds under the Internal Revenue Code, provided that the system shall not be obligated to accept any funds from any such authorized plan or account if the funds would jeopardize the tax-qualified status of the system; or8. The member, if the amount was distributed to the member from a qualified plan, is rolled over by the member to the system within sixty (60) days of that distribution, and is accompanied by proof of rollover eligibility.(B) The retirement system will accept, pursuant to section (1) above, only an amount of funds equal to or less than the balance due, including interest, for the reinstatement or purchase for which the member applied.(2) The board of trustees prior to July 1 each year shall establish a "purchase rate" of interest based upon the actuarially-assumed annual rate of return on invested funds of the retirement system. The purchase rate shall apply to any amount due for reinstatement of credit or for the purchase of credit except as otherwise specified by law.(3) A purchase shall be effected by the member paying to the retirement system the amount the member would have contributed and the amount the employer would have contributed had such member been an employee for the number of years for which the member is electing to purchase credit, and had the member's compensation during such period been the highest annual salary rate on record with the retirement system on the date of election to purchase credit. The contribution rate used in determining the amount to be paid shall be the contribution rate in effect on the date of election to purchase credit.(4) A reinstatement shall be effected by the member paying to the retirement system with interest the total amount of accumulated contributions withdrawn by the member or refunded to the member with respect to the service being reinstated. A member may reinstate less than the total service previously forfeited. If a member is retired on disability before completing such payments, the balance due with interest may be deducted from the member's disability retirement allowance.(5) The total amount of any payments made on an application for purchase or reinstatement that buys a minimum of one-one-hundred thousandth (0.00001) or more of credit shall be credited to the member's accumulated contributions no later than the close of the school year in which payment is made in full or upon termination of membership.(6) If payment to reinstate or purchase credit for which the member applies is not completed within the period, established by law, or prior to termination of membership within the retirement system, the amount paid will- a) be refunded to the member if proportional credit is not allowable; or b) be used to allow proportional credit where permissible, based on the relationship between the total principal due at application and the total of the payments applied to the principal, and the total amount paid will be credited to the member's accumulated contributions. Unless proportional credit is not allowed, only payments purchasing less than the first one-one-hundred thousandth (0.00001) year of credit will be refunded. No other refunds will be permitted except as specifically stated in this regulation.(7) If a member dies before retirement or retires on service or disability retirement after having made partial payments but not payment in full to reinstate or purchase credit, the partial payments will be refunded to the member's beneficiary or the retiree if proportional credit is not allowable by law or by rule of the board of trustees. If proportional credit is allowable, the payments will be credited to the member's accumulated contributions and proportional credit will be allowed. If a member retires on disability retirement before completing payment for a reinstatement of credit only, the balance due with interest shall be deducted from the disability retirement allowance as provided by law. Only payments purchasing less than first one-one-hundred thousandth (0.00001) year of credit will be refunded.(8) A member electing to reinstate or purchase membership service credit authorized by the laws governing the retirement system shall make the election to reinstate or purchase credit on a form provided by the retirement system and the reinstatement or purchase shall be effected through payment to the retirement system within the time period prescribed by law of the contributions due, together with interest computed at the purchase rate set by the board of trustees, in accordance with the provisions of 16 CSR 10-6.045(2).(9) A member may not elect to purchase membership service credit from any source if the purchase would result in the member accruing more than one (1) year of membership service credit for any school year except as a result of the purchase of credit authorized by section 169.577, RSMo. Unless required to be allowed under federal law, a member cannot elect to purchase or claim credit for services outside of a district included in this retirement system, or to reinstate credit previously earned in this retirement system, for which the member is receiving or for which the member may, without additional services, become eligible to receive a benefit from another retirement system.(10) A member who applies to reinstate or purchase credit must provide reliable documentation adequate to prove each element required to qualify for the reinstatement or purchase for which the member applies. Where the credit being purchased is based on a period of employment or a period of service covered by a retirement system, the documentation must include confirmation by the employer or retirement system of the relevant facts.(11) Once a member has made application to reinstate or purchase service credit no additional application to reinstate or purchase such credit may be filed for the same period of employment unless the member terminates membership with the retirement system and subsequently reestablishes such membership.(12) The purchase of creditable service pursuant to section 169.577, RSMo, shall be administered as follows:(A) Any member will be considered "within five (5) years of being eligible to retire with a retirement allowance" if that person would be eligible to begin receiving a full or reduced retirement allowance from The Public Education Employee Retirement System, by virtue of accrual of five (5) or fewer years of creditable service or the passage of five (5) or fewer calendar years;(B) The salary used in calculating the cost of creditable service purchased pursuant to section 169.577, RSMo, is not "compensation paid to a member" as that phrase is used in section 169.600(7), RSMo, and shall not be used in determining final average salary;(C) Credit purchased shall be used for all purposes except vesting;(D) The cost of the purchase shall be calculated pursuant to the provisions of 16 CSR 10-4.012;(E) A purchase shall be made only in increments of at least one-one-hundred thousandth (0.00001) year and may not exceed five-tenths (0.5) year; and(F) If the total payments made prior to termination of membership with the retirement system are insufficient to purchase all the credit for which the member applied, proportional credit shall be allowed based upon the ratio between the amount due for the entire period for which election to purchase was made and the total amount of the payments applied to reduce the principal amount due, but only in increments of one-one-hundred thousandth (0.00001) year. The amount of partial payments not used to purchase credit or pay interest shall be refunded.(13) Members electing to reinstate or purchase credit may make payments in any amount and at any time during the period allowed for payment.(14) "Public college" as that phrase is used in section 169.655.3, RSMo, and "private college" as that phrase is used in section 169.655.9, RSMo, shall include junior colleges and community colleges either inside or outside of Missouri. "Private school, college, or university" as that phrase is used in section 169.655.9, RSMo, shall not include trade schools.(15) The following provisions shall apply to the purchase of creditable service under section 105.691, RSMo: (A) A member may elect to purchase creditable service under section 105.691, RSMo, only if the member had previously acquired creditable service in a retirement plan defined in that section for the employment to which the election applies; except that if the service did not meet the membership requirements of the employer's retirement plan or the employer had no such retirement plan at the time the service was rendered, but the service would otherwise have met the membership requirements of this system as in effect when the election is made, the member shall be eligible to purchase such creditable service. The creditable service allowable shall be determined in accordance with the provisions of section 105.691, RSMo, and the rules of the board of trustees; and(B) A member who does not complete payment in full on an application to purchase creditable service under section 105.691, RSMo, within the time limit prescribed by law may reapply to purchase creditable service for that same period of employment. The member may apply within the limits of the law to purchase creditable service for any other period of employment for which application to purchase creditable service was not previously made.(16) Unless otherwise required by law, membership service credit purchased under the laws governing the retirement system cannot be used to establish eligibility for benefits under sections 169.600 to 169.715, RSMo, but such purchased credit may be used in computing the value of any benefits to which a member would otherwise qualify under those sections.(17) Unless a different amount is required by law, members must have accrued at least one (1) year of membership service credit for employment in a position covered by the retirement system in order to apply to purchase service credit.(18) The salary used in calculating the cost of creditable service purchased is not compensation payable to a member as that phrase is used in section 169.600(7), RSMo, and shall not be used in determining final average salary.(19) Unless otherwise required by law, if the total payments made within the time allowed to purchase credit is insufficient to purchase all the credit for which the member applied, proportional credit shall be allowed based on the ratio between the amount due for the entire period for which the member applied and the total amount of the payments applied to reduce the principal amount due.(20) A member electing to purchase membership service credit for service in the armed forces may purchase one (1) year of credit for each twelve- (12-) month period of such service. For any such period of service in the armed forces of less than twelve (12) months, the member shall receive proportional credit computed to the nearest one-one-hundred thousandth (0.00001) of a year; provided that if the member entered active duty in the armed forces no later than the date on which the member's services were to have begun under an employment agreement with a district included in the retirement system, and if the total period of active military service that year would have entitled the member to a year of creditable service had that service been rendered with the district, the member shall be eligible to purchase a full year of credit. No more than one (1) year of membership service credit shall be allowed for service in the armed forces or for a combination of service in the armed forces and actual service in a district included in the retirement system, for any one (1) school year.(21) The following provisions apply with respect to a purchase of credit for maternity or paternity leave pursuant to section 169.655, RSMo: (A) A period of leave shall be considered maternity or paternity leave for which membership service credit may be purchased if-2. The leave related to a natural birth or legal adoption;3. The member was employed in a position covered by The Public Education Employee Retirement System at the time the leave relating to the initial natural birth or legal adoption began;4. The member provides written confirmation that the leave was maternity or paternity leave;5. The member provides a copy of a birth certificate, certification of adoption, or physician's certification which indicates that the event occurred within a reasonable time before or after the period of maternity or paternity leave began; and6. The member returns to employment in a position covered by The Public Education Employee Retirement System;(B) The maternity or paternity leave for which membership service credit may be purchased shall terminate upon the member's return to covered employment and may not exceed one (1) year for each natural birth or legal adoption; and(C) A member may elect to purchase some or all of the period of maternity or paternity leave for which the member is eligible.(22) A purchase of credit for Social Security covered employment pursuant to section 169.655.11, RSMo, shall be allowed only in a manner consistent with Title 26 of the United States Code and, in addition, shall be governed by the following provisions:(A) The member must have five (5) years of creditable service with the retirement system prior to purchasing credit for Social Security covered employment pursuant to section 169.655.11, RSMo;(B) The retirement system shall allow the purchase of no more than five (5) years of credit for "nonqualified service" as that term is defined in section 415 of Title 26 of the United States Code if doing so would jeopardize the tax qualified status of the retirement system pursuant to the Internal Revenue Code and the retirement system determines that the provisions of section 415(n) of Title 26 of the United States Code apply to the purchase of such member's purchase;(C) The member must supply evidence satisfactory to the retirement system that the member is eligible to purchase credit for Social Security covered employment pursuant to section 169.655.11, RSMo;(D) The member must submit to the retirement system a detailed statement of the member's employment history created by the Social Security Administration in a format satisfactory to the retirement system; and(E) The retirement system shall determine the amount of credit that may be purchased for Social Security covered employment pursuant to section 169.655.11, RSMo, based on the information provided pursuant to this section of this rule. AUTHORITY: section 169.610, RSMo Supp. 2011.* Original rule filed June 15, 1994, effective Nov. 30, 1994. Amended: Filed June 14, 1995, effective Dec. 30, 1995. Amended: Filed Aug. 15, 1996, effective Feb. 28, 1997. Amended: Filed Oct. 24, 1996, effective April 30, 1997. Amended: Filed Oct. 25, 1999, effective April 30, 2000. Amended: Filed Oct. 30, 2000, effective May 30, 2001. Amended: Filed Aug. 15, 2001, effective Feb. 28, 2002. Amended: Filed Aug. 29, 2003, effective Feb. 29, 2004. Amended: Filed Sept. 1, 2005, effective Feb. 28, 2006. Amended: Filed June 30, 2011 , effective Jan. 30, 2012. Amended: Filed July 2, 2012, effective Dec. 30, 2012. Amended by Missouri Register September 15, 2014/Volume 39, Number 18, effective 10/31/2014*Original authority: 169.610, RSMo 1965, amended 1977, 2005.