Okla. Admin. Code § 715:10-5-35

Current through Vol. 42, No. 6, December 2, 2024

Section 715:10-5-35 - Employer pick-up of service credit purchase

(a) The purpose of OAC 715:10-5-35 is to provide a pick-up of employee contributions by participating employers under Section 414(h)(2) of the Internal Revenue Code of 1986 for contributions that are made for the purpose of purchasing service credit or re-establishing withdrawn service under Chapter 10, Subchapter 5 of these Rules, and for contribution deficit payments provided for by 70 O.S. §17-116.2C or balances due as authorized under 70 O.S. §17-116.2. Employers may elect to participate in the pick-up of employee contributions made for the purpose of purchasing service credits or re-establishing withdrawn service by a resolution adopting the provisions of this regulation.

(b) An active member of TRS who elects to purchase or re-establish service credit under any applicable provision of Chapter 10, Subchapter 5 of these Rules, or to make contribution deficit payments provided for by O.S. §17-116.2C or balances due as authorized under 70 O.S. §17-116.2 through installments may elect to do so through a binding, irrevocable payroll reduction authorization established by TRS.

(c) An active member of TRS, having executed a binding, irrevocable payroll reduction authorization with respect to any such contributions, shall not be entitled to receive the contributed amounts directly instead of having them paid by the employer to TRS. Such contributions shall be remitted to TRS and credited to the member in the same manner as all other employee contributions. Such contributions, although designated as employee contributions, will be paid by the employer in lieu of contributions by the employee. The contributions so assumed shall be treated as tax-deferred employer "pick-up" contributions pursuant to the United States Internal Revenue Code Section 414(h)(2), as authorized in a favorable letter ruling by the Internal Revenue Service.

(d) An active member of TRS may elect to pay all or part of any contribution to purchase or re-establish service credit or to make contribution deficit payments provided for by 70 O.S. §17-116.2C or balances due as authorized under 70 O.S. §17-116.2 through such payroll reduction. The amount by which an employee's compensation will be reduced and the duration of the reduction shall be specified on the authorization form prescribed by TRS and the amounts and duration shall be irrevocable and binding once made. Prepayment of amounts covered by the authorization is not permitted. However, nothing herein shall prevent a member from paying any amounts not covered by the authorization with after-tax dollars, provided that any such after-tax payments by an employee of a participating employer shall be paid directly by the employee to TRS, as opposed to being paid to or withheld by the participating employer. An employee of non-participating employer may purchase service credit or re-establish withdrawn service by making after-tax payments directly to TRS.

(e) No such payroll reduction shall begin unless and until the member executes the payroll reduction authorization described below on a form prescribed by TRS and delivers the form to the treasurer or other disbursing officer of the participating employer. After receiving the binding, irrevocable payroll reduction authorization, the treasurer or other disbursing officer of each participating employer shall reduce the member's regular annual compensation by the authorized amount and remit these contributions to TRS, in addition to (but separate from) the mandatory contributions from the member's regular annual compensation pursuant to 70 O.S., §17-116.2 and OAC 715:10-13-3. The participating employer shall continue to make such reductions for the number of months specified on the form and shall treat these reductions as picked-up contributions.

(f) All such payroll reductions, including the amounts and the duration specified, shall be binding and irrevocable upon the member's execution of the prescribed form.

(g) Notwithstanding the above, such reductions will cease only after the authorization has expired by its terms or upon any of the following events:

(1) The member's death. In the event of a member's death, the designated beneficiary shall have the option of paying the remaining amount owed (using after-tax dollars) regarding the purchase of service credit, payments for contribution deficits provided for by 70 O.S. §17-116.2C or balances due as authorized under 70 O.S. §17116.2 within six (6) months of the member's death. If the balance is not paid, the beneficiary shall be entitled to prorated credit for that portion of the additional contributions actually made prior to the member's death. At the time of the member's termination, if there is any remaining amount owed with respect to a redeposit of contributions, the designated beneficiary will be reimbursed for those redeposits which had already been paid at the time of the member's death. A beneficiary may not make payments for a purchase of service credit if such a purchase had not been initiated by the member prior to the member's death.

(2) The termination of the member's employment. In this event, the member shall have the right to pay the remaining amount owed (using after-tax dollars) regarding the purchase of service credit, payments for contribution deficits provided for by 70 O.S. §17-116.2(C) or balances due as authorized under 70 O.S. §17116.2 within six (6) months of the member's termination of employment, but payment must be completed 90 days prior to the effective retirement date of the member. If the entire remaining amount is not paid, the member shall be entitled to prorated service credit for those payments actually made. At the time of the member's termination, if there is any remaining amount owed with respect to a redeposit of contributions, the member shall be reimbursed for those redeposits which had already been paid at the time of the member's termination. In the situation where a terminated member becomes employed by another employer participating in TRS, the member may elect to reinstate or not reinstate his authorization with the new employer.

(3) For purposes of (1) and (2) above, after-tax contributions shall only be received to the extent allowed by section 415 of the Internal Revenue Code.

(h) In no event shall the member receive a return of the payroll reductions made hereunder, except as a refund together with all other contributions, as provided in OAC 715:10-11-1 et seq. or as a refund of a redeposit of contributions as provided in subsection g(2) above.

(i) Payroll reductions and installment agreements hereunder shall last no longer than sixty (60) months.

Okla. Admin. Code § 715:10-5-35

Added at 19 Ok Reg 95, eff 8-10-01 (emergency); Added at 19 Ok Reg 2729, eff 7-11-02; Added at 24 Ok Reg 220, eff 10-31-06 (emergency); Amended at 24 Ok Reg 1692, eff 6-11-07

Amended by Oklahoma Register, Volume 36, Issue 22, August 1, 2019, eff. 8/11/2019

Amended by Oklahoma Register, Volume 41, Issue 23, August 15, 2024, eff. 9/1/2024