Indiana Code 5-10-5.5-7.5. Purchase of service credit earned in certain Indiana public retirement funds
(b) As used in this section, “public retirement fund” refers collectively to:
Terms Used In Indiana Code 5-10-5.5-7.5
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Board: refers to the board of trustees of the Indiana public retirement system established by Indiana Code 5-10-5.5-1
- Contract: A legal written agreement that becomes binding when signed.
- Interest: means the rate of interest specified by rule by the board of trustees of the Indiana public retirement system established by Indiana Code 5-10-5.5-1
- Participant: means any officer who has elected to participate in the retirement plan created by this chapter. See Indiana Code 5-10-5.5-1
- Salary: means the total compensation, exclusive of expense allowances, paid to any officer by the department or the commission, determined without regard to any salary reduction agreement established under Section 125 of the Internal Revenue Code. See Indiana Code 5-10-5.5-1
- Trustee: A person or institution holding and administering property in trust.
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(2) the Indiana state teachers’ retirement fund (IC 5-10.4);
(3) the state police pension trust (IC 10-12); and
(4) the 1977 police officers’ and firefighters’ pension and disability fund (IC 36-8-8).
(c) Subject to this section, a participant may purchase and claim service credit for the participant’s prior service in a position covered by a public retirement fund.
(d) To purchase the service credit described in subsection (c), a participant must meet the following requirements:
(1) The participant has at least one (1) year of creditable service in the retirement plan created by this chapter.
(2) The participant has not attained vested status in and is not an active participant in the public retirement fund from which the participant is purchasing the service credit.
(3) Before the participant retires, the participant makes contributions to the retirement plan created by this chapter as follows:
(A) Contributions that are equal to the product of the following:
(i) The participant’s salary at the time the participant actually makes a contribution for the service credit.
(ii) A rate, determined by the actuary for the retirement plan created by this chapter, based on the age of the participant at the time the participant actually makes a contribution for service credit and computed to result in a contribution amount that approximates the actuarial present value of the benefit attributable to the service credit purchased.
(iii) The number of years of service credit the participant intends to purchase.
(B) Contributions for any accrued interest, at a rate determined by the actuary for the retirement plan created by this chapter, for the period from the participant’s initial participation in the retirement plan created by this chapter to the date payment is made by the participant.
(e) At the request of the participant purchasing service credit under this section, the amount a participant is required to contribute under subsection (d)(3) may be reduced by a trustee to trustee transfer from a public retirement fund in which the participant has an account that contains amounts attributable to member contributions (plus any credited earnings) to the retirement plan created by this chapter. The participant may direct the transfer of an amount only to the extent necessary to fund the service purchase under subsection (d)(3). The participant shall complete any forms required by the public retirement fund from which the participant is requesting a transfer or the retirement plan created by this chapter before the transfer is made.
(f) At least ten (10) years of service in the retirement plan created by this chapter is required before a participant may receive a benefit based on service credit purchased under this section.
(g) A participant who:
(1) terminates employment before satisfying the eligibility requirements necessary to receive an annual retirement allowance; or
(2) receives an annual retirement allowance for the same service from another tax supported governmental retirement plan other than under the federal Social Security Act;
may withdraw the purchase amount plus accumulated interest after submitting a properly completed application for a refund to the retirement plan created by this chapter.
(h) The following may apply to the purchase of service credit under this section:
(1) The board may allow a participant to make periodic payments of the contributions required for the purchase of the service credit. The board shall determine the length of the period during which the payments must be made.
(2) The board may deny an application for the purchase of service credit if the purchase would exceed the limitations under Section 415 of the Internal Revenue Code.
(3) A participant may not claim the service credit for purposes of determining eligibility for a benefit or computing benefits unless the participant has made all payments required for the purchase of the service credit.
(i) To the extent permitted by the Internal Revenue Code and applicable regulations, the retirement plan created by this chapter may accept, on behalf of a participant who is purchasing permissive service credit under this chapter, a rollover of a distribution from any of the following:
(1) A qualified plan described in Section 401(a) or Section 403(a) of the Internal Revenue Code.
(2) An annuity contract or account described in Section 403(b) of the Internal Revenue Code.
(3) An eligible plan that is maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state under Section 457(b) of the Internal Revenue Code.
(4) An individual retirement account or annuity described in Section 408(a) or Section 408(b) of the Internal Revenue Code.
(j) To the extent permitted by the Internal Revenue Code and applicable regulations, the retirement plan created by this chapter may accept, on behalf of a participant who is purchasing permissive service credit under this chapter, a trustee to trustee transfer from any of the following:
(1) An annuity contract or account described in Section 403(b) of the Internal Revenue Code.
(2) An eligible deferred compensation plan under Section 457(b) of the Internal Revenue Code.
As added by P.L.180-2007, SEC.2. Amended by P.L.23-2011, SEC.5; P.L.8-2015, SEC.1.