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Purchasing Credit and Service Types

There are six different types of service that you may be eligible to purchase while active:


A member currently participating in one of the state administered retirement systems who has taken a refund of retirement contributions for previous employment may regain the service lost by paying the amount of contributions withdrawn plus interest calculated from the time of withdrawal. The purchase does not reinstate the original participation date from that service. Note: The member must work for at least six months to validate the purchase.

Verification Required: ​Information should be on file at KRS.

​A member currently participating in one of the state administered retirement systems who was contracted by a local school board, university, community action agency, or school for the deaf or blind to work 9, 10, or 11 months may purchase up to three (3) additional months to complete a full year.

Verification Required: Information should be on file at KRS.

​If a member was entitled to service credit but was not reported to KRS, the member may obtain service by paying the employee contributions on the period of omitted service. If employee contributions are not received within six (6) months of notification by KRS, a participating employee may obtain the service by paying the employee contributions plus any accumulated interest. Service credit will not be awarded to the member’s account until KRS has also received the employer contributions.

​Verification Required: Form 4225 - Verification of Past Employment or Personnel Form

Members participating in hazardous positions may pay the cost to convert eligible non-hazardous service to hazardous service. The service credit must be in a position that was reported to KRS under nonhazardous coverage, but has since been approved for hazardous duty coverage by the Board of Trustees. The agency where the nonhazardous service was earned must complete a Form 4150, Certification of Employment in a Hazardous Position, in order for the member to convert the service.

Verification Required: Form 4150 - Certificaton of Employment - Hazardous Position

​Service you are entitled to receive if you left participating employment (either terminated or was placed on leave), entered the Armed Forces of the United States (within 3 months), and subsequently returned to participating employment within two years of receiving an honorable discharge.

If your employment was in a nonparticipating status, such as seasonal or temporary, the service must be purchased in order for the member to be eligible to receive free military service credit. If you contributed, but subsequently took a refund for the period immediately prior to the military service, the refund of contributions must be repaid in order for you to qualify for free military service credit. Service credit and creditable compensation, as provided in 38 U.S.C. sec. 4318, shall be given for a period not to exceed 6 years.

Verification Required: Form DD-214 and Personnel Forms


No other service purchase types are available if you began participating on or after January 1, 2014.  Please refer to the Summary Plan Description for more details and eligibility criteria.

Paying for a Purchase

Eligible service credit may be purchased by the following payment methods, provided it falls within the limitation set forth in Section 415 (c) of the Internal Revenue Code.  Any combination of these three methods may be used to pay for most service purchases.

 
  • Lump Sum Payment: Service may be purchased by making a lump sum payment to KRS.  In many instances, the lump sum payment amount for some purchase types is limited by federal tax laws.
  • Installment Purchase of Service Agreement (IPS): Members may choose to have the cost of service deducted from their paycheck for a period not to exceed five years.  To be eligible, the purchase cost must be at least $1,000.00.  An interest charge of 7.50% compounded annually will be applied.  KRS offers both before- and after-tax IPS contracts; however, some purchases may only qualify for before Tax IPS contracts.  The before-tax IPS contracts are irrevocable contracts, so you should be mindful of the conditions of the contract before you enter the agreement.  Additionally, tax laws limit how much money you can pay, if any, on an after tax contract for some service types.
  • Rollover or Transfer From a Qualified Plan: The Internal Revenue Code allows KERS, CERS, and SPRS to accept rollovers from other qualified plans such as Section 401(a), Section 401(k), Section 403(b), Section 457, a "Rollover" IRA or Traditional IRA.  In order to complete a direct rollover or transfer of funds from another qualified plan to purchase service with KRS, the member and the financial institution making the direct rollover or transfer of funds must complete a Form 4170, Direct Transfer/Rollover Acknowledgement Form.


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