There are six different types of service that you may be eligible to
purchase while active:
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 KPPA. 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. KPPA 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 KPPA,
the member and the financial institution making the direct rollover or transfer
of funds must complete a Form 4170, Direct Transfer/Rollover Acknowledgement Form.