Updated March 2008
This publication relates to the following retirement systems:
Many public employees in Washington State leave public employment sometime during their careers and exercise the option to withdraw their contributions from their retirement fund. Members who withdraw their contributions lose all service credit associated with the withdrawn contributions and any future benefits based on that service credit. There are three ways to recover service credit lost due to the withdrawal of contributions.
Note: Service credit may also be acquired for certain periods of public service or leaves of absence referred to as optional service. For more information about acquiring service credit for optional service, see What is optional service credit and how do I apply for it?
Restoration rules apply to service credit lost due to withdrawal of contributions. Under restoration rules, you repay the full amount of the original withdrawal, plus recovery interest compounded from the time of withdrawal until the restoration costs are paid in full.
You may make direct payment with either a personal or cashier's check. In many cases it's also possible to transfer funds from another eligible retirement account to purchase service credit. You are advised to check with the administrator of your account to see if you can transfer those dollars. However, we cannot accept funds in excess of the cost to make your purchase. DRS is classified by the Internal Revenue Service as a 401 (a) account.
You may apply for restoration only after you reestablish membership. You reestablish membership by working in an eligible position covered by the retirement system. If you wish to apply for restoration, see DRS contact information.
You are required to initiate and complete restoration payments within a specific time period after returning to service. Restorations can be paid in a lump sum, or in installment payments. Restoration payments not paid in full by the deadline, will be refunded and the associated service credit will not be restored to your account.
Restoration deadlines vary depending on their system:
In PERS Plan 1 and LEOFF Plan 1 the restoration deadline is determined by periods of service (service credit months). If you leave active service, payments must stop and cannot be resumed until you return to service.
In TRS Plan 1, if you leave active service and do not withdraw your contributions, you may continue making restoration payments. Your deadline remains the same.
If you leave service and withdraw your contributions before completing restoration payments for a previous withdrawal, the restoration deadline for the service credit lost in the first withdrawal does not change. Any contributions or interest associated with service credit earned after the initial withdrawal will be assigned a new deadline, if you again return to service and apply for restoration.
A dual member:
Dual member restoration rules and deadlines apply to all dual member systems and plans. For restoration under dual membership, you must repay the amount withdrawn plus interest within 24 months (2 years) of becoming a dual member or before you retire, whichever comes first.
For more information about dual membership rights, refer to the DRS publication, What Is Dual Membership and How Does it Affect Me?
Plan 1 members have the option to apply for service credit for periods of public service or leaves of absence that fall under rules other than normally accumulated service credit. This is referred to as “optional service.” Optional service can be acquired by paying contributions within a specific time period immediately after returning to active service. Though payment for optional service credit must be initiated while actively employed in a covered position, payments can be completed regardless of employment status.
Some common types of optional service:
Though it is considerably more expensive than recovering the service within the statutory deadline, optional service can be purchased any time during active membership under other service credit purchase provisions.
All active Plan 1 members have the option to purchase withdrawn service credit even after deadlines for normal or dual member restoration have passed. Service credit purchased under this law costs much more than service credit recovered within statutory deadlines. This is because cost is based on the increased value of your retirement benefit, not on the amount of withdrawn contributions.
Optional service credit can only be purchased for the total amount of service involved. You may be eligible for more than one period of optional service credit. If you have questions concerning any periods of time that you think may qualify as optional service, call DRS and speak with a Retirement Services Analyst.
If you wish to apply for service credit purchase, contact DRS to receive a billing.
In many cases it is possible to transfer funds from another eligible retirement account to pay your bill.
DRS uses a formula based on the following:
For LEOFF Plan 1 members the normal retirement age is age 50 with at least 5 years of service credit. Only Part 1 of the formula and the factors from Table 1 are used to calculate total service credit purchase cost.
For PERS and TRS Plan 1 members, the normal retirement age is the earliest possible retirement date based on your age and service credit at the time you apply for service credit purchase. Normal retirement age can be (1) any age with 30 years of service credit; or (2) age 55 or older with 25 years of service credit; or (3) age 60 with 5 or more years of service credit. If a service credit purchase does not change the potential retirement date, only Part 1 of the formula is used. If the purchase allows the potential retirement date to be sooner, Parts 1 and 2 of the formula are used.
Part 1: Average Annual Earnings x Purchased Years x Table 1 Actuarial Factor
= Part 1 Cost
Part 2: Average Annual Earnings x Total anticipated service credit at retirement x Number of years able to retire earlier (after purchase) x Table 2 Actuarial Factor x Table 3 Actuarial Factor
= Part 2 Cost
Part 1 Cost + Part 2 Cost = Total purchase price
Ron is a PERS Plan 1 member. He is age 50 and has 18 years of service credit.
Determine Normal Retirement Age:
Ron’s first opportunity to retire would come in 7 years when he is age 57 with 25 years of service credit. Therefore, Ron’s normal retirement age is age 57. At age 50, Ron is 7 years from normal retirement age.Determine years of earlier retirement:
If Ron purchases 3 years of service, his current total service would increase to 21 years. This means that Ron could reach 25 years of service when he is age 54. At age 55, Ron would be able to retire.* Since Ron will be eligible to retire 2 years earlier than his normal retirement age of 57, a two-part formula will be used.Part 1: Average annual earnings x Years purchased x Table 1 Factor = Cost
$50,000 x 3 x 0.1680 = $25,200
Part 2: Average annual earnings x Total service credit at retirement x Years of earlier retirement x Table 2 factor x Table 3 factor = Cost
$50,000 x 26 x 2 x 0.00434 x 0.7940 = $8,959
Total Purchase Cost: Part 1 Cost + Part 2 Cost = Total Purchase Cost
$25,200 + $8,959 = $34,159
*Retirement eligibility is 30 years, or age 55 with 25 years or age 60 with 5 years.
To initiate the recovery of service credit, or to obtain an estimate for the cost of service credit purchase, contact DRS. Be sure to provide your:
The actual provisions governing the recovery of withdrawn or optional service credit are contained in Chapter 41.40 and 41.50 Revised Code of Washington (RCW). This publication is a summary of those provisions, not a complete description of the law, and describes provisions currently in effect. If there are any conflicts between what is written in this brochure and what is contained in the law, the applicable law will govern.
