Updated May 2008
This publication relates to the following retirement plans:
Many public employees in Washington State leave public employment during their careers and exercise the option to withdraw their contributions from the retirement fund. Members who withdraw their contributions lose all service credit and any future benefits based on that service credit. There are three different ways to recover service credit lost due to the withdrawal of contributions.
Restoration
You return to the same system from which a withdrawal was made and complete repayment of withdrawn contributions plus interest within 60 months (five years) after returning to service.
Dual Member Restoration
You join a retirement system other than the one you withdrew from, and restore the service withdrawn from the previous system within 24 months. Both retirement systems must be dual member systems.
Service Credit Purchase
If deadlines pass before restoration is completed, you still have the option to purchase withdrawn service credit. However, the cost will be higher.
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. Restorations can be paid in a lump sum, or in installment payments and must be completed before the deadline.
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 or service credit. However, DRS cannot accept funds in excess of the cost to make your purchase. You are advised to check with the administrator of your account to see if you can transfer those dollars. DRS is classified by the Internal Revenue Service (IRS) as a 401(a) account.
You may not restore unless you have reestablished membership by working in an eligible position in the same retirement system from which you withdrew. Once membership has been reestablished, you do not need to be working to make payments for restoration.
Except where dual membership is involved, payment must be completed within 60 calendar months (five years) of returning to service. Restoration payments must be completed before retirement. Restoration payments not paid in full by the deadline, will be refunded and service credit will not be restored to your account.
While you must be an active member in Plan 2 to initiate restoration, you can continue your restoration payments even if you leave active service.
If you return to service then leave your job and again withdraw your contributions, you must complete payment for the first withdrawal by the original deadline or the service is permanently unrecoverable under restoration rules.
Each withdrawal is handled separately and deadlines are assigned according to the rules of the system. Service credit that is no longer recoverable under restoration rules can be regained using the service credit purchase option.
Mary is a Plan 2 member. After six years of service, she ended employment and withdrew her accumulated contributions. Later she returned to work and began restoration installment payments. Under Plan 2, she had five calendar years (60 months) to complete payment. After four years, Mary again left employment and withdrew her contributions, however she had not completed payment for restoration of her first withdrawal. Mary could have continued her installment payments but chose not to. Two years later she returns to service and elects to restore her withdrawn credit. Mary is unable to resume payment for the six years of service credit lost for the first withdrawal because her deadline (60 calendar months) passed while she was out of service. She is, however, able to begin restoration for the two years she worked after the first withdrawal, and has five years to complete this. To recover the first six years, Mary would have to use the service credit purchase rules which involve a higher cost.
A dual member:
For restoration under dual membership, you must repay the amount withdrawn plus interest within 24 months 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?
All active Plan 2 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 more than restorations. The cost is based on the increased value of your retirement benefit, not on the amount of withdrawn contributions. You may purchase service credit in increments as small as the amount earned in one month. You are not limited to a single purchase, and may purchase credit up until you retire. If you wish to apply for service credit purchase, you must contact DRS to receive a billing.
James is an active PERS Plan 2 member. He left his job and withdrew his contributions. Later, he returned to another PERS 2 job but did not restore within 60 months. He is now 55 years old (10 years from normal retirement eligibility in PERS Plan 2) and wishes to purchase the two years he lost when he withdrew. His average earnings are $40,000 per year. His calculation is:
Average Earnings x Years Purchased x Factor
$40,000 x 2 x 0.1655 = $13,240.00
Actuarial factors are subject to periodic change. The actuarial factors table was accurate as of April 2008. Check with DRS for current tables.
DRS uses a formula based on the following:
Basic Formula: Service Credit Purchase
Average Earnings x Service Credit Being Purchased
x Actuarial Factor for your plan = Purchase Price
Under Plan 2, the age you become eligible for an normal retirement benefit is set by law. Service credit purchases are calculated using a basic formula and a single, system-specific, actuarial factor. Under Plan 2, you must have at least five years of service credit to qualify for retirement.
| Eligible for an unreduced benefit | Age |
|---|---|
| PERS, PSERS, TRS and SERS | 65 |
| PSERS (with 10 years PSERS service) | 60 |
| LEOFF | 53 |
Plan 2 members have the option to apply for service credit for periods of public service or a leave 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 normal active service. Payment must be initiated while employed in a covered position. However, once initiated, payments can be completed regardless of employment status.
Please note: The type of optional service credit determines whether the member or employer makes the contribution. To find out more information specific to your situation, contact DRS.
| Common types of optional service | PERS | SERS | TRS | PSERS | LEOFF |
|---|---|---|---|---|---|
| Authorized leaves of absence | X | X | X | X | X |
| Temporary duty disability | X | X | X | X | |
| Legislative employment | X | X | X | X | X |
| Interruptive military service | X | X | X | X | X |
| Elected official service | X | X | X | X | X |
If statutory deadlines have passed, you can still recover optional service credit
Though it is considerably more expensive than recovering the service within the statutory deadline, optional service can be purchased any time during active membership.
To initiate service credit recovery, or to obtain an estimate for the cost of recovering service credit, contact DRS. Please be prepared to provide your:
The 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.
