Purchasing an Annuity or Service Credit

There are several ways to increase your monthly retirement benefit at the time you apply for retirement (or in some cases at the time you separate from employment). This publication addresses two of the most common:

  • Purchasing an annuity; and
  • Purchasing service credit

If you are interested in other ways that you may increase your benefit, such as restoring withdrawn service credit, contact DRS.

What is an annuity?

An annuity provides guaranteed income for the rest of your life in exchange for an initial lump-sum payment that you make up front. This payment continues even if you return to membership or exceed retiree return-to-work hourly limits.

  • Single Life Annuity - provides a guaranteed benefit for your lifetime
  • Joint Life Annuity - provides a guaranteed benefit for your lifetime and the lifetime of your designated survivor

What is purchased service credit?

At retirement, you may purchase up to 60 months (five years) of service credit in whole month increments to increase your retirement benefit. The service credit purchased may not be used to qualify you for retirement. For more information, see Purchasing Additional Service Credit on the DRS website or contact DRS. This payment is suspended if you return to membership or exceed retiree return-to-work hourly limits.

Why would I purchase an annuity or service credit?

Retirees often choose annuities because they provide guaranteed income for life. They like the security of a set monthly payment that covers part or all of their fixed expenses. However, flexibility is not a feature of annuities. If fixed expenses increase, annuities do not allow retirees to adjust their payment amounts to meet those changing needs. With annuities, you are trading market risk and account growth for the guarantee of a steady, fixed lifetime income stream.

Similar to an annuity, purchasing service credit increases your monthly retirement benefit for the remainder of your lifetime and the remainder of your survivor's lifetime (should you choose to designate a survivor). Also similar to an annuity, you are trading market risk and account growth for this guaranteed increase to your monthly benefit. For more information, see Purchasing Additional Service Credit on the DRS website or contact DRS.

Annuity Products

Teachers' Retirement System (TRS) Annuity Purchase

Who may purchase?
TRS Plans 1, 2 and 3 members.
When can I purchase?
At the time of retirement.
Are there limits to the annuity amount I may purchase?
Minimum: None
Maximum: None
How do I get an estimate of my annuity benefit?
Access your retirement account and choose "Purchasing Annuity."
How do I purchase an annuity?
Contact DRS for a bill. You may pay before retirement or up to 90 days after retirement. You have the option to cancel or change the amount of a bill before payment.
What type of funds can I use to purchase an annuity?
You may use the following types of funds:
  • DCP funds
  • IRAs
  • Employer sponsored plans
  • Qualified plans such as 401(a), 401(k), 403(a), 403(b) or 457
  • Personal savings
  • Any combination of the above
When does my annuity benefit begin?
At the later of your retirement date or the day after your bill for the annuity is paid in full.
How often do I receive my annuity benefit?
Monthly.
Can I designate a survivor?
Yes. Your survivor must be the same survivor and the same survivor option that you chose for your retirement benefit.
Will I receive a Cost-of-Living Adjustment (COLA)?
Yes. You will receive a COLA up to 3 percent annually. If you are a TRS Plan 1 member, a COLA is optional.
Will I get my original purchase amount back (refundable upon death)?

If you and your survivor (if you selected a survivor option) die before the amount of your purchase has been paid back to you in monthly payments, the difference will be refunded to your designated beneficiary.

This refund option does not apply to the TRS Plan 1 Maximum Option.

What if I return to work or membership?
Your annuity continues.
Who provides the annuity?
The Washington State Investment Board
Where can I learn more?
The TRS Purchasing an Annuity flier.
Can I purchase Service Credit?
Yes. These are your Purchased Service Credit options.
What are my DCP options?
These are your Deferred Compensation Program (DCP) options.

Law Enforcement Officers' and Fire Fighters' (LEOFF) Plans 1 and 2 and Washington State Patrol (WSPRS) Plans 1 and 2 Annuity Purchase

Who may purchase?
LEOFF Plans 1 and 2 members and WSPRS Plans 1 and 2 members.
When can I purchase?
At the time of retirement.
Are there limits to the annuity amount I may purchase?
Minimum: $25,000*
Maximum: There is no maximum*
*Funds must be from an eligible governmental plan.
How do I get an estimate of my annuity benefit?
Access your retirement account and choose "Purchasing Annuity."
How do I purchase an annuity?
Contact DRS for a bill. You may pay before retirement or up to 90 days after retirement. You have the option to cancel or change the amount of a bill before payment.
What type of funds can I use to purchase an annuity?
Payment must come from funds you have accumulated in an eligible governmental plan.
When does my annuity benefit begin?
At the later of your retirement date or the day after your bill for the annuity is paid in full.
How often do I receive my annuity benefit?
Monthly.
Can I designate a survivor?
Yes. Your survivor must be the same survivor and the same survivor option that you chose for your retirement benefit.
Will I receive a Cost-of-Living Adjustment (COLA)?
Yes. You will receive a COLA up to 3 percent annually.
Will I get my original purchase amount back (refundable upon death)?
If you and your survivor (if you selected a survivor option) die before the amount of your purchase has been paid back to you in monthly payments, the difference will be refunded to your designated beneficiary.
What if I return to work or membership?
Your annuity continues.
Who provides the annuity?
The Washington State Investment Board.
Where can I learn more?
LEOFF Plans 1 and 2 and WSPRS Plans 1 and 2 Purchasing an Annuity flier.
Can I purchase Service Credit?
Yes. These are your Purchased Service Credit options.

Plan 3: Total Allocation Portfolio (TAP)

Who may purchase?
Plan 3 members only.
When can I purchase?
When your separation date from DRS-covered employment is received.
Are there limits to the annuity amount I may purchase?
Minimum: $25,000
Maximum: Limited to your defined contribution account balance in your Washington State Investment Board (WSIB) account.
How do I get an estimate of my annuity benefit?
Call the Plan 3 information line at 888-327-5596 or access the Plan 3 calculators.
How do I purchase an annuity?
Complete the Plan 3 Annuity Payment Request form, along with the proof of age document and submit them to the Plan 3 record keeper.
What type of funds can I use to purchase an annuity?
The annuity may be purchased with defined contribution funds from your WSIB account only.
When does my annuity benefit begin?
Approximately 70 days after your request to purchase.
How often do I receive my annuity benefit?
Monthly.
Can I designate a survivor?
Yes.
Will I receive a Cost-of-Living Adjustment (COLA)?
An automatic COLA of 3 percent will be applied to your benefit annually. This COLA is applied on the anniversary of the annuity.
Will I get my original purchase amount back (refundable upon death)?
If you and your survivor (if you selected a survivor option) die before the amount of your annuity purchase has been paid back to you in monthly payments, the difference will be refunded to your designated beneficiary.
What if I return to work or membership?
Your annuity continues.
Who provides the annuity?
The Washington State Investment Board.
Where can I learn more?
See the Plan 3 annuities section of the withdrawal page.
Can I purchase Service Credit?
Yes. These are your Purchased Service Credit options.
What are my DCP options?
These are your Deferred Compensation Program (DCP) options.

Plan 3: Self-Directed Investment Program

Who may purchase?
Plan 3 members only.
When can I purchase?
When your separation date from DRS-covered employment is received.
Who provides the annuity?
MetLife.
Are there limits to the annuity amount I may purchase?
Minimum: $5,000
Maximum: Limited to your defined contribution account balance in your Self-Directed account.
How do I get an estimate of my annuity benefit?
Call the Plan 3 information line at 888-327-5596.
How do I purchase an annuity?
Call the Plan 3 information line at 888-327-5596.
What type of funds can I use to purchase an annuity?
The annuity may be purchased with defined contribution funds from your Self-Directed account only.
When does my annuity benefit begin?
After you separate from employment and payment for your annuity is received.
How often do I receive my annuity benefit?
Monthly, quarterly, semi-annual, or annual.
Can I designate a survivor?
Yes.
Will I receive a Cost-of-Living Adjustment (COLA)?
Optional.
Will I get my original purchase amount back (refundable upon death)?
Optional.
What if I return to work or membership?
Your annuity continues.
Where can I learn more?
See the Plan 3 annuities section of the withdrawal page.
Can I purchase Service Credit?
Yes. These are your Purchased Service Credit options.
What are my DCP options?
These are your Deferred Compensation Program (DCP) options.

Deferred Compensation Program (DCP)

Who may purchase?
Washington State DCP participants.
When can I purchase?
When your separation date from DRS-covered employment is received and you are at least 40 years of age.
Who provides the annuity?
MetLife.
Are there limits to the annuity amount I may purchase?
Minimum: $2,000
Maximum: Your DCP account balance.
How do I get an estimate of my annuity benefit?
Call the DCP information line at 888-327-5596.
How do I purchase an annuity?
Call the DCP information line at 888-327-5596.
What type of funds can I use to purchase an annuity?
May be purchased with your personal DCP funds only.
When does my annuity benefit begin?
After you separate from employment and payment is received. (You must be at least age 40.)
How often do I receive my annuity benefit?
Monthly or quarterly; purchases under $100,000 will only be paid quarterly.
Can I designate a survivor?
Yes.
Will I receive a Cost-of-Living Adjustment (COLA)?
Optional.
Will I get my original purchase amount back (refundable upon death)?
Optional.
What if I return to work or membership?
Your annuity continues.
Where can I learn more?
Call the DCP information line at 888-327-5596.
Can I purchase Service Credit?
Yes. These are your Purchased Service Credit options.

Purchased Service Credit

Who may purchase?
All members.
When can I purchase?
At the time of retirement.
Are there limits to the amount I may purchase?
Minimum: One month of service credit.
Maximum: 60 months of service credit.
How do I get an estimate of my purchased service credit benefit?
Access your retirement account and choose "Purchasing Service."
How do I purchase additional service credit?
You must complete the Request for Purchasing Service Credit form when you apply for retirement. DRS will issue a bill during the month of your retirement, and then you will have 90 days to make payment. You have the option to cancel or change the amount of the bill before payment.
What type of funds can I use to purchase additional service credit?
  • DCP funds
  • IRAs
  • Employer sponsored plans
  • Qualified plans such as 401(a), 401(k), 403(a), 403(b), or 457
  • Personal savings
  • Any combination of the above
When does my purchase service credit benefit begin?
After you have made payment in full.
How often do I receive my purchase service credit benefit?
Monthly.
Can I designate a survivor?
Yes. Your survivor must be the same survivor and the same survivor option that you chose for your retirement benefit.
Will I receive a Cost-of-Living Adjustment (COLA)?
Yes. You will receive a COLA up to 3 percent annually. If you are a TRS Plan 1 or PERS Plan 1 member, a COLA is optional.
Will I get my original purchase amount back (refundable upon death)?
If you and your survivor (if you selected a survivor option) die before the amount of your purchase has been paid back to you in monthly payments, the difference will be refunded to your designated beneficiary.

This refund option does not apply to the TRS Plan 1 Maximum Option.
What if I return to work or membership?
Your benefit will stop if you return to membership, or if you return to work as a retiree for a DRS-covered employer and exceed allowable hours.
Who provides the purchased service credit benefit?
The Washington State Investment Board.
Where can I learn more?
Purchasing Additional Service Credit brochure.
What are my DCP options?
These are your Deferred Compensation Program (DCP) options.