Last Updated October 2014
This publication relates to the following Plan 1 retirement systems:
Many public employees in Washington state leave public employment sometime 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 ways to recover service credit lost due to the 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. 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 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 as a 401(a)account.
You may not restore unless you have re-established membership by working in an eligible position in the same retirement system from which you withdrew.
You are required to initiate and complete restoration payments within a specific time period after 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.
Restoration deadlines vary depending on the system:
Employment termination impacts restoration repayment based on the system:
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. If you again return to service and apply for restoration, any contributions or interest associated with service credit earned after the initial withdrawal will be assigned a new deadline.
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For restoration under dual membership, you must repay the amount withdrawn plus interest within 24 months of becoming a dual member or before you retire, whichever comes first.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?
Plan 1 members have the option to apply for service credit for periods of public service or a leave of absence that falls 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.
It is considerably more expensive than recovering the service within the deadline. However, you can purchase optional service any time during membership under service credit purchased past the deadline provisions.
All 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 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 service credit up until you retire. If you would like an estimate of the cost to purchase service credit past the deadline, you may contact DRS, or use the Buy Back Calculator. You must contact DRS to request a billing.
DRS uses a formula based on the following:
Part 1: Annual Average Salary x Service Credit Years to Purchase x Factor 1
Part 2: Annual Average Salary x Current Service Credit Years x (Factor 1 – Factor 2)
Total Cost = Part 1 cost + Part 2 cost
The Part 1 cost pays for the additional value of the service credit you plan to purchase.
The Part 2 cost pays for the increased value of your current service credit. The value of your current service credit may increase with this purchase because you may be eligible for earlier retirement, better early retirement factors, or both. For some situations your Part 2 cost will be $0. The factors used in the example below are for illustrative purposes only. See the current factors.
Tom is a PERS Plan 1 member. He left his job and withdrew his contributions. Later, he returned to another PERS Plan 1 job, but did not restore within 60 months. He is now 50 years old with 18 years of current service credit and an annual average salary of $50,000. He now wishes to purchase the three years he lost when he withdrew. His calculation is:
Part 1: 50,000 (annual average salary) x 3 (years to purchase) x 0.1915 (factor 1) = $28,725
Part 2: $50,000 (annual average salary) x 18 (current service credit) x (0.1915 – 0.1729)(factor 1 – factor 2) = $16,740
Total Cost = $45,465 (Part 1 + Part 2)
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 rules that govern withdrawn or optional service credit are contained in state retirement law. This publication is a summary, written in non-legal terms. It is not a complete description of the law. If there are conflicts between what is written in this publication, and what is contained in the law, the applicable law will govern.