Last Updated November 2016
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.
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. Once membership has been re-established, 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 option to purchase service credit past the deadline.
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 rules for purchasing service credit past the deadline, which involves 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?
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.
All 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 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 the formula below:
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.
James is a TRS Plan 2 member. He left his job and withdrew his contributions. Later, he returned to another TRS 2 job but did not restore within 60 months. He is now 45 years old with 15 years of current service credit and an annual average salary of $55,000. He now wishes to purchase the five years he lost when he withdrew. His calculation is:
Part 1: $55,000 (annual average salary) x 5 (years to purchase) x 0.1756 (factor 1) = $48,290
Part 2: $55,000 (annual average salary) x 15 (current service credit) x (0.1756 – 0.1494) (factor 1 – factor 2) = $21,615
Total Cost = $69,905 (Part 1 + Part 2)
If you’re a Plan 2 member of Law Enforcement Officers’ and Fire Fighters’ there are certain circumstances, on or after March 22, 2014, when you might qualify for disaster response service credit during a leave of absence. There is no cost to you for this service credit, but you are limited to five years. Your death or disability must have occurred while you were in eligible federal service providing eligible emergency management services. Your surviving spouse or registered domestic partner, or if none, the guardian of your minor child or children may qualify for this service credit if you die as a result of this federal service.
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 rules that govern withdrawn or optional service credit are contained in state retirement law. This webpage 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 webpage, and what is contained in the law, the applicable law will govern.