How To Buy Credit
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how to buy credit
STRS Ohio members may purchase service credit for certain types of past employment and leaves of absence. Purchasing service credit may increase the amount of your retirement income and/or enable you to retire sooner. The information that follows applies to STRS Ohio members who are enrolled in the Defined Benefit Plan.
Because records are sometimes difficult to obtain, it is advisable to certify the service credit as soon as possible. Certifying credit does not obligate you to buy the credit, but it does verify the credit amount and current cost. Once credit is certified, cost statements from STRS Ohio can be updated at any time for most types of purchasable credit.
You may receive a maximum of one year of service credit for each STRS Ohio fiscal year. Service concurrent with your Ohio public service or other purchasable service would not be eligible for purchase.
Members who plan to purchase credit should review the Purchasing Service Credit brochure and talk to an STRS Ohio benefits counselor for further details on purchasing service credit, certification of credit and payment options. Information about other changes related to legislation can be found on this website. Follow these steps to ensure proper certification of your service.
If service is purchasable, an initial cost statement will be mailed to you. This cost statement does not obligate you to buy credit, but it does verify the credit amount and current cost. A payroll deduction cost, if available, will be included with the cost statement. Before purchasing service credit, a benefits counseling session with an STRS Ohio benefits counselor is strongly recommended.
All purchasable service credit must be paid in full within three months following your retirement effective date or before your benefit becomes final, whichever is earlier. Purchasing service credit within three months after retirement will delay the finalization of your retirement benefit and it may delay partial payments. You may purchase service credit up to three months after your retirement but before the final benefit determination only if:
STRS Ohio offers employers two payroll deduction options. Your employer may elect to use one or both methods. Payment may be submitted with money that has already been taxed (after-tax) or with money that has not been taxed (pretax). Leave of absence credit, school board credit, credit for interrupted teaching due to military service and restored service with Cincinnati Retirement System cannot be purchased through payroll deduction.
The pretax payroll deduction plan is irrevocable. Once started, the plan cannot be canceled or converted to an after-tax plan. The monthly payment amount cannot be stopped or changed even in the case of unforeseen circumstances or financial hardship. Extra payments may not be submitted on the pretax plan. The plan must continue until the member terminates employment or the credit is fully purchased.
At retirement, members have the option of electing a PLOP payment which would result in a permanent reduction of the monthly benefit amount. PLOP payments cannot be paid earlier than 91 days after your retirement date or the date all necessary information is received and your retirement benefit is finalized, whichever is later.
A member can use a PLOP payment to replenish funds that were used to purchase service credit. The monthly reduction for the PLOP payment may be less than the increase resulting from the purchase. Because credit must be purchased before the PLOP payment is issued, you must use funds from some other source to purchase credit and use the PLOP payment to replenish those funds. There are two ways you can use the PLOP payment to replenish funds used to purchase credit:
Certified service credit may be purchased up to three months following your retirement date. There are many factors for you to consider when determining the best time to purchase service. The cost to purchase service may change as you get closer to being eligible to retire, and factors and interest rates could change as well. However, you should also consider other potential circumstances, such as:
You can buy purchasable service while receiving a disability benefit. Purchasing credit will not increase your disability benefit, but it may be used to calculate survivor benefits for your spouse or qualified beneficiary. It may also enhance any future service retirement benefits.
Because purchasing credit may increase the amount of your retirement income and/or enable you to retire sooner, the amount you pay to purchase the credit reflects the additional liability to STRS Ohio resulting from your purchase.
Purchasable service calculated at 100% liability cost must be purchased in whole-year increments. A member who certifies and purchases only a partial year of credit has the option to certify and receive the balance of that year at a later time for no additional cost.
While receiving disability income from STRS Ohio, you may buy any purchasable service. Purchasing credit will not increase the disability benefit, but it will be used to calculate survivor benefits for a spouse or qualified beneficiary. It may also enhance any future service retirement benefits.
Below are the types of purchasable service. Click on the type of service to learn about eligibility, maximum credit and cost. Contact STRS Ohio if you have any questions. Please note that email submissions on this site are unsecured, so only include your name, the last four digits of your Social Security number or STRS Ohio account number with your message.
Members who plan to purchase credit should review the Purchasing Service Credit brochure and talk to an STRS Ohio benefits counselor for further details on purchasing service credit, certification of credit and payment options.
The maximum credit you can buy is five years. This includes regular military service and Ohio National Guard and reserve military service. For each year of purchasable credit, you must have at least one year of service in STRS Ohio.
The maximum credit you can buy in STRS Ohio, OPERS and SERS is five years. You can purchase all five years under one category or a total of five years as a combination of those listed under Section 3307.74, R.C. and comparable provisions of law governing OPERS and SERS. For each year of purchasable credit, you must have at least one year of service in STRS Ohio.
You may purchase STRS Ohio service credit for either a resignation due to pregnancy or adoption of a child, or a leave of absence due to pregnancy or adoption of a child, that began before July 1, 1982.
The total service credit purchased under this section, and all other previous open window periods for purchasing absences and resignations due to pregnancy, may not exceed a combined total of two years.
STRS Ohio members who are members of the Cincinnati Retirement System, Ohio Police & Fire Pension Fund, or Highway Patrol Retirement System may restore or transfer credit from the other systems to STRS Ohio.
The maximum credit you can buy is the total earned credit and purchased military credit that was withdrawn and can be used to increase your benefit. Total service credit cannot exceed one year in any STRS Ohio fiscal year.
Contact STRS Ohio to request a cost statement. Upon request, a certification form will be mailed to you for purchasing STRS Ohio credit for service withdrawn from another Ohio retirement system or to transfer inactive service.
If you have not withdrawn your account, you may elect to have the credit transferred directly to STRS Ohio at no cost to you. Once the contributions and interest are transferred, the credit will be posted to your account. For more information about transferring your account, call STRS Ohio.
If the account was refunded, the cost to restore is based on the amount refunded by the other Ohio retirement system, plus 8%* annual compound interest (subject to change) from the date of the refund through the month of purchase.
A member can complete deposits directly with his or her employer within the year in which the absence or leave occurs. The employer is responsible for determining the amount of contributions owed to STRS Ohio for the leave. If a member changes employers, the employer who granted the absence or leave will determine the contributions owed to STRS Ohio.
The cost is based on the annual compensation that would have been received had the member remained in the position, multiplied by the STRS Ohio member contribution rate in effect at the time the absence or leave occurred. This is the same amount the member would have contributed to STRS Ohio had he or she actually been employed during that period.
The member pays directly to STRS Ohio the member contribution, plus interest on both member and employer payments. Leave of absence credit can only be purchased in a lump sum. Payroll deduction is not permitted.
Step 4: Using the Annual Compound Interest Factors by Years table above, find the 8% annual compound interest factor for 17 years (2006 until 2023) and multiply it by the answer from Step 3.
A member employed by a university, community college, technical college or institute may, with State Teachers Retirement Board approval, complete retirement contributions and secure retirement credit for nonpaid periods of absence, other than for personal illness or injury, by complying with the requirements below.
To establish full retirement credit for the leave period, contributions are required on the full salary that would have been earned if the leave had not occurred. Contributions are not permitted in excess of that salary.
If payment is received by STRS Ohio no later than June 30 of the year in which the absence or leave ended, the member shall pay the difference between the contributions deducted from salary payments during the leave period, if any, and the contributions due based on the contract salary. 041b061a72