 IPERS Member Handbook
PURCHASING SERVICE CREDITS
 IPERS allows you to increase your IPERS benefits through a service purchase. A service purchase allows you to buy service time that you do not already have. When purchasing service, you make a payment to IPERS to receive additional service credits. Then, whenever you retire or take a refund, these additional credits will be used in the calculation of your benefit. It’s important to determine if the added benefits you receive from a service purchase outweigh the cost of making the service purchase.
IPERS provides free service credit for certain times when you are not working in IPERS-covered employment (for example, if you take a military leave of absence or leave of absence granted before July 1, 1998).
A. Why Purchase Service?
The amount of your benefit is partially based on the amount of service you have. Purchasing additional service under the IPERS plan can increase the amount of your retirement benefits or eliminate an early retirement penalty—which may affect benefits when you decide to retire.
B. What Types of Service Qualify for a Service Purchase?
The chart that follows summarizes the types of service that qualify for a service purchase. Note that all service purchase applications must be in writing using IPERS’ Application for Service Purchase, except as otherwise noted. You may purchase service if you are vested, even if you are already retired.
| Nonqualified Service Purchases |
Nonqualified service means employment:
- In the private sector.
- In the federal Peace Corps program.
- With a Canadian governmental educational entity.
You may purchase up to 5 years of nonqualified service, provided you have 5 full calendar years of wages on file with IPERS.
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| Leave of Absence/Workers' Compensation Buy-In |
You can purchase IPERS service for a leave of absence or a leave that qualified for workers’ compensation benefits that began on or after July 1, 1998, if you meet both of these conditions:
- Are a vested member of IPERS with at least 1 full calendar year of covered wages on file.
- Were on an approved leave of absence or were absent due to an illness or injury that qualified for workers’ compensation benefits.
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| Members of the Iowa General Assembly |
If you served in the Iowa Legislature and elected out of IPERS coverage, you may buy this service. |
| IPERS Buy-Back Due to Disability |
If you terminated covered employment due to an illness or injury that qualified for social security disability or railroad retirement disability benefits and you received an IPERS refund, you may be eligible to purchase service for the period covered by the refund, provided that you meet all of the following conditions:
- Were a vested member who had terminated IPERS-covered employment due to a disability.
- Received an IPERS refund payment for the applicable period of time.
- Received federal social security disability or railroad retirement disability payments for the disability.
- Provide IPERS with a copy of the applicable disability award letter within 90 days of beginning to receive disability payments.
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| IPERS Buy-Back |
If you received a refund for service earned after July 4, 1953, you may purchase the refunded credit if you meet both of these conditions:
- Are a vested IPERS member.
- Received one or more refunds for the applicable period of time.
You can make a written or verbal request for this type of service buy-back.
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| Veteran's Credit Buy-In |
You may purchase IPERS service for active duty in the armed forces of the United States, provided that you meet all of these conditions:
- Are a vested IPERS member with at least 1 full calendar year of covered wages on file.
- Submit a copy of DD Form 214 (or other acceptable military records) to verify the dates of the active-duty service.
- Are not receiving and not eligible to receive disability benefits in place of military retirement benefits.
If you are eligible for a military pension, your service purchase will be limited to 5 years.
Note: You may purchase veteran’s credit without the 5-year limit if the retirement pay you receive is for nonregular military service (for example, service in the military reserves or disability pay from the U.S. Department of Veterans Affairs that is not paid in place of retirement benefits). See “If You Serve in the Military” in this handbook for more on this type of purchase. You may be entitled to free service.
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| Other U.S. Public Employment Buy-In |
You may purchase IPERS service for U.S. public employment. This employment can be as a public employee in another state or the federal government comparable to IPERS-covered employment, or public employment within Iowa that was not covered by IPERS, provided you are a vested IPERS member with at least 1 full calendar year of covered wages on file. If you are eligible for retirement benefits from another public retirement system based on this service, IPERS is required to limit the amount of service you may purchase to 5 years unless you waive your right to that benefit. |
| Buy-Ins for Persons With Elective Coverage |
You can purchase optional IPERS coverage provided you meet all of these conditions:
- Are a vested IPERS member with at least 1 full calendar year of covered wages on file.
- Were employed before January 1, 1999, in a position eligible for optional IPERS coverage.
- Have not previously elected coverage for that employment. (If you are still eligible for another retirement benefit from this service, IPERS is required to limit the amount of service you may purchase to 5 years unless you waive your right to the benefit.)
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C. How to Purchase Service
1. Application
Use the Application for Service Purchase to begin the process to purchase service. Completing the application does not obligate you to purchase service.
2. Cost
You must complete an Application for Service Purchase to find out the cost of purchasing service. IPERS’ actuary determines the cost of your service purchase.
Cost quotes are valid for 6 months. If you request more than 1 cost quote within a 6-month window, IPERS will use the most recent cost quote and all previous cost quotes will become invalid. Your cost quote will include an expiration date. Service purchase payments must be postmarked by the expiration date on the cost quote.
You can purchase all or a portion of your qualified service in quarter-year increments. For example, if you are eligible to purchase 2 years of service (8 quarters), you can purchase any amount from 1 quarter to all 8 quarters. However, service purchases made in a calendar year cannot exceed a limit set by the federal government ($45,000 in 2007), unless you roll over money to IPERS from another retirement account or buy back IPERS service. There is no limit on the amount you can spend in a calendar year when you buy back IPERS service or when you roll over money from another retirement account to purchase service.
Remember, completing the Application for Service Purchase does not mean that you are obligated to purchase service. Allow IPERS at least 4 to 6 weeks to process a service purchase application.
3. Using Rollover Money to Purchase Service
If you have money in another retirement plan or retirement account, you may be able to use that money to purchase IPERS service credit without incurring any tax penalties. This is called a rollover. IPERS accepts rollover money from certain types of retirement plans including:
- 401(a) and other qualified plans.
- IRA accounts and annuities.
- Governmental 403(b) tax-sheltered annuities.
- Governmental 457(b) plans.
If you have money in another retirement plan or retirement account, confirm with your retirement plan administrator the type of plan it is. Remember, the federal government does not limit how much you can purchase in a calendar year by rolling over money to IPERS.
D. Free Service Credit
IPERS will provide you with service credit at no cost for the following types of service:
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- Family and medical leaves of absence granted under standards established by the federal Family and Medical Leave Act.
- Service in the U.S. Armed Forces, provided you worked in covered employment immediately before entering the armed forces and you return to covered employment within one year after leaving active duty service in the armed forces.
- Leaves of absence that occurred before July 1, 1998.
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If you think you qualify for free service credit, contact IPERS. Also, refer to “If You Serve in the Military” of this handbook. |
