Frequently Asked Questions on Service Credit - PA 92 2017
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1. How did PA 92 affect service credit purchases?
Public Act 92 of 2017, which was signed into law on July 13, discontinues the option to initiate a service credit purchase as of September 29, 2017. If you’re planning any service credit purchases, full payment for the amount of service you wish to buy or a fully completed Tax-Deferred Payment (TDP) Agreement (R0392C) signed by both you and your employer must be received in our office by 5:00 p.m. EDT, September 29, 2017. Any service credit applications received after that time will not be processed and payments will be refunded appropriately. However, the ability to receive credit for time spent in military service and to reinstate service credit by repaying any refunded pension contributions will remain available to you after that date.
2. What types of service credit purchases does PA 92 impact?
|Service credit types that will be discontinued as of 5:00 p.m., Sept. 29, 2017:||Service credit types that will continue to be available after 5:00 p.m., Sept. 29, 2017:|
Universal Buy-In Service
Nonpublic Educational Service
Both Pre- and Post- 1974 Out-of-System Public Educational Service
Both Pre- and Post-1981 Sabbatical Leave
State of Michigan Service for both defined benefit and defined contribution service
Comprehensive Employment and Training Act (CETA)
Active Duty Military Service
Repayment of Refund
Weekly Workers Compensation*
Payment for MIP Window*
* Certain types of payments can be made by members to either reinstate service canceled by a refund or to make whole member contributions that should have been made, but weren’t. Although these kinds of payments may involve a tax-deferred payment (TDP) agreement, they technically aren’t service credit purchases.
3. What impact does this legislation have on my future pension and/or healthcare?
Public Act (PA) 92 does not change the benefits or requirements for receiving a pension and retiree healthcare.
However, if you're planning any service credit purchases, full payment for the amount of service you wish to buy, or a fully completed tax-deferred payment agreement signed by both you and your employer, must be received in our office by 5:00 p.m. EDT, September 29, 2017. Any service credit applications received after that time will not be processed and payments will not be accepted. The ability to receive credit for time spent in military service and to reinstate service credit by repaying any refunded pension contributions will remain available to you after that date.
4. What if I’m already paying for service credit using a tax-deferred payment agreement?
PA 92 does not have an impact on TDP agreements already in place. Your payments will continue until the service credit is paid-in-full or you terminate your employment.
5. Will I still be eligible to pay off a TDP agreement using a plan-to-plan transfer, one-time lump sum payroll deduction, or a check or money order if I am either retiring or terminating my employment within 90 days?
Yes. Public Act 92 did not affect a member’s option to pay off a TDP agreement at the time of retirement or termination. If you choose to pay off a TDP agreement at retirement or termination, please complete the Payoff Payment Options for a TDP Agreement (R0518C) and submit it to ORS prior to your termination date.
6. Will I still be allowed to permanently increase my deduction amount on my TDP agreement?
Yes. Public Act 92 did not change ORS policies that allow you to increase the deduction amount on your TDP agreement. If you wish to increase your deduction amount, you must work with your employer to complete the Supplemental TDP Agreement (R0654C) and submit it to ORS so increased deductions can take place. Please remember that, once a deduction amount is increased, it cannot subsequently be decreased.
7. I have a minimum scheduled deduction amount for my TDP agreement, but I want to pay a lower payment instead. Can I lower the scheduled deduction for my TDP Agreement?
You cannot pay less than your scheduled deduction because TDP agreements need to be paid-in-full within 15 years. The scheduled deduction amount listed on the TDP agreement is the minimum amount that can be applied each pay period to your TDP agreement so that it will be paid off within the 15-year timeframe.
8. I'm paying off service credit using a TDP agreement, but I’m on an unpaid leave of absence. What do I do?
Your TDP agreement remains valid while you are on unpaid leave or temporarily off payroll for any reason, as long as an employer-employee relationship exists. Your payroll office should resume your deductions when you return to work.
Note: If you are on an approved leave of absence, your termination date for retirement system purposes is the date two years after your employer last reported service credit for you.
9. I'm paying off service credit using a TDP agreement, but I’m changing employers. What do I do?
If you change your employer to another Michigan public school, you must complete a TDP Addendum (R0625C). You must do this within 90 days for your new employer to continue to submit payments under the same TDP agreement. The 90 days is counted from your termination date from your former employer.
If you were purchasing military service or purchasing another type not being discontinued (see Question 2) and 90 days have passed, you’ll need to set up a new TDP Agreement. Ask ORS for a recalculated Member Billing Statement and complete a new agreement form as described here.
If you are paying off one of the service credit types discontinued as of 5:00 p. m. EDT September 29, 2017 and more than 90 days have passed, you will not be able to set up a new agreement with your new employer. You may be awarded prorated service credit, for most service credit types, for the amount of service already paid. Please remember: Certain types of service credit purchases require payment-in-full.
10. I sent ORS a Plan-to-Plan Transfer document. Why wasn’t my payment applied?
Plan-to-plan transfers can take 6-8 weeks to process, so you may need to allow more time for this type of payment to show.
11. When will my payment be applied?
The payment will be applied when we have received the payment and all required forms for processing. Please allow 15-20 business days from when the payment was received for the payment to post.