10.11.00: When an Employer Purchases Service Credit for an Employee

From time to time the school employer will pay for an employee’s purchase of service credit. This can be due to a grievance settlement, retirement incentive, or for other reasons. Whatever the reason, employers are able to make the purchase payment. However, it is the employee that must contact ORS to request a current member billing statement. The employee should then bring the billing statement to the school employer.

Payments can be made either pre- or post-tax. However, the tax-deferred payment plan is the only way a reporting unit can make a pre-tax purchase. Neither the pre- or post-tax payment is considered as reportable compensation for retirement purposes; however, the IRS considers the payment taxable income. See sections 8.01.03, 8.01.04 and 8.01.05 for further information on purchases made by an employer.

Last updated: 04/11/2012