Skip to main content
8.01.03: Post-tax employer payment for service credit purchase by an employer

8.01.03: Post-tax employer payment for service credit purchase by an employer

8.01.03: Post-tax employer payment for service credit purchase by an employer

Reporting unit post-tax purchases of service credit are covered by the following rules:

  • Do not report or remit employer retirement contributions for the following payments, which are considered fringe benefits. (See section 4.03: Nonreportable compensation.)
    • Purchases of active-duty military service credit.
    • Payment for a repayment of a refund.
    • Contributions for pre-1992 weekly workers' compensation.
    • Member Investment Plan (MIP) window buyback payments made by the reporting unit on behalf of the employee.
  • These payments are considered employee rather than employer contributions toward retirement. Submit these payments with a check separately from the regular employer contributions. Include a copy of the member billing statement. Indicate on your check stub the purpose for the payment, including the employee name and Social Security number. See section 10.10.02: Post-tax employer payment.
  • All service credit payments, delinquent defined benefit (DB) contributions, MIP window buyback payments, and Pension Plus and Pension Plus 2 member DB contributions are deposited into the Reserve for Employee Contributions as defined by Public Act (PA) 300 of 1980, as amended, and are credited to the individual employee's account as after-tax contributions. If the member or the member's beneficiary receives a refund of contributions, these payments will be included in the refund. If the member retires, these after-tax contributions will be distributed over the individual's expected lifetime according to IRS life expectancy tables.
  • Member retirement healthcare contributions are not deposited into the Reserve for Employee Contributions as defined by PA 300 of 1980, as amended, and are not credited to the individual employee's account as after-tax contributions.
  • These types of payments must be reported to the IRS as income on your employee's Form W-2.

Last updated: 02/01/2018