Oklahoma Administrative Code › Title 715 - Teachers' Retirement System › Chapter 10 - General Operations › Subchapter 5 - Establishing Other Service Credits › Section 715:10-5-35 - Employer pick-up of service credit purchase

Current through Vol. 41, No. 20, July 1, 2024
(a) The purpose of OAC 715:10-5-35 is to
				provide a pick-up of employee contributions by participating employers under
				Section 414(h)(2) of the Internal Revenue Code of 1986 for contributions that
				are made for the purpose of purchasing service credit or re-establishing
				withdrawn service under Chapter 10, Subchapter 5 of these Rules, and for
				contribution deficit payments provided for by 70 O.S. § 17-116.2C or balances
				due as authorized under 70 O.S. § 17-116.2. Employers may elect to participate
				in the pick-up of employee contributions made for the purpose of purchasing
				service credits or re-establishing withdrawn service by a resolution adopting
				the provisions of this regulation.
(b) An active member of TRS who elects to
				purchase or re-establish service credit under any applicable provision of
				Chapter 10, Subchapter 5 of these Rules, or to make contribution deficit
				payments provided for by 70 O.S. § 17-116.2C or balances due as authorized
				under 70 O.S. § 17-116.2 through installments may elect to do so through a
				binding, irrevocable payroll reduction authorization established by TRS .
(c) An active member of TRS,
				having executed a binding, irrevocable payroll reduction authorization with
				respect to any such contributions, shall not be entitled to receive the
				contributed amounts directly instead of having them paid by the employer to TRS
				. Such contributions shall be remitted to TRS and credited to the member in the
				same manner as all other employee contributions. Such contributions, although
				designated as employee contributions, will be paid by the employer in lieu of
				contributions by the employee. The contributions so assumed shall be treated as
				tax-deferred employer "pick-up" contributions pursuant to the United States
				Internal Revenue Code Section 414(h)(2), as authorized in a favorable letter
				ruling by the Internal Revenue Service.
(d) An active member of TRS may elect to pay
				all or part of any contribution to purchase or re-establish service credit or
				to make contribution deficit payments provided for by 70 O.S. § 17-116.2C or
				balances due as authorized under 70 O.S. § 17-116.2 through such payroll
				reduction. The amount by which an employee's compensation will be reduced and
				the duration of the reduction shall be specified on the authorization form
				prescribed by TRS and the amounts and duration shall be irrevocable and binding
				once made. Prepayment of amounts covered by the authorization is not permitted.
				However, nothing herein shall prevent a member from paying any amounts not
				covered by the authorization with after-tax dollars, provided that any such
				after-tax payments by an employee of a participating employer shall be paid
				directly by the employee to TRS, as opposed to being paid to or withheld by the
				participating employer. An employee of non-participating employer may purchase
				service credit or re-establish withdrawn service by making after-tax payments
				directly to TRS .
(e) No such
				payroll reduction shall begin unless and until the member executes the payroll
				reduction authorization described below on a form prescribed by TRS and
				delivers the form to the treasurer or other disbursing officer of the
				participating employer. After receiving the binding, irrevocable payroll
				reduction authorization, the treasurer or other disbursing officer of each
				participating employer shall reduce the member's regular annual compensation by
				the authorized amount and remit these contributions to TRS, in addition to (but
				separate from) the mandatory contributions from the member's regular annual
				compensation pursuant to 70 O.S., §17-116.2 and OAC
				715:10-13-3. The participating
				employer shall continue to make such reductions for the number of months
				specified on the form and shall treat these reductions as picked-up
				contributions.
(f) All such
				payroll reductions, including the amounts and the duration specified, shall be
				binding and irrevocable upon the member's execution of the prescribed form.
(g) Notwithstanding the above,
				such reductions will cease only after the authorization has expired by its
				terms or upon any of the following events:
(1) The member's death. In the event of a
				member's death, the designated beneficiary shall have the option of paying the
				remaining amount owed (using after-tax dollars) within six (6) months of the
				member's death. If the balance is not paid, the beneficiary shall be entitled
				to prorated credit for that portion of the additional contributions actually
				made for service purchases prior to the member's death. If there is any
				remaining amount owed with respect to a redeposit of contributions, the
				designated beneficiary will be reimbursed for those redeposits which had
				already been paid at the time of the member's death. A beneficiary may not make
				payments for a purchase of service credit or a re-deposit of contributions if
				such a purchase or re-deposit had not been initiated by the member prior to the
				member's death.
(2) The
				termination of the member's employment. In this event, the member shall have
				the right to pay the remaining amount owed (using after-tax dollars) within six
				(6) months of the member's termination of employment, but payment must be
				completed one (1) month prior to the effective retirement date of the member.
				If the member retires and does not pay the entire remaining amount, the member
				shall be entitled to prorated service credit for those payments actually made
				for service purchases. If there is any remaining amount owed with respect to a
				redeposit of contributions, the member shall be reimbursed for those redeposits
				which had already been paid at the time of the member's termination. In the
				situation where a terminated member becomes employed by another employer
				participating in TRS, the member may elect to reinstate or not reinstate his
				authorization with the new employer.
(3) For purposes of (1) and (2) above,
				after-tax contributions shall only be received to the extent allowed by section
				415 of the Internal Revenue Code.