When you purchase service, you gain IPERS service credits for time when you were not working in IPERS-covered employment.
What is Service?
IPERS calculates your retirement benefit amount with a formula that uses a multiplier based on the number of years you worked in IPERS-covered employment (“years of service”).
Your retirement benefit is reduced if you retire before reaching normal retirement age.
For Regular members, Normal retirement age is one of the following, whichever comes first:
- Age 65.
- Age 62 with 20 or more years of service. (Rule of 62/20)
- Years of service plus your age equals or exceeds 88. (Rule of 88)
Purchasing Service: Increasing your benefits
Increasing your amount of service results in a higher multiplier (up to the maximum), which means a larger retirement benefit payment.
It’s important to determine whether the added benefits of a service purchase outweigh the cost of making the purchase.
Depending on your circumstances, purchasing service may:
- Eliminate an early retirement benefit reduction. Purchasing service could help you reach normal retirement age, eliminating or reducing an early-retirement reduction. (Note: IPERS’ records of your age will not change when you purchase service; only your years of service can change.)
- Increase your death benefit. Depending on the benefit payment option you choose at retirement, your beneficiary(ies) may receive a larger death benefit if you die after retirement.
Service purchase requirements
You must file an Application for IPERS Retirement Benefits before you can purchase service. You also must meet the years of service requirement for vesting in IPERS.
- Seven years for Regular members.
- Four years for Protection Occupation and Sheriff/Deputy Sheriff members.
Each service purchase type has additional requirements. Also, the amount of service you may purchase may be limited. See Application for further details.
Free service credit
IPERS provides free service credit if you:
- Take a leave of absence from IPERS-covered employment under rules established by the federal Family and Medical Leave Act.
- Work in IPERS-covered employment immediately before entering the U.S. Armed Forces and return to covered employment within one year of leaving active-duty service. *
- Take a leave of absence from IPERS-covered employment granted before July 1998 in increments of one year or less.
You can request free credit any time before retirement. If you think you qualify, contact IPERS.
*Free service is granted for your period of military leave if you do not return to IPERS-covered employment because of an active-duty injury or disease that results in death. To receive this free service credit, the injury or disease must be sustained in a combat zone, hazardous duty area or during a contingency operation. Death must occur within two years after you suffer the injury.
Types of Service Purchase
|Service purchase type||Type of employment/time|
|Buy-Back with Cost Credit||
|Buy-Up Credit Conversion||
Service purchase cost
Complete an Application for Service Purchase (PDF, 241 KB) to learn the cost of your service purchase. The cost of your purchase is calculated especially for you, using information about your unique situation. IPERS does not profit from a service purchase.
The cost of your purchase will be shown by quarter. You may purchase any number of quarters; you are not obligated to purchase every quarter you are eligible to buy. Some quarters will cost more than others. Often, the quarter that allows you to reach normal retirement age will cost more.
Because service purchase calculations are based on your individual situation, costs can vary widely.
Basic cost estimate/Official cost quote
If you have not filed an Application for IPERS Retirement Benefits, you will receive a basic cost estimate when you submit an Application for Service Purchase (PDF, 241 KB). The estimate will give you an idea of the cost of a future purchase to help you plan and save money for the purchase. A basic cost estimate is only an estimate. The actual cost of your service purchase may vary from the estimate. It’s a good idea to occasionally request an updated estimate prior to your retirement.
After you file an Application for IPERS Retirement Benefits, IPERS will prepare an official cost quote, and you can decide whether to make the purchase.
Steps to purchase service
- Complete the Application for Service Purchase (PDF, 241 KB). This does not obligate you to purchase service; it is the only way to determine the cost of your purchase. If you are considering a purchase, you must submit an Application for Service Purchase (PDF, 241 KB) by the date your first retirement benefit payment is issued.
- After applying for retirement benefits, you will receive an official cost quote with an expiration date. Your payment must be postmarked by that date.
- You can purchase all or a portion of your qualified service. For example, if you are eligible to purchase two years (eight quarters) of service, you can purchase any amount from one to all eight quarters. You may purchase all of your service at one time or in quarter-year increments, as long as your purchase is completed before the expiration date.
- Service purchase costs cannot exceed a limit set by the federal government unless you roll over money to IPERS from another retirement account or are making a buy-back. In those cases, there is no limit on the amount you can spend.
- Even if your purchase is within the dollar limits described above, your service purchase cannot increase your IPERS retirement benefit beyond the IRS limit on annual benefit payments.
- Allow IPERS at least four to six weeks to process a service purchase application.
Using rollover money to purchase service
If you have money in another retirement plan or account, you may be able to use that money to purchase service. This is called rolling over money to IPERS.
IPERS accepts rollover money only from certain types of retirement plans, including:
- 401(a) and 401(c) qualified plans, including 401(k).
- IRAs and annuities.
- 403(b) tax-sheltered annuities.
- Governmental 457(b) plans.
If you have money in another retirement plan or account, confirm your plan type with your retirement plan administrator. Remember, the federal government does not limit how much you can purchase in a calendar year with rollover money.