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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > Employers > Employer Handbook > TRF Employer Handbook: Service Credit TRF Employer Handbook: Service Credit

The most common form of service credit is service earned in a position covered by TRF or the Public Employees’ Retirement Fund (PERF). Still, there are other methods used to obtain service credit, both for free and for purchase.

Creditable Service

Creditable service is the amount of time that can be counted in the calculation of the pension portion of the TRF retirement benefit. TRF members earn one year of service credit for working 120 or more days in a fiscal year. Onehalf year of credit is earned for working between 60 and 119 days in a fiscal year. Service is creditable only if the member works in a position covered by either PERF or TRF. Service credit is measured by a fiscal year that runs from July 1 through June 30. Any time worked during a work day entitles members to a full day of service credit. Service arising out of jury duty, sick leave, or worker’s compensation may be included.

Indiana Service Credit for Vesting

Only certain types of service credit can be used to count toward a member’s 10-year vesting requirement under Indiana law. The following categories of service credit may be recognized and counted toward vesting:

1. Regular Indiana Teaching Service
2. Omitted Contributions
3. Approved leaves of absence
4. Service in a position covered by the Public Employees’ Retirement Fund (PERF)

Regular Indiana Teaching Service

One year of regular Indiana teaching service is earned when a member works 120 days or more in the State’s fiscal year (July 1 through June 30). One-half year of creditable service is earned for 60 to 119 days of service worked in the fiscal year. An active member is entitled to one day of service credit if the member engages in covered service for a standard workday or any fraction thereof.

To claim any in-state service that has been removed due to a voluntary withdrawal, the member must call or write TRF with all pertinent information. TRF requires the member’s Social Security number and/or a TRF number. TRF will complete a service credit analysis and send the results to the member. Should the member so choose, any applicable service credit will be added to the member’s account.

Omitted Contributions

Eligible members may have taught part-time or substituted in previous years, but the employing unit did not enroll the member or withhold contributions. This is referred to as omitted contributions. Members must meet the eligibility requirements to have this service added to their accounts. Members may claim this service in two ways.

1. If the 3 percent mandatory contributions were paid by the member on a post-tax basis, the member should complete Part I of State Form 41625, Verification of In- State Teaching Service. This form may be obtained on the TRF Web site.

The member should send one form to each employing unit where he/she seeks to confirm service. The employer will complete the form (years, days worked, salary, etc.) and return it to TRF.

If service occurred after July 1, 1995, the Verification of In-State Teaching Service form will not be considered complete unless the employer has paid all contributions in accordance with Indiana Code, Section 5-10.4-7 et seq.

2. If the employer paid the 3% mandatory contributions on a pre-tax basis, the employer must submit the missing service, wages, and contributions online using the Adjusted Wage and Contribution reporting option (see the Online Services section of this handbook for more information).

Note: The Adjusted Wage and Contribution option should only be used to report omitted contributions or to make corrections to previously reported data. Adjusted Wage and Contribution should never be used to report any other type of service or leave of absence.

Approved Leaves of Absence (see Leave of Absence)

To enter leaves of absence, known as a ‘life events,’ into Employer Reporting and Maintenance (ERM), see http://www.in.gov/inprs/files/MemberMgmtUserManual-Employerv1_11FINAL.pdf.

Certain leaves of absence may count toward your vesting requirement. TRF is generally able to recognize leaves of absence granted by a school corporation (employer) for the following reasons.

  1. Sabbatical for improvement of professional skills through the following:
    1. Advanced study
    2. Work experience
    3. Teacher exchange programs
    4. Approved educational travel
  2. Disability or sick leave
  3. Pregnancy
  4. Adoption leave

PERF-Covered Service

Service credit granted by PERF for service in a PERFcovered position counts as TRF creditable service. Any overlapping service covered by both TRF and PERF is only credited once.

Additional or Enhancement Service Credit

Members may use the following five other sources of creditable service in the calculation of the State-provided portion of the retirement benefit.

1. Military service credit
2. Out-of-state service credit
3. Additional service credit
4. Private school service credit
5. Substitute teaching service credit

Only substitute teaching, military service, and FMLA count toward vesting with TRF. The other three types of service above do not count for vesting purposes; they only count for pension calculative purposes once the member has the requisite 10 years of Indiana service.

Under the Uniformed Services Employment & Reemployment Rights Act of 1994 (USERRA), eligible military service earned after the implementation of this Act becomes immediately added and vested. However, prior to this Act, military service is not added or counted toward vesting until after 10 years of active TRF service is earned.

Military Service Credit

A member whose teacher training or teaching career is interrupted by service in the United States Armed Forces may be eligible for up to six years of service credit for time spent in the military. All service during periods of hostility or mobilization counts toward the six-year limit. Military service that occurred during other time periods is subject to the 1/7th rule, meaning no more than 1/7th of the total years of creditable service may be from military service credit.

According to Indiana law, TRF will grant military service credit to a member under the following conditions.

1. Member must have an honorable discharge from active military service.

2. Member must have started approved college teacher training or received a Bachelor’s degree in teacher training before induction into active military service; or

3. If the member started but did not complete teacher training before induction into active military service, the member must have returned to four-year college teacher training within 24 months after discharge from active military service.

4. If the member completed college teacher training before induction into active military service, the member must start or return to an actual teaching position within 24 months after discharge from active service.

5. Member must have at least 10 years of Indiana teaching service credit.

Reporting Military Service

The member is required to furnish military documents which show the following:

1. Date of entry into active military service

2. Date of honorable discharge from active military service

Note: Military form DD214 normally provides sufficient information.

If the member completed four years of college but did not teach before induction into active military service, member must provide:

1. Copies of transcripts of college work before induction into active military service.

2. Copies of transcripts of college work after honorable discharge from military service.

If a member needs help locating DD214 or other military records, the member should assemble all possible information concerning his/her military service and contact

National Personnel Records
Military Personnel Records
9700 Page Avenue
St. Louis, MO 63132
(314) 801-0800
http://www.archives.gov/st-louis/military-personnel/

It is important for employers to note that non-USERRA military service does not require any information from employers except for a current salary verification. There are specific laws, however, governing an employer’s liability regarding USERRA military service. If a member qualifies for USERRA military service, the required information should be reported using the Leave of Absence Verification (LOA) form on TRF’s Web site. When completing the form, the entire compensation for the fiscal year should be entered in the Compensation section. If the USERRA military service covers more than one fiscal year, additional LOA forms must be completed for each fiscal year. Once the forms are received, TRF will calculate the contribution payment due and send an invoice for payment to the employer and/or the member.

Out-of-State Service Credit

Creditable out-of-state service includes:

  • Teaching in another state at a public school in which service is covered by a retirement fund comparable to TRF
  • Service teaching military dependents performed on a regular and continuing basis inside or outside of this country
  • Service attributable to leaves of absence which meet the appropriate criteria required by Indiana Code (IC) section 20-28-10 & IC 5-10.4-4-7

Service at a federal agency in a position comparable to teaching in Indiana may also qualify. Teachers who became members of TRF prior to July 1, 1981 and who have out-ofstate service prior to July 1, 1981 have specific rights of transfer. Up to eight years of out-of-state service may be added to a member’s creditable service at no cost to the member, provided that the member has at least 10 years of creditable Indiana service (not including PERF or military service). The member may not use this service to receive any additional benefits from another state retirement system or the federal retirement system. If the member has not earned 10 years of creditable service, the out-ofstate credit is held in pending status until the member attains the requisite 10 years. If the member does not qualify for free transfer of out-of-state credit, the cost to purchase this type of service is calculated actuarially.

To claim out-of-state service, the member must complete State Form 49530, Verification of Out of State Teaching Service. This form is available on the TRF Web site. The member should complete the form and send it to the out-ofstate school involved. The out-of-state school will complete its portion and send the form to the out-of-state pension fund involved.

Next, the member should send a copy of his or her latest teaching contract to TRF. After TRF has verified the service, TRF will send the member an assessment, along with an IRS Section 415 Limitation form. The member can use the assessment to decide whether or not to buy service. The IRS Section 415 Limitation form can be used to determine how much the IRS will allow the member to put into a taxdeferred fund in one calendar year.

If the member wishes to purchase out-of-state credit, it is necessary to notify TRF. The member must include the specific years to be purchased, a copy of the IRS Section 415 Limitation form, and a check for the amount of purchase. Out-of-state service that entitles a member to a benefit in another state system or any federal retirement system cannot be used in Indiana.

Members should allow a minimum of 60 days for TRF to receive the Out of State Verification form back from the outof- state system.

Teaching out of the country does not qualify for service credit unless the teaching was in a military dependent school covered by the U.S. Department of Defense or teaching was during a qualified leave of absence granted for exchange teaching.

For military dependent teaching service, Form NA 13037-9- 85 is required for proper verification. This form can be obtained at:

National Personnel Records
Civilian Personnel Records
111 Winnebago St.
St. Louis, MO 63118

Additional Service Credit

Members with at least 10 years of combined PERF and TRF service may purchase additional service credit. Once the 10-year requirement has been met, the member may purchase one year for each five years of service credit earned. The cost to purchase this type of service is calculated actuarially.

Private School Service

A member may purchase private teaching service credit if the member has at least one year of credited service in TRF. The cost to purchase this type of service is calculated actuarially. The private school where the service occurred must be accredited in order for this service to count. A list of all accredited private schools is available on the Indiana Department of Education’s Web site.

Substitute Teachers

Substitute teachers who are members of the Fund earn one year of service credit if they work 120 days in a fiscal year or between 60 and 119 days per year over two fiscal years. Once the substitute teacher has taught the requisite number of days, he or she becomes a member of the Fund.

Employers must begin making contributions once substitute teachers become members of the Fund. Retroactive payments by the employer are not required for service prior to the teacher reaching the required number of days needed to attain member status.

Once these teachers achieve membership status and earn one full year of service as a member, they may purchase prior substitute or part-time teaching service, which is calculated actuarially. To do this, the member must complete the Verification of Prior In-State Teaching (State Form 41625), Part 1, and forward it to the employing school district for completion of Part 2. This form is available on the TRF Web site. The cost of the service in question is then calculated by TRF and an invoice is sent to the member. If the member chooses to purchase the service credit, a check must be sent to TRF for the invoiced amount. No employer contributions are required for this service credit.

Leave of Absence

TRF members who are teachers may earn credit for eligible leaves of absence if the leave is approved by the school board of the corporation granting the leave. To receive service credit for a leave of absence, the member must submit the Leave of Absence Verification form through the school granting the leave. This form is available on the TRF Web site. Sabbatical leave for advanced study, work experience, teacher exchange programs, or approved educational travel require the teacher to return to a covered position for the same length of time as the leave. Leave for disability, pregnancy, or adoption does not require a return to service. All leaves of absence, except USERRA military service, are subject to the one-seventh (1/7th) rule, meaning no more than 1/7th of the total years of creditable service may be from leave of absence service credit.

General Service Credit Rules

The following rules are in place regarding the addition of service credit to a member’s account. It is important to note that each rule is applicable only to certain types of service credit.

1/7th Rule (One-Seventh Rule)

  • Applies to military and leave of absence service credit.
  • A member may purchase or add for free one year of service for every six years of teaching.
  • The six years of teaching must already be in the member’s account. This can include in-state, out-ofstate, federal, or leave of absence service.
  • IC 5-10.4-4-7 provides that a TRF member may be given credit for leaves of absence for study, professional improvement, and temporary disability so long as the leave credit does not exceed oneseventh of the total years of service claimed for retirement.

1/5th Rule (One-Fifth Rule)

  • Applies to additional service
  • A member can add one year of service for every five years of Indiana service.
  • Indiana service can be under TRF or PERF.

Minimum of One Year

  • Applies to out-of-state, federal, private school, and substitute teaching service.
  • After one year of Indiana service in a covered position, a member can purchase service credit.
  • At the time of purchase, the service credit will be added to the member’s account.

10-Year Requirement

  • Applies to additional service
    Member can purchase service credit only after earning 10 years of Indiana service (TRF and/or PERF).
  • Applies to out-of-state, federal, and private school service
    Member will not accrue a benefit on purchased service until member completes 10 years of Indiana service (TRF only).

Payment

TRF may accept funds for the purchase of service in the form of a rollover from another tax-deferred retirement plan as defined in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This trustee-to-trustee transfer should not be for more than the cost to purchase the service. Any excess amount is deposited in a Rollover Savings Account (RSA).

Note: The price paid to purchase service is the actuarially calculated amount required to fund the Defined Benefit Pension. Therefore, this amount is not added to the member’s ASA. In the event the member terminates service prior to retirement eligibility, the purchase price plus interest as described in IC 34-13-1-6 is included in the refund to the member if the member withdraws his or her ASA. If the member returns to work in a TRF-covered position and the money has been refunded, the purchased service credit cannot be reinstated without purchasing it again.

Service in a Dual Position

550 IAC 2-4-2 dictates that whenever an individual is employed by the same employer in a position which requires the performance of covered and non-covered service, contributions shall be paid from the portion of the annual compensation attributable to the covered service.

Important Note about Service Credit

A member’s service credit record receives an official evaluation at the time of retirement. Any service credit granted to a member must comply with the laws in effect at the time of retirement. TRF encourages members to request a service credit analysis approximately two years prior to retirement to allow for additional verification and correction if needed.

Section four: Working after Retirement