Pre-Tax Payroll Deductions To Be Accepted For Purchase of Service Credit

NDPERS has received a positive letter of determination from the IRS regarding our request to allow individuals purchasing service credit to make monthly payroll deductions on a pre-tax basis. NDPERS is currently in the process of modifying our system and forms to allow this option and hopes to have it ready for implementation on May 1, 2004. The option will automatically be available for all state agency employees who elect to purchase service. Employees of participating political subdivisions will only have this option if their employer elects to sign an employer agreement making this available to their employees. Due to IRS requirements, individuals who elect to purchase service credit and elect to pay for it through pre-tax monthly payroll deductions will be required to sign an irrevocable purchase agreement. The agreement specifies the terms, which include the requirement that the contract be for an exact period of time and for an exact dollar amount. This monthly payroll deduction can not be changed at anytime during the contract. It can only be stopped when the contract is paid in full, or due to termination, retirement, disability or death of the member. In addition, supplemental after-tax payments CANNOT be applied to the contract and the individual will be required to make a lump sum payment for the retiree health insurance credit portion of the purchase prior to entering into the irrevocable purchase agreement. If you currently have an open purchase contract and are interested in changing your payment option to a pre-tax monthly payroll deduction, please contact the NDPERS office. If you are interested in determining if you are eligible to purchase service credit or in receiving a cost to purchase, please review the Provisions to Purchase Service Credit brochure. Please complete a Request for Purchase Information to obtain a cost calculation. Phone requests for cost calculations will not be accepted.