Sec. 825.410. PAYROLL DEDUCTIONS OR INSTALLMENT PAYMENTS FOR SPECIAL SERVICE CREDIT. (a) Payments to establish special service credit as authorized under this subtitle, other than service credit that may only be determined and paid for at the time of retirement such as unused leave as authorized by Section 823.403, may be made in a lump sum by a monthly payroll deduction in an amount not less than one-twelfth of the contribution required to establish at least one year of service credit, or in equal monthly installments over a period not to exceed the lesser of the number of years of credit to be purchased or 60 months. Installment and payroll deduction payments are due on the first day of each calendar month in the payment period. If an installment or payroll deduction payment is not made in full within 60 days after the due date, the retirement system may refund all installment or payroll deduction payments less fees paid on the lump sum due when installment or payroll deduction payments began. Partial payment of an installment or payroll deduction payment may be treated as nonpayment. A check returned for insufficient funds or a closed account shall be treated as nonpayment. When two or more consecutive monthly payments have a returned check, a refund may be made.
(b) Service credit shall be established pursuant to the following provisions:
(1) The retirement system shall credit a member's payments made under this section to a suspense account in the trust fund until the sum of the payments equals the amount required for one year of service credit, at which time the retirement system shall deposit the payments in the appropriate accounts in the trust fund and grant the applicable amount of service credit. No credit shall be established for service pursuant to Section 823.501 until a lump sum has been paid or all payroll deduction or installment payments have been completed.
(2) No credit shall be established for other service when the cost of establishing the service has been determined by using withdrawn service to be reinstated pursuant to Section 823.501 until a lump sum or all payroll deductions or installments for the withdrawn service have been paid.
(3) All other service shall be credited when sufficient payroll deductions or installments have been completed to satisfy the cost requirements for a year of service.
(c) All installment and payroll deduction payments must be made on or before the service retirement date or the last day of the month in which the member's application for service retirement is submitted, whichever is later, or before the 31st day following the date on which the medical board certifies a member's disability. The installment payment method or payroll deduction method may not be used to establish service credit after retirement.
(d) If a member who has made at least one payroll deduction or installment payment and who is using the payroll deduction or installment method of payment dies before completing the payments, the retirement system may:
(1) return to the beneficiary determined under Sections 824.101 and 824.103 the payments less fees paid on the lump sum due when payments began and less payments which have resulted in credited service being established; or
(2) permit the beneficiary determined under Sections 824.101 and 824.103 to complete payment of the unpaid balance remaining at the time of the member's death.
(e) If the beneficiary requests a return of the installment or payroll deduction payments under Subsection (d)(1), the retirement system shall return the payments in a lump sum. No additional service credit shall be established that has not been established in compliance with this section. If service credit has been established by installment or payroll deduction payments, the retirement system shall not refund the payments, less any applicable fees, used to establish such credit unless a refund of total accumulated contributions is made to a member or beneficiary.
(f) If the beneficiary elects to complete the payments under Subsection (d)(2), the beneficiary shall make full payment in a lump sum of the unpaid balance before the issuance of any warrant to him in full or partial payment of death or survivor benefits.
(g) A member seeking to establish service credit by using the installment or payroll deduction payment method shall pay an additional fee of nine percent per annum calculated on a declining balance method on the lump sum due at the time the payment process begins. For purposes of this subsection, the installment or payroll deduction payment process begins on the first business day of the month in which the first payment becomes due. None of the additional fees shall be returned to the member or a beneficiary.
(h) The board of trustees has authority to adopt rules to implement this section, including rules establishing a minimum amount for monthly installment or payroll deduction payments and rules establishing payment under Section 823.004(b).
(i) The actuary designated by the board of trustees shall, in investigating the experience of the members of the system, note any significant increase in the establishment of special service credit and determine the extent to which any increase has been caused by the installment or payroll deduction payment method. If the actuary certifies in writing to the retirement system that sound actuarial funding of the retirement system's benefits is endangered by continuation of the installment or payroll deduction payment method, the board of trustees may determine that the payment method will not be available, other than to those who are using the method at the time of the determination.
(j) Payments to establish service credit by a member who plans to retire in less than a year may be made by payroll deduction for a period determined by the retirement system.
(k) Each employer shall establish a payroll deduction plan to facilitate the payroll deductions authorized by this section and shall cooperate with the retirement system in implementing the payroll deduction method of payment for service credit.
Added by Acts 1991, 72nd Leg., ch. 882, Sec. 2, eff. Sept. 1, 1992. Amended by Acts 1993, 73rd Leg., ch. 812, Sec. 27, eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 1416, Sec. 28, eff. Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch. 1359 (S.B. 1691), Sec. 32, eff. September 1, 2005.
Acts 2013, 83rd Leg., R.S., Ch. 1078 (H.B. 3357), Sec. 15, eff. June 14, 2013.
Acts 2017, 85th Leg., R.S., Ch. 930 (S.B. 1663), Sec. 14, eff. September 1, 2017.
