{"data":{"id":"us-ky/krs-61.552","jurisdiction":"us-ky","citation":"KRS 61.552","heading":"Credit for service -- Purchases and grants.","body":"(1) Called to Active Duty Military Service. An employee of an employer participating\nin the system who is called to active military duty in the Armed Forces of the\nUnited States shall be credited in accordance with 38 U.S.C. sec. 4318 with service\ncredit, creditable compensation, and in the case of employees participating in the\nhybrid cash balance plan, employee contributions, employer credits, and interest\ncredits, for a period of active military duty of up to six (6) years, provided:\n(a) The employee was cal led to active military duty in the Armed Forces of the\nUnited States:\n1. After the employee's membership date in the system and provided the\nemployee was on leave of absence from the employer and did not\nwithdraw his or her accumulated account balance; or\n2. Prior to the employee's membership date in the system and the date the\nemployee terminated employment with his or her employer;\n(b) The employee entered active military service within three (3) months of his or\nher last day of paid employment;\n(c) The employee's discharge military service was terminated in a manner other\nthan as described in 38 U.S.C. sec. 4304;\n(d) The employee returns to work with an employer participating in the system\nwithin two (2) years after completion of the period of active mil itary duty, or\nupon the subsequent termination of any total disability which existed at the\nexpiration of the two (2) years after discharge; and\n(e) For an employee whose membership date is on or after January 1, 2014, who\nis participating in the hybrid ca sh balance plan under KRS 16.583, 61.597,\n78.5512, or 78.5516, the employee pays the employee contributions on the\ncredited compensation as provided under KRS 16.543, 61.543, and 78.615.\nFor periods of active military duty that meet the requirements of this subsection, the\nemployer shall pay the employer contributions payable under KRS 61.565, 61.702,\n78.5536, and 78.635.\n(2) (a) Omitted Service. Any person who is entitled to service credi t for employment\nwhich was not reported by the employer in accordance with KRS 16.543,\n61.543, or 78.615 may obtain credit for the service subject to the provisions of\nthis subsection.\n(b) Provided the person pays for the omitted service with within six (6) months of\nnotification by the system, the cost of the service shall be equal to the\nemployee contributions that would have been paid if the person had been\ncorrectly reported in accordance with KRS 16.543, 61.543, or 78.615.\n(c) Any employee participati ng in one (1) of the state -administered retirement\nsystems entitled to service credit under paragraph (a) of this subsection who\nhas not repaid the employee contributions due within six (6) months of\nnotification by the system may purchase the credit after  the six (6) months by\npaying to the system the employee contributions plus interest at the actuarially\nassumed rate from the date of initial notification under paragraph (b) of this\nsubsection.\n(d) Omitted service purchased under this subsection shall:\n1. Be considered service credited under KRS 16.543(1), 61.543(1), or\n78.615(1) for purposes of determining eligibility for retirement benefits\nunder KRS 78.510 to 78.852; and\n2. Not be credited to the member's account until the employer\ncontributions due a nd any interest or penalties on the delinquent\nemployer contributions for the period of omitted service are received by\nthe system.\n(e) Employees who begin participating on or after January 1, 2014, in the hybrid\ncash balance plan provided by KRS 16.583 or  61.597 or 78.5512 or 78.5516\nshall, upon payment of the employee and employer contributions due under\nthis subsection, have their accumulated account balance increased by the\nemployee contributions, employer pay credits, and interest credits that would\nhave been credited to their member's account if the contributions had been\npaid on time.\n(f) Contributions payable by the employer under this subsection for omitted\nservice shall be considered delinquent from the date the employee should\nhave been reported a nd received service credit in accordance with KRS\n16.543, 61.543, and 78.615.\n(3) (a) Recontribution of a Refund. Any employee participating in one (1) of the\nstate-administered retirement systems who has been refunded his or her\naccumulated account balanc e under the provisions of KRS 61.625, thereby\nlosing service credit in the system, may regain the credit by paying to the\nsystem the amount or amounts refunded by the system with interest at a rate\ndetermined by the board. Service purchased under this subs ection on or after\nJanuary 1, 2014, shall not be used to determine the member's membership\ndate in the systems.\n(b) Recontribution of a refund purchased under this subsection shall not be used\nin determining a retirement allowance until the member has accr ued at least\nsix (6) months of service credit in a state -administered retirement system,\nexcluding the service purchased under this subsection. If the member does not\naccrue at least six (6) months of service credit in a state -administered\nretirement system, excluding service purchased under this subsection, then the\npayment plus interest as provided in KRS 16.560, 61.575, or 78.640 shall be\nrefunded upon retirement, death, or written request following termination of\nemployment. The service requirement shal l be waived if the member dies or\nbecomes disabled as provided for by KRS 16.582, 61.600, 61.621, 78.5522, or\n78.5524.\n(4) (a) Summer Months. Any employee participating in one (1) of the state -\nadministered retirement systems who is or has been employed by a school\nboard or community action agency participating in the County Employees\nRetirement System or a state -operated school under KRS Chapter 167 or an\ninstitution of higher learning participating in the Kentucky Employees\nRetirement System, who receives service credit for less than twelve (12)\nmonths each year, may purchase the additional months of service credit\nneeded to total one (1) year of service credit, except the amount purchased for\nany specific year shall not exceed three (3) months.\n(b) The co st of the summer months service credit shall be determined by the\nformula established by subsection (10) of this section and may be purchased\nby the employee, or the employer on behalf of the employee, or the cost may\nbe paid by both the employer and emplo yee in which case the employer and\nemployee shall each pay fifty percent (50%) of the cost. Service credit shall\nnot be credited to the member's account until both the employer's and\nemployee's payment are received by the system.\n(c) If the employee has pu rchased service credit under this subsection based on\nmonths reported by the employer for the fiscal year, and an audit of the\nemployee's account reduces the number of months of service credit for which\nthe employee is eligible to no fewer than nine (9) mo nths, the employee shall\nretain credit for the months purchased unless the employee is ineligible for\nany service in the fiscal year. The employee shall be eligible to purchase the\nadditional months under this subsection to total one (1) year.\n(d) This sub section shall not apply to members who began participating in the\nCounty Employees Retirement System on or after January 1, 2014.\n(5) Vested Service Purchases. Any employee who began participating in the County\nEmployees Retirement System, the Kentucky Employees Retirement System, or the\nState Police Retirement System prior to January 1, 2014, who is vested may\npurchase service credit for:\n(a) Past service. \"Past service\" means periods of employment:\n1. Between July 1, 1956, in the case of the Kentucky Emp loyees\nRetirement System, or July 1, 1958, in the case of the County\nEmployees Retirement System, and the effective date of participation by\nthe employer; or\n2. With a public agency that did not participate in the Kentucky Employees\nRetirement System but w ould have been eligible to participate under\nKRS 61.520 or a political subdivision that did not participate in the\nCounty Employees Retirement System but would have been eligible to\nparticipate under KRS 78.530, provided the public agency or political\nsubdivision has merged with or been taken over by a participating\nemployer;\n(b) State university service, provided the university does not participate in a state-\nadministered retirement system and the university service being purchased\nwas in a nonteaching pos ition that did not participate in a defined benefit\nretirement program;\n(c) 1. Up to ten (10) years of out-of-state service. \"Out-of-state\" means service\ncredited to a state or local government -administered public defined\nbenefit plan in another state that  is not a defined benefit plan for\nteachers.\n2. Up to ten (10) years of out -of-state hazardous service. \"Out -of-state\nhazardous service\" means service in a regular full-time position that was\ncredited to a defined benefit retirement plan administered by a  state or\nlocal government in another state, if the service could be certified as\nhazardous pursuant to KRS 61.592 or 78.5520, as applicable. The\nemployee may purchase out -of-state hazardous service under this\nsubparagraph provided the employee is vested t o receive benefits from\nthe State Police Retirement System or hazardous duty benefits from the\nKentucky Employees Retirement System or the County Employees\nRetirement System.\nThe employee must purchase out -of-state service or out -of-state hazardous\nservice in the system in which he or she is vested based solely upon the\nservice in that system;\n(d) Active military duty, which means periods of active military duty in the\nArmed Forces of the United States, provided:\n1. The employee's military service was terminated in a manner other than\nas described in 38 U.S.C. sec. 4304; and\n2. The service has not been credited as free military service under\nsubsection (1) of this section;\n(e) National Guard service. An employee may p urchase one (1) month of service\nfor each six (6) months of service in the National Guard or the military\nreserves of the United States. The service shall be treated as service earned\nprior to participation in the system;\n(f) Federal service. \"Federal serv ice\" means service with the United States\ngovernment, that is not service in the Armed Forces;\n(g) Seasonal, emergency, interim, probationary, or temporary employment or\npart-time employment as provided by KRS 61.510(21) or 78.510(21)\naveraging one hundred (100) or more hours of work per month on a calendar\nor fiscal year basis. If the average number of hours of work is less than one\nhundred (100) per month, the member may purchase credit for only those\nmonths he or she receives creditable compensation for one hundred (100)\nhours of work;\n(h) Part-time employment in a noncertified position at a school board prior to the\n1990-91 school year which averaged eighty (80) or more hours of work per\nmonth on a calendar or fiscal year basis. If the average number of hours of\nwork is less than eighty (80) per month, the noncertified employee of a school\nboard shall be allowed to purchase credit only for those months he or she\nreceives creditable compensation for eighty (80) hours of work;\n(i) Any period of:\n1. Authorized maternity leave without pay or sick leave without pay;\n2. Unpaid leave authorized under the federal Family and Medical Leave\nAct;\n3. Approved educational leave; and\n4. Agency-approved leave to work for a work -related labor organization if\nthe agency subsequently participated in the County Employees\nRetirement System, but only if the board receives a favorable private\nletter ruling from the United States Internal Revenue Service or a\nfavorable opinion letter from the United States Department of Labor;\n(j) Non-participating employer service, which means periods of employment\nwith the following types of agencies provided the agency does not participate\nin a state-administered retirement system:\n1. A regional community services program for mental health organized and\noperated under the provisions of KRS 210.370 to 210.480;\n2. A community action agency created under KRS 273.405 to 273.453.\nThe service provided by this subparagraph shall be purchased in the\nCounty Employees Retirement System;\n3. An area development district created pursuant to KRS 147A.050; or\n4. A business development corporation created pursuant to KRS 155.001\nto 155.230, provided the system receives a favorable private letter ruling\nfrom the United States Internal Revenue Service or a favor able opinion\nletter from the United States Department of Labor;\n(k) Urban-county government service, which means employment in an urban -\ncounty government position that would qualify for hazardous duty coverage\nunder KRS 61.592 or 78.5520. The provisions of  this paragraph shall only be\napplicable to vested members participating in the State Police Retirement\nSystem or in a hazardous position in the Kentucky Employees Retirement\nSystem or the County Employees Retirement System;\n(l) Periods of service as assis tants to officers and employees of the General\nAssembly for persons who were unable to acquire service under KRS\n61.510(20) for service performed after January 1, 1960;\n(m) Service as a volunteer in the Kentucky Peace Corps, created by KRS 154.1 -\n720; and\n(n) Employment with a vocational technical school in a noncertified part -time\nposition averaging eighty (80) or more hours per month, determined by using\nthe number of months actually worked within a calendar or fiscal year. The\nservice provided by this par agraph shall be purchased in the Kentucky\nEmployees Retirement System.\n(6) Non-qualified service. Provided the employee's membership date in the system is\nprior to July 15, 2002, and provided the employee has total service in all state -\nadministered retirem ent systems of at least one hundred eighty (180) months of\nservice credit, the employee may purchase a combined maximum total of five (5)\nyears of service credit, known as non -qualified service, which is not otherwise\npurchasable under any of the provision s of KRS 16.505 to 16.652, 61.510 to\n61.705, or 78.510 to 78.852. The service purchased under this paragraph shall not\nbe used in determining a retirement allowance until the member has accrued at least\ntwo hundred forty (240) months of service, excluding service purchased under this\nsubsection. If the member does not accrue at least two hundred forty (240) months\nof service, excluding service purchased under this subsection, upon retirement,\ndeath, or written request following termination, the payment, plu s interest as\nprovided in KRS 16.560, 61.575, or 78.640, as applicable, shall be refunded.\n(7) For purposes of service purchased under subsections (2) to (6) of this section:\n(a) Except for subsection (6) of this section, the service must qualify as regula r\nfull-time as provided by KRS 61.510 and 78.510;\n(b) No service credit may be purchased for periods already credited to the system\nor another public defined benefit retirement fund, including non -qualified\nservice purchased in another state-administered retirement system;\n(c) Except as provided by paragraph (a)2.a. of subsection (9) of this section, the\nemployee payment for service purchases shall not be picked up, as described\nin KRS 16.545(4), 61.560(4), or 78.610(4), by the employer;\n(d) Except for se rvice purchased under subsection (2) or (3) of this section,\nservice purchases made pursuant to this section may be purchased by the\nentire amount of service available or by increments. Service purchases made\npursuant to subsections (2) and (3) of this sec tion shall only be purchased by\nthe entire amount of service available; and\n(e) Service purchases as provided by subsections (5)(b), (d) to (f), and (j)1. and\n(6) of this section may be purchased in any system in which the member has\nservice credit.\n(8) (a) Employer purchase of past service. Any employer participating in the system\nmay purchase service credit, between July 1, 1956, in the case of the\nKentucky Employees Retirement System, or July 1, 1958, in the case of the\nCounty Employees Retirement System, and the participation date of the\nemployer, for present employees of the county or department who have\nelected coverage under KRS 61.525(2) or 78.540(1), provided the employee\nbegan participating in the system prior to January 1, 2014.\n(b) A Kentucky Employees Retirement System employer shall pay the cost of the\nservice credit within the fiscal year the election is made to purchase the\nservice credit. A County Employees Retirement System employer may\npurchase the service, with interest at the rate actuarially assumed by the board,\nover a period not to exceed ten (10) years.\n(c) If an employer elects to purchase service under the provisions of this\nsubsection, any present employee who would be eligible to receive service\ncredit under the provisions of this subsection and has purchased service credit\nunder subsection (5)(a) of this section shall have his or her payment for the\nservice credit refunded with interest at the rate paid under KRS 61.575 or\n78.640.\n(d) Any payments made by an employer under th is subsection shall be deposited\nto the retirement allowance account of the system and these funds shall not be\nconsidered accumulated contributions of the individual members.\n(9) (a) An employee participating in the system may purchase service credit unde r\nany of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to\n78.852 for which he or she is eligible to purchase, or as otherwise required by\n38 U.S.C. ch. 43, by:\n1. Making a lump -sum payment on a before -tax basis as provided in\nsubparagraph 3. of this paragraph, or on an after -tax basis if the\nemployee is purchasing service credit under subsection (1) or (3) of this\nsection, service available pursuant to 38 U.S.C. ch. 43 not otherwise\nprovided for in this section, or grandfathered servi ce as defined in\nparagraph (b) of this subsection;\n2. Entering into an agreement to purchase service credit through an\ninstallment purchase of service agreement with the systems as provided\nby paragraph (c) of this subsection:\na. On a before-tax basis in which the service is purchased pursuant to\nthe employer pick-up provisions in 26 U.S.C. sec. 414(h)(2); or\nb. On an after -tax basis if the employee is purchasing service credit\nunder subsection (1) or (3) of this section, service available\npursuant to 38  U.S.C. ch. 43 not otherwise provided for in this\nsection, or grandfathered service as defined in paragraph (b) of this\nsubsection; or\n3. Transferring funds to the system through a direct trustee -to-trustee\ntransfer as permitted under the applicable secti ons of the Internal\nRevenue Code and any regulations or rulings issued thereunder, through\na direct rollover as contemplated by and permitted under 26 U.S.C. sec.\n401(a)(31) and any regulations or rulings issued thereunder, or through a\nrollover of funds p ursuant to and permitted under the rules specified in\n26 U.S.C. secs. 402(c) and 408(d)(3). The system shall accept the\ntransfer or rollover to the extent permitted under the rules specified in\nthe applicable provisions of the Internal Revenue Code and any\nregulations and rulings issued thereunder.\n(b) For purposes of this subsection, \"grandfathered service\" means service\npurchases for which a member, whose membership date in the system is prior\nto July 1, 1999, is eligible to purchase under KRS 16.505 to 16.652, 61.510 to\n61.705, or 78.510 to 78.852, that were available for all members of the system\nto purchase on August 5, 1997.\n(c) 1. For service purchased under a before -tax or after -tax installment\npurchase of service agreement as provided by paragraph  (a)2. of this\nsubsection, the cost of the service shall be computed in the same manner\nas for a lump -sum payment which shall be the principal, except that\ninterest compounded annually at the actuarial rate in effect at the time\nthe member elects to make t he purchase shall be added for the period\nthat the installments are to be made.\n2. Multiple service purchases may be combined under a single installment\nagreement, except that no employee may make more than one (1)\ninstallment purchase at the same time.\n3. For after-tax installment purchase of service agreements, the employee\nmay elect to stop the installment payments by notifying the system; may\nhave the installment purchase recalculated to add one (1) or more\nadditional service purchases; or may pay by lump sum the remaining\nprincipal or a portion of the remaining principal.\n4. Before-tax installment purchase of service agreements shall be\nirrevocable, and the employee shall not be able to stop installment\npayments or to pay off the remaining balance of  the purchase of service\nagreement, except upon termination of employment or death.\n5. One (1) year of installment payments shall be made for each one\nthousand dollars ($1,000) or any part thereof of the total cost, except\nthat the total period allowed fo r installments shall not be less than one\n(1) year and shall not exceed five (5) years.\n6. The employee shall pay the installments by payroll deduction for after -\ntax purchase of service agreements, and the employer shall pick up\ninstallments for before -tax purchase of service agreements. Upon\nnotification by the system, the employer shall report the installment\npayments monthly continuously over each twelve (12) month period at\nthe same time as, but separate from, regular employee contributions on\nthe forms or by the computer format specified by the board.\n7. The system shall determine how much of the total cost represents\npayment for one (1) month of the service to be purchased and shall\ncredit one (1) month of service to the member's account each time thi s\namount has been paid. The first service credited shall represent the first\ncalendar month of the service to be purchased and each succeeding\nmonth of service credit shall represent the succeeding months of that\nservice.\n8. If the employee utilizing an i nstallment purchase of service agreement\ndies, retires, does not continue employment in a position required to\nparticipate in the system, or elects to stop an after -tax installment\npurchase of service agreement, the member, or in the case of death, the\nbeneficiary, shall have sixty (60) days to pay the remaining principal or\na portion of the remaining principal of the installment purchase of\nservice agreement by lump sum, subject to the restrictions of paragraph\n(a)1. of this subsection, or by transfer of f unds under paragraph (a)3. of\nthis subsection, except that payment by the member shall be filed with\nthe system prior to the member's effective retirement date. If the\nmember or beneficiary does not pay the remaining cost, the system shall\nrefund to the me mber or the beneficiary the payment, payments, or\nportion of a payment that does not represent a full month of service\npurchased, except as provided by subsection (6) of this section.\n9. If the employer does not report installment payments on an employee\nfor sixty (60) days for an after -tax installment purchase of service\nagreement, except in the case of employees on military leave or sick\nleave without pay, the installment purchase shall cease and the system\nshall refund to the employee the payment, payme nts, or portion of a\npayment that does not represent a full month of service purchased.\n10. Installment payments of employees on military leave or sick leave\nwithout pay shall be suspended during the period of leave and shall\nresume without recalculation upon the employee's return from leave.\n11. If payments have ceased under subparagraph 8. or 9. of this paragraph\nand the member later becomes a participating employee in the County\nEmployees Retirement System, Kentucky Employees Retirement\nSystem, or State Police Retirement System, the employee may complete\nthe adjusted original installment purchase by lump sum or installment\npayments, subject to the restrictions of this subsection. If the employee\nelects to renew the installment purchase, the cost of the remaining\nservice shall be recalculated in accordance with subsection (10) of this\nsection.\n(d) Member payments, including interest, properly received pursuant to this\nsubsection, shall be deposited to the member's account and considered as\naccumulated contributions of the individual member.\n(10) (a) The cost of purchasing service credit under any provision of this section,\nexcept as provided by subsections (1) to (3) of this section, shall be\ndetermined by multiplying the higher of the employee's current rate of pay,\nfinal rate of pay, or final compensation as of the end of the month in which\nthe purchase is made times the actuarial factor times the number of years of\nservice being purchased. The actuarial factor used to determine the cost of\npurchasing service credit shall assume the earliest date the member may retire\nwithout a reduction in benefits and the cost -of-living adjustments provided to\nmembers upon retirement.\n(b) Service purchased on or after August 1, 2004, under the provisions of KRS\n16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852, except for service\npurchased under subsections (1) to (3) of this section or service purchased as\ndescribed by paragraph (d) of th is subsection, shall not be used to determine\neligibility for or the amount of the monthly insurance contribution under KRS\n61.702 or 78.5536.\n(c) For a member whose membership date is on or after August 1, 2004, service\npurchased under the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or\n78.510 to 78.852, except for service purchased under subsections (1) to (3) of\nthis section or service purchased as described by paragraph (d) of this\nsubsection:\n1. Shall not be used to determine eligibility for a  retirement allowance\nunder disability retirement, early retirement, normal retirement, or upon\ndeath of the member under any of the provisions of KRS 16.505 to\n16.652, 61.510 to 61.705, or 78.510 to 78.852; and\n2. Shall only be used to determine the amoun t of the retirement allowance\nof a member who is eligible for a retirement allowance under disability,\nearly retirement, normal retirement, or upon death of the member under\nany of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or\n78.510 to 78.852, based on service earned as a participating employee.\n(d) Paragraphs (b) and (c) of this subsection shall not apply to a member who was\nbound by an educational contract as a conditional employee to the state of\nKentucky prior to December 31, 2003, regar dless of membership date in the\nsystem. Educational leave, seasonal service, or any other qualified service\npurchased by a member with this classification under this section shall be\nused to determine eligibility for benefits, membership dates, and the amo unt\nof benefit for:\n1. A retirement allowance under disability retirement, early retirement,\nnormal retirement, or death under any of the provisions of KRS 16.505\nto 16.652, 61.510 to 61.705, and 78.510 to 78.852; and\n2. The monthly insurance contribution under KRS 61.702 or 78.5536.","path":["KRS Chapter 61"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=54852","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:15Z","sha256":"211da481950f474d76e3829fabc2c65aae639127a1d4d9b33550a1953d3b1097","source_id":"us-ky","stale":false,"prev":"us-ky/krs-61.550","next":"us-ky/krs-61.5525"},"notice":"GroundRules: Original legal text. Not legal advice."}