PURPOSE: This rule sets forth the manner in which funds shall be paid to, credited and refunded by the retirement system for the reinstatement and purchase of membership service credit in the retirement system.

1. (1) Payments to reinstate or to purchase credit must be by cash, check, cashier’s check, money order or bank draft payable to the Public School Retirement System of Missouri at par.

2. (2) Consistent with the Internal Revenue Code, the system will accept rollovers in payment for reinstatement and credit purchases provided the money is an “eligible rollover distribution” from one of the following:

   1. (A) A 401(a) tax qualified plan (including a Keogh plan which meets additional requirements pertaining to owner-employees);
   2. (B) A 401(k) profit sharing plan;
   3. (C) A 403(a) qualified annuity plan;
   4. (D) A 408(a) individual retirement account or a 408(b) individual retirement annuity, but only if the IRA is a conduit or “holding account” IRA or annuity containing amounts from a 401(a) qualified plan or a 403(a) annuity plan, and does not contain any other types of funds: therefore, an IRA which is established and/or funded with other monies is not an eligible rollover distribution;
   5. (E) A 403(b) qualified plan;
   6. (F) A state and local government 457(b) qualified plan;
   7. (G) Such other plans or accounts as may be authorized as a source of eligible rollover distributions to the system under the Internal Revenue Code, provided that the system shall not be obligated to accept any distribution from any such authorized plan or account if the distribution would jeopardize the taxqualified status of the system; or
   8. (H) The member, if the amount was distributed to the member from a qualified plan, is rolled over by the member to the system within sixty (60) days of that distribution, and the payment is accompanied by proof of rollover eligibility.
3. (3) If an “eligible rollover distribution” is used to reinstate or to purchase credit, the system will accept only an amount equal to or less than the balance due for the reinstatement or purchase.
4. (4) Prior to July 1 each year, the board of trustees shall establish a “purchase rate” of interest based upon the actuarially assumed annual rate of return on invested funds of the retirement system. The purchase rate shall apply to any amount due for reinstatement of credit or for the purchase of credit except as otherwise specified by law.
5. (5) Interest on an application to reinstate credit shall be charged from the date of refund to the member to the date of final payment to the system. Interest on an application to purchase credit shall be charged from the end of the school year in which each period of credit being purchased occurred to the date of final payment to the system. Interest shall be compounded as of each June 30 to the date of final payment.
6. (6) The total amount due at the date of application to reinstate credit or to purchase credit, including interest charges to that date, shall become the principal amount. If payment in full is made within the time period prescribed by law, the total amount of any payments made on the application will be credited to the member’s accumulated contributions.
7. (7) The total amount paid for the service credit reinstated or purchased shall be credited to the member’s accumulated contributions account at the close of the school year in which the application expires or the payment is made in full, or as of the effective date of the member’s retirement or the member’s date of death, as appropriate.
8. (8) A member electing to reinstate or purchase credit who wishes to extend payment for the credit over a period of time following the election may make payments at will during, but for no longer than, the period for payment established by law, and interest on the unpaid balance shall accrue monthly and shall be compounded annually at the purchase rate established by the board of trustees.
9. (9) If payment to reinstate or purchase all the credit for which the member applies is not completed within the period established by law, the amount paid will be—a) used to allow proportional credit where permissible, based on the relationship between the total principal due at application and the total of the payments applied to the principal, and the total amount paid will be credited to the member’s accumulated contributions; or by refunded to the member if proportional credit is not allowable. Only payments purchasing less than the first one-tenth (0.1) year of credit will be refunded. The member may reapply to reinstate or purchase credit for the same period for which the member previously applied but did not make full payment, except in those instances where a current employer must make matching contributions to fund the credit, in which case the member shall be limited to one (1) application for such credit.
10. (10) If a member dies before retirement or retires on service or disability retirement after having made partial payments but not payment in full to reinstate or purchase credit, the partial payments will be refunded to the member’s beneficiary or the retiree if proportional credit is not allowable by law or by rule of the board of trustees. If proportional credit is allowable, the payments will be credited to the member’s accumulated contributions and proportional credit will be allowed. Only payments purchasing less than first one-tenth (0.1) year of credit will be refunded to the member’s beneficiary or the retiree.

AUTHORITY: section 169.020, RSMo 2000.* Original rule filed June 23, 1998, effective Jan. 30, 1999. Amended: Aug. 15, 2001, effective Feb. 28, 2002.

*Original authority: 169.020, RSMo 1945, amended 1951, 1953, 1967, 1973, 1983, 1990, 1995, 1996, 1998.