1. (a) An eligible member may purchase one or two years of equivalent membership service credit in the Teacher Retirement System of Texas ("TRS") for eligible work experience in accordance with Government Code, §823.404 and subject to the approval of TRS and to any plan qualification requirements, including permissive service credit purchase restrictions under Government Code, §823.006 and/or the Internal Revenue Code of 1986, as amended from time to time. For the purpose of limitations on contributions under the Internal Revenue Code, the service credit authorized under Government Code, §823.404 is non-qualified permissive service credit as defined in Government Code, §823.006. A member is eligible to establish up to two years of equivalent membership service credit for eligible work experience if, at the time of the purchase, the member has at least five years of membership service credit in TRS.
2. (b) Equivalent membership service credit for eligible work experience may be established by depositing with TRS the amounts described in subsection (c) of this section and by submitting certification, in the form and manner prescribed by TRS, that the member is entitled to salary step credit under Education Code, §21.403(b) and is eligible to purchase the service credit.
3. (c) For each year of equivalent membership service credit described in this section and approved by TRS, the eligible member must deposit the actuarial present value, at the time of deposit, of the additional standard retirement annuity benefits that would be attributable to the conversion of the work experience into service credit to be purchased under this section. Upon receipt by TRS of the required amount, the member will be credited with the additional year(s) of service credit purchased up to the maximum years of service credit allowed under Government Code, §823.404.

4. (d) To calculate these amounts, TRS will use the cost factors obtained from the two Service Purchase Tables furnished by the TRS actuary of record. Each of the tables cross-reference the member's age in rows with years of credited service (before purchase) in columns. The intersection of the participant's age and service is the cost per $1,000 of salary. The cost factor remains constant after 31 years of service. Therefore, when an eligible member's service exceeds 31 years, the applicable cost factor is found at the intersection of the member's age and 31 years of service. TRS will calculate the cost to purchase service under this section by dividing the salary by 1000 and multiplying the resulting quotient by the appropriate cost factor obtained from the tables. Table 1 sets forth the cost, per $1,000 of salary, to purchase one year of service. Table 2 sets forth the cost, per $1,000 of salary, to purchase two years of service. For purposes of this calculation, the term "salary" is defined as follows:

   1. (1) For the upper region of each table (where the factors appear above the line in italics), salary is the greater of current annual salary or the average of the member's highest three years of compensation; and
   2. (2) For the lower region of each table (where the factors appear below the line in bold), salary is the average of the member's highest three years of compensation. A member's highest three years of compensation shall be calculated as if the member were retiring at the time the service credit is purchased. The lower region of each table (where factors appear below the line in bold) reflects those age and service combinations where the purchase of service credit results in the immediate eligibility of the member for unreduced retirement benefits.
      Attached Graphic
      
      Attached Graphic
      
5. (e) The purchase cost described in subsection (d) of this section assumes a lump-sum deposit will be made. If deposits are made over a period of time as allowed by TRS, the purchase cost will be adjusted to reflect the actuarial present value of the benefits attributable to the purchased service credit.
6. (f) Service credit purchased under this section may not be used to determine eligibility for the Texas Public School Retired Employees Group Insurance Program per Insurance Code, Article 3.50-4, §2(10)(A).
7. (g) Payments for the purchase of TRS service credit for eligible work experience shall be paid in a manner consistent with any applicable limitations of 26 United States Code § 415, including any applicable limitations on payments as a percentage of compensation of the participant from the employer for the school year in which the payments are sought to be made, pursuant to Internal Revenue Code §415. A member, or a beneficiary of a member if service is sought to be established after the death of the member, may not be permitted to purchase TRS service credit for some or all years of work experience if payments exceed applicable limitations on contributions.

Source Note:The provisions of this §25.161 adopted to be effective February 4, 2000, 25 TexReg 598; amended to be effective December 9, 2001, 26 TexReg 8545; amended to be effective March 12, 2003, 28 TexReg 2100.