1. (a) Effective September 1, 2001, an eligible member may purchase one, two or three years of equivalent membership service credit in the Teacher Retirement System of Texas ("TRS") in accordance with Government Code, §823.405 and subject to the approval of TRS and to any plan qualification requirements and limits under the Internal Revenue Code of 1986, as amended from time to time. A member is eligible to establish up to three years of equivalent membership service credit if, at the time of the purchase, the member has at least seven years of actual membership service in TRS. Service credit must be purchased no later than December 31, 2005, by payment in full to TRS or by filing a completed and signed installment payment agreement with TRS. After December 31, 2005, purchase of this service credit will not be available due to the repeal of Government Code, §823.405, effective January 1, 2006. Installment agreements that are terminated, including by failure to pay amounts required under the agreement, will result in the permanent loss of eligibility to purchase this service credit after December 31, 2005.
2. (b) "Actual membership service" has the meaning given to "membership service" in Government Code, §821.001(11), and means service during a time that a person is both an employee, as defined in Government Code, §821.001(6), and a member of the retirement system.
3. (c) Equivalent membership service credit under Government Code, §823.405 may be established by depositing with TRS the amounts described in this subsection. 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 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, §823.405.

4. (d) To calculate these amounts, TRS will use the cost factors obtained from the three Service Purchase Tables furnished by the TRS actuary of record. Each of the tables cross-references 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. When an eligible member's service credit exceeds the last column for years of service credit on the tables, the applicable cost factor is found at the intersection of the member's age and the last column for years of service credit. 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. Table 3 sets forth the cost, per $1,000 of salary, to purchase three 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.
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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 be used to determine eligibility for the Texas Public School Retired Employees Group Insurance Program (TRS-Care) to the extent permitted under Chapter 1575, Texas Insurance Code.
7. (g) Payments for TRS service credit obtained through service credit purchase shall be paid in a manner consistent with any applicable limitations of 26 U.S.C. §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 under this section if payments exceed applicable limitations on contributions.

Source Note:The provisions of this §25.163 adopted to be effective December 9, 2001, 26 TexReg 8545; amended to be effective March 12, 2003, 28 TexReg 2100; amended to be effective February 9, 2006, 31 TexReg 709.