1. (a) A member of the Teacher Retirement System of Texas (TRS) who is subject to a membership waiting period beginning on or after September 1, 2003, pursuant to Government Code §822.001, may purchase one year of equivalent membership service credit in TRS in accordance with Government Code §823.406 and this section.

2. (b) A member is eligible to purchase one year of service credit under this section if the following requirements are met:

   1. (1) the individual served at least 4 1/2 months in an eligible position during the school year in which the waiting period ended or, in the alternative, the individual served a full semester of more than four calendar months in an eligible position during the school year in which the waiting period ended or the individual entered into an employment contract or oral or written work agreement for a period which would qualify the individual for a year of service credit but who actually renders only 90 working days of service, and
   2. (2) any portion of that service was performed during the membership waiting period, and
   3. (3) the individual did not serve a sufficient length of time during the school year after becoming eligible for TRS membership to earn a year of membership service credit in the retirement system.
3. (c) A member may not purchase service credit under this section until after the end of the school year in which the waiting period ended. If requested by TRS, in order to purchase service credit under this section, a member shall provide verification of service and salary during the school year in which the waiting period service was performed. The verification must be in a form that TRS finds acceptable to determine that the member meets the requirements of this section.
4. (d) Equivalent membership service credit may be established under this section by depositing with TRS the amount described in this subsection. To establish service credit for the year, 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.
5. (e) Upon receipt by TRS of the required amount, the member will be credited with the year of service credit. A member may not receive more than one year of service credit for the service performed in a school year.

6. (f) To calculate the amount required by this section, TRS will use the cost factors indicated on the "Waiting Period Service Credit Purchase Table" furnished by the TRS actuary of record. The table 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. The cost factor for a participant with more years of service credit than shown on the table is the same as the factor shown for the highest number of years of service credit on the table for the participant. TRS will calculate the cost to purchase service credit under this section by dividing the salary by 1000 and multiplying the resulting quotient by the appropriate cost factor obtained from the table. The table sets the cost, per $1,000 of salary, to purchase one year of service credit. For the purpose of calculating the required amount, the term "salary" is defined as follows:

   1. (1) For the upper region of the 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 years of compensation, with either two or three years of compensation used for the average, depending on whether the member has only two years or has three or more years of service credit at the time of the calculation; or
   2. (2) For the lower region of the 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 the table (where the factors appear below the line in bold) reflects those age and service combinations where the purchase of service credit results in immediate eligibility of the member for unreduced retirement benefits.
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7. (g) The purchase cost described in subsection (f) of this section is based on a lump-sum deposit. If deposits are made by installment payments, the purchase cost will be adjusted to reflect applicable fees and any additional actuarial cost resulting from the schedule of payments.
8. (h) Service credit purchased under this section cannot be used to determine eligibility for Texas Public School Retired Employees Group Health Insurance under Insurance Code, Chapter 1575.
9. (i) Payments for TRS service credit purchased under this section shall be paid in a manner consistent with any applicable limitations of United States Code, Title 26, §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 credit 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 §25.164 adopted to be effective April 28, 2004, 29 TexReg 3968.