Service Purchase Fact Sheet - Judges
You may be able to increase your retirement benefit and possibly retire earlier by purchasing service credit. If you are eligible, you can purchase service credit by making additional contributions to the Retirement System.
Types of Service Credit You Can Purchase
- Forfeited Judges service
- Forfeited KPERS and KP&F service
- Military service
- Senior judges service (retired judges only)
- VISTA service
- Additional benefit service (first took office after age 60)
District Magistrate Judges may increase or convert certain types of DMJ service.
- Convert KPERS District Magistrate service to Judges District Magistrate service
(1.75 percent to 3.5 percent multiplier) - Increase Judges District Magistrate service rate from 3.5 percent to 5 percent
(membership date before July 1, 1987)
Check with your designated agent to see if your past public service qualifies. He or she also will be able
to help you start the purchase process.
Now Is the Time to Buy
Don’t wait. Purchase costs are based on salary and
age. Now is probably the most inexpensive time
for you to buy. Also, you
can only purchase credit while an active member (except senior judges service).
Payment Options
- Pre-tax payroll deduction over a period of time
- Rollover or trustee-to-trustee transfer from another retirement plan
like a governmental 457(b) plan, 403(b) annuity, or an individual retirement account - Lump sum (personal check, money order or Discover Card)
Cost
If you are under age 45, a year of service generally costs about 6 percent of your annual salary (or final average salary, whichever is higher). See example below. Each year after age 45, the actuarial cost increases significantly.
| Judges Service Purchase Example - under age 45 | ||
Salary (or FAS) |
|
Service purchase cost |
$80,000 |
x 6% |
= $4,800 |
$100,000 |
x 6% |
= $6,000 |
$120,000 |
x 6% |
= $7,200 |
| Benefit of Purchasing Service Credit | ||
Your final average salary |
For each additional year of service, your benefit increases by ... |
|
$80,000 |
$233 per month |
$2,800 per year |
$100,000 |
$291 per month |
$3,500 per year |
$120,000 |
$350 per month |
$4,200 per year |
Note: The benefit example above was calculated using the 3.5% multiplier. See "Calculating Your Retirement Benefit"
for more information.
Using the above examples, a member retiring with full benefits would recover the original purchase price
after 21 months. Any money after that would be value added to the lifetime benefit.
How Does the Process Work?
- Contact your designated agent to see if your past service is eligible.
- If your service is eligible, complete an Application to Purchase Service Credit – Judges (KPERS-67J) form.
- Your designated agent completes the employer part of the form and sends it to the Retirement System.
- The Retirement System calculates your purchase cost and sends a letter to you through your designated agent. At this point, you can consider the cost and benefits.
- To complete the purchase, sign the paperwork, arrange for payment and return both to the Retirement System.
- The Retirement System receives your payment or payroll deduction commitment.
- The Retirement System adds service credit to your record after the purchase is completed.
Federal Tax Requirements on Service Purchases
Only active members may purchase service. Federal law may limit you if you are purchasing service with after-tax money. This limit applies only to after-tax contributions, not to regular Retirement System contributions or tax-free rollovers.
- Not on purchases with rollovers or payroll deduction
- Annual limit amount is indexed and changes each year
- Can cause a delay in completing a lump-sum after-tax purchase
- Most likely to affect high-cost purchases (large number of years or member’s age and salary)