Payment Methods

After-tax payroll deduction or pre-tax reduction from your compensation

If you purchase prior service credit at the 5-percent rate, you may finance the cost through an after-tax payroll deduction or a pre-tax reduction from your compensationif your employer offers this option.

After-tax lump-sum payment

You may purchase some or all of your prior service credit with a lump-sum payment on an after-tax basis. The cost letter will include a section for you to complete if you are choosing this option. You must send VRS your payment within 90 days of receiving the cost letter.

Lump-sum payment using qualified rollover distribution

You may purchase prior service credit through the rollover of funds from qualified plans, such as a 403(b), 457(b) or 401(a) plan; other types of defined contribution and defined benefit plans that pay lump sums; and other qualified retirement plans.

Trustee-to-Trustee transfer

If you are an active participant in a 457(b) governmental deferred compensation plan or a 403(b) tax-sheltered annuity plan, you may transfer funds from your plan to VRS to purchase some or all of your prior service credit.

Combination lump-sum and payroll methods

You may make a lump-sum payment for a portion of your purchase and begin an after-tax payroll deduction or pre-tax reduction contract for the remainder. Talk with your human resource officer or VRS about this option.