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Payment Methods
Lump-sum payment
You can purchase prior service with a personal check, trustee-to-trustee transfer of funds or pre-tax rollover of funds.
Trustee-to-trustee transfer
You may arrange to transfer funds to VRS from a governmental 457(b) plan, including the Commonwealth of Virginia 457 Deferred Compensation Plan.
Pre-Tax Rollover
You may roll over funds on a tax-deferred basis to VRS from an Individual Retirement Account (IRA) or another qualified plan with a previous employer.
After-tax payroll deduction contract
If you are within your three-year eligibility period, you may purchase prior service through an after-tax payroll deduction. Five percent of your compensation will be deducted from your paycheck each month. The 5 percent rate will not change even if it takes you longer than three years to complete your purchase.
Pre-tax salary reduction contract
If you are within your three-year eligibility period, you may purchase prior service through a pre-tax salary reduction contract, if your employer offers this option. If you have more than 12 months to purchase and elect to purchase 12 months at a time, you must enter into a new contract before your current contract lapses. If your contract lapses and you are within your three-year eligibility period, you can enter into another pre-tax salary reduction contract or purchase your remaining service with a lump sum based on the 5 percent rate. If your three-year eligibility period has ended and you wish to purchase the balance, your cost will be based on the actuarial equivalent rate. You also will be required to purchase the remaining service with a lump-sum payment.
Combination lump-sum payment and contract methods
You may purchase a portion of your prior service in a lump sum and the remainder with a payroll deduction contract or salary reduction contract, as described above.
