You may initiate purchase of prior service through your myVRS account and select from among the following payment methods:
- Lump-Sum Payment. You can purchase prior service by paying for the service in full with a personal check, funds from another retirement plan to VRS using a trustee-to-trustee transfer or a pretax rollover of funds from another retirement account. VRS members who are active participants in the Commonwealth of Virginia 457 Deferred Compensation Plan have the option of using employee contribution funds from their 457 Plan for payment.
- Purchase Payment Agreements
- After-tax payroll-deduction agreement. You may purchase prior service through an after-tax payroll-deduction agreement during any period of active employment. The agreement may be made for a minimum of six months (unless there are fewer than six months of prior service eligible for purchase) to a maximum of 12 months in duration. Payments will be deducted from your paycheck.
- Pretax salary-reduction agreement. You may purchase prior service through a pretax salary-reduction agreement, if your employer offers this option. The agreement may be made for a minimum of six months (unless there are fewer than six months of prior service eligible for purchase) or a maximum of 12 months in duration. Payments will be deducted from your paycheck.
When you complete your agreement, you can enter into another agreement or make a lump-sum purchase of your remaining service. If your two-year approximate normal cost window has ended and you wish to purchase the balance, either through an agreement or lump-sum payment, your cost will be the actuarial equivalent cost.
- Combination lump-sum payment and purchase payment agreement. You may purchase a portion of your prior service in a lump sum and the remainder with a purchase payment agreement, as described above.
Purchase Agreement Requirements
- An agreement may include multiple types of prior service, provided that all types have the same cost basis (e.g., all are at approximate normal cost or all are at actuarial equivalent cost).
- Purchase agreements may be made for a minimum of six months (unless there are fewer than six months to purchase) or a maximum of 12 months.
- You may purchase a minimum of one month of service per month of an agreement, up to a maximum of four months of service per month of an agreement.
- You can make only one purchase agreement at a time.
- The duration of an agreement may not extend beyond the two-year approximate normal cost window. However, you may enter into another agreement to purchase any remaining service at actuarial equivalent cost.
- Purchase payment agreements are executed through your employer.
- Each agreement to purchase service is calculated on a stand-alone basis, meaning that the agreement cannot be renewed, and the terms and cost in effect at the end of an agreement will not carry forward to the next agreement.