Members may look into purchasing creditable service with FRS to increase their ultimate retirement benefit while in the Florida Retirement System Pension Plan. The additional service credit applies only for past service. To qualify for the purchase of service credits, members must meet certain requirements. Past service would apply for certain military service, approved leaves of absence, in/out of state public service and disability. Certain military service allows a member to buy up to four years of creditable service. Approved leave of absence allows a member to buy up to two years of creditable service. In state or out of state public service allows a member to buy up to five years of creditable service. If a member retires on disability and fully recovers, as long as the member is employed for a year in a FRS covered position once he or she recovers, the member may buy back their service time.
Buying service credit can be extremely expensive. The cost for purchasing creditable service with FRS varies. “As an example, for each year of in-state or out-of-state public service purchased, you must pay 20% of the salary you earned for the first full work year as a member of the FRS or 20% of $12,000, whichever is greater, plus interest at 6.5% compounded annually from your first year of membership in the FRS.”1 The total benefit cost may be paid from the member’s self-directed retirement account, such as a 401(k) or 403(b). In certain circumstances, the employer may pay for all or part of the cost.
You cannot acquire additional creditable service under the Investment Plan unless the service is authorized by federal law, such as military service.
Is buying the service credit really worth it for you? Silverman Financial can help you determine if the cost of purchasing creditable service with FRS is really worth the benefit in the long run.