2006 Buyback Law

Stu Dickson

Local 509 was able to pass a law now on the books from 2006 (see the law) that enables state employees with “creditable service” to “Buy Back” up to 4 years of time towards the retirement system.

An employee must first have achieved “creditable service” within their agency. A two-page form is filled out by both the employee and the employer verifying how much creditable service the worker has, the time frames in question, and any available historical payroll information. The state Board of Retirement develops a calculation of what the worker would have to pay to “buy” retirement years. The worker has six months to decide if they will do this or not. If the worker does not follow through on the buyout, they forever forfeit this opportunity, so you need to make sure you can fulfill this opportunity once you start down this road.

The retirement board will give people three options for payment:

1) a lump sum option;
2) up to five years of payroll deductions; or
3) payment of the entire amount from Deferred Compensation (no tax penalty for withdrawal).

The Retirement Board charges 4 1/4% interest, which can be a sizable amount of money if the relevant time dates back to the 1980s, so workers should do this as soon as they think they can.

  More
  Buyback regulations from the State Retirement Board website