2.43.3515    PURCHASE OF SERVICE NOT PERMITTED BY PARTICIPANT IN DEFINED CONTRIBUTION RETIREMENT PLAN

(1) A member of PERS with an existing non-PERS service purchase contract entered into pursuant to any MPERA statute or rule who wishes to elect the DCRP or the Montana University System Retirement Program (MUS-RP) must terminate or complete the service purchase contract before the election will be confirmed by MPERA.

(2) If a member of PERS with an existing service purchase contract files an election form electing either the DCRP or the MUS-RP, MPERA will send written notice to the member that the election cannot be confirmed until the service purchase contract is either terminated or completed.

(3) The notice will give the member 30 days to provide MPERA with written notification of the member's intentions.

(4) The member must choose one of the following options:

(a) pay to MPERA in a lump sum the entire amount remaining due under the service purchase contract and have the entire amount of service purchased under the contract transferred to the DCRP; or

(b) pay nothing more to MPERA and have the prorated amount of service purchased under the contract credited and applicable contributions transferred to the DCRP; or

(c) change the member's election to the DBRP.

(5) If a member chooses the option in (4)(a), the member may, pursuant to ARM 2.43.441, complete the service purchase contract with a rollover of funds from an eligible retirement plan account belonging to the member or a direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) tax-sheltered annuity or 26 USC 457 governmental plan, subject to (5)(a):

(a) A direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) or 26 USC 457 governmental plan prior to the member's severance from employment can be made only if the transfer is either for the purchase of permissive service credit (as defined in section 415(n)(3)(A) of the Internal Revenue Code) under the receiving defined benefit governmental plan or a repayment to which section 415 of the Code does not apply by reason of section 415(k)(3) of the Code. A purchase of service pursuant to 19-3-513, 19-5-409, 19-6-804, 19-7-804, 19-8-904, 19-9-411, or 19-13-405, MCA, is a purchase of permissive service credit.

(6) If a member chooses the option in (4)(a), but then fails to complete the service purchase contract by the end of the member's 12-month election period, MPERA will unilaterally implement (4)(b).

(7) If a member with an existing service purchase contract fails to provide MPERA with written notice of the member's intentions within the 30 days provided in (3), MPERA will unilaterally implement (4)(b). MPERA will take this action at the close of the 30-day time frame.

(8) A member with an existing service purchase contract who elects the DCRP or the MUS-RP in the last month of the member's 12-month election period may pay to MPERA in a lump sum the entire amount remaining due under the service purchase contract.

(a) The entire amount of service purchased under the contract will then be transferred to the DCRP.

(b) The member will not be given time to pay off the existing service purchase contract after the close of the member's 12-month election period.

(9) Any member of an MPERA-administered retirement system with an existing service purchase contract who does not elect the DCRP or the MUS-RP may not terminate the service purchase contract pursuant to this rule.

History: 19-2-403, 19-2-1010, 19-3-2104, MCA; IMP, 19-2-710, 19-3-2111, 19-3-2112, 19-3-2115, MCA; NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2003 MAR p. 1800, Eff. 8/15/03; AMD, 2005 MAR p. 913, Eff. 6/17/05; AMD & TRANS, from ARM 2.43.1015, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13