Title 105 | Chapter 001 | Regulation 330
SUPERSEDED
This document is no longer current.
PREVIOUS VERSION
The previous document that this document is based upon is available.
FINANCE AND ADMINISTRATION CABINET
Kentucky Retirement Systems
(Amendment)
105 KAR 1:330.Purchase of service credit.
Section 1.
Definitions.(1)
Definitions contained in KRS 16.505, 61.510, and 78.510 shall apply to this regulation, unless otherwise defined herein.(2)
Prior to April 1, 2021, "the Agency" means the Kentucky Retirement Systems, which administers the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System. Effective April 1, 2021, "the Agency" means the Kentucky Public Pension Authority, which is authorized carry out the day-to-day administrative needs of the Kentucky Retirement Systems (comprised of the State Police Retirement System and the Kentucky Employees Retirement System) and the County Employees Retirement System.(3)
"File" means the following methods for delivering or submitting a form to the retirement office: mail, fax, secure email, in-person delivery, and upload via Self Service on the Web site maintained by the Agency (if available). A form shall not be deemed filed until it has been received at the retirement office.(4)
"Provide," when used in reference to a form or other document, means the following methods for the Agency to make a form or document available to a member, retired member, or person: mail, fax, secure email, and upload via Self Service on the Web site maintained by the Agency (if available).(5)
"The Systems" means the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System.(6)
"Valid," when used in reference to a form, means that all required sections on a form are completed and all required signatures on a form are executed.Section 2.
Cost Calculation Date for Determining the Cost of the Service Purchase.(1)
The cost calculation date for determining the cost of the service to be purchased shall be the later of:(a)
The last day of the month in which the request for the cost of the service is filed(b)
The last day of the month the employee or person designates as the intended purchase date;(c)
The last day of the month in which documentation of the service is filed at the retirement office;(d)
The last day of the month in which the employee(e)
The last day of the month in which the employee(2)
(a)
The purchase deadline date shall be the later of the cost calculation date or thirty (30) days from the date the purchase cost is provided(b)
Upon discovery of a delay in providing the purchase cost to the employee or person, the Agency may extend the purchase deadline date in paragraph (a).(3)
An employee or person may not make a new request for cost calculation for purchase of service previously requested until the purchase deadline date has passed.(4)
Payment(a)
The purchase of service credit is made under KRS 61.552(2);(b)
If the employee files a Form 4170, "Direct Transfer/Rollover Authorization Form," at the retirement office while the employee is participating in an eligible retirement system and prior to the employee's termination date, so long as the financial institution completes the transfer or rollover within sixty (60) days of the payment due date, the payment for purchase of service credit by transfer or rollover may occur when the employee is no longer participating in an eligible retirement system and after the employee's termination date; or(c)
If the Agency discovers an error or omission in the service purchase cost, then the Agency may provide corrected costs to the employee, person, member, or retired member and, in order to have the service purchase credited to his or her account, the employee, person, member, or retired member shall pay any additional amount due for the corrected costs.(5)
If the employeeSection 3.Section 2.
General Requirements to Purchase Service.(1)
The employee or person shall file at the retirement office(a)
(b)
(2)
The Agency may require that any statement, letter, form, or other document required in this regulation be notarized, made under oath as defined in KRS 523.010, or both.(3)
No employee or person shall certify his or her own service on any of the statements, letters, forms, or other documents required by this regulation.(4)
(a)
The Agency shall determine how much service is eligible for purchase by statute and shall notify the employee or person in writing of the cost of the service that qualifies for purchase.(b)
If the Agency determines that the service is not eligible for purchase, the Agency shall notify the employee or person in writing of the reasons.Section 4.
Purchase of Omitted Service.(1)
(a)
To purchase omitted service pursuant to KRS 61.552(2) and 78.545, the employee or person shall file at the retirement office a valid Form 4225, "Verification of Past Employment."(b)
If the employee or person is seeking to purchase omitted service based on employment with the Executive Branch, copies of personnel and wage records provided by the employer shall be filed at the retirement office instead of the Form 4225, "Verification of Past Employment."(2)
If the Agency(3)
If the employee or person does not have additional documentation of the service, the employee or person may file at the retirement officeSection 5.
Purchase of School Board Service.[(4)
Section 3.
(1)
(a)
(b)
(c)
(d)
(2)
For service with a school board, the employee shall file at the retirement office a valid Form 4225, "Verification of Past Employment."(a)
(b)
(c)
(d)
(e)
(f)
Section 6.
Vested Service Purchases.(1)
(a)
In order to purchase service credit for1.(a)
The date of entry into active duty service;2.(b)
The date of discharge from active duty service; and3.(c)
The type of discharge.(b)
In order to purchase service credit for(c)
The documents required in paragraphs (a) or (b) of this subsection shall be verified by a statement or letter signed by an authorized employee of the military.(d)
The Agency shall verify with the employer the beginning and ending dates of the period of leave associated with active duty service in the Armed Forces of the United States, service in the National Guard, or service in the military reserve forces.[(5)
(a)
(b)
(c)
(d)
(e)
(2)
(a)
To purchase service for(b)
The Agency shall verify with the employer the beginning and ending dates of the period of educational, maternity, or sick leave without pay.(3)
To purchase state university service pursuant to KRS 61.552(5)(b) and 78.545, the employee shall file at the retirement office a valid Form 4120, "Verification of Employment with a State University."(4)
To purchase federal service pursuant to KRS 61.552(5)(f) and 78.545, the employee shall file at the retirement office a valid Form 4115, "Federal Verification."(5)
(a)
To purchase past seasonal, emergency, interim, probationary, temporary, or part-time employment that averages the required hours of work per month pursuant to KRS 61.552(5)(g) and 78.545, the employee shall file at the retirement office a valid Form 4225, "Verification of Past Employment."(b)
If the employee is seeking to purchase service based on past seasonal, emergency, interim, probationary, temporary, or part-time employment with the Executive Branch, copies of personnel and wage records provided by the employer shall be filed at the retirement office instead of the Form 4225, "Verification of Past Employment."(6)
To purchase service with a non-participating agency whose service is authorized pursuant to KRS 61.552(5)(j) and 78.545, the employee shall file at the retirement office the following documentation and may be required to file additional information, if necessary for determination:(a)
The beginning and ending dates of the service and any breaks that may have occurred during the service, listed by fiscal year;(b)
The number of calendar months worked;(c)
The position title and status, including full time, part time, probationary, emergency, seasonal, temporary, or interim; and(d)
If the employee participated in a retirement plan, and if so, if the plan was a defined contribution or defined benefit plan, and if the employee has taken a refund of contributions to the plan.(7)
To purchase urban-county government service pursuant to KRS 61.552(5)(k) and 78.545, the employee shall file at the retirement office a valid Form 4131, "Verification of Urban-County Government Service."(8)
(a)
To purchase service credit for out-of-state public service pursuant to KRS 61.552(5)(c) and 78.545, the employee shall file at the retirement office a valid Form 4140, "Verification of Out-of-State Service."(b)
To purchase out-of-state service credit for a hazardous duty position, the employee shall also file at the retirement office a copy of the description of the duties of the out-of-state position from his or her former out-of-state employer.[(7)
(a)
(b)
(c)
(d)
(e)
(8)
(a)
(c)
Out-of-state service(b)
(c)
(d)
Section 7.Section 4.
Service purchase calculations based on actuarial cost. For a purchase based on the actuarial cost, in accordance with KRS 61.552(10)(a) and 78.545(1)
Except for a classified employee of a local school board, current rate of pay shall be determined as follows:(a)
For an hourly employee paid on a seven and one-half (7 1/2) hour day, the hourly rate times 1,950;(b)
For an hourly employee paid on an eight (8) hour day, the hourly rate times 2,080;(c)
For an employee paid by the day, the daily rate times 260;(d)
For an employee paid by the week, the weekly rate times fifty-two (52);(e)
For an employee paid by the month, the monthly rate times twelve (12);(f)
For a part-time employee who averages 100 or more hours per month, the hourly rate times hours per day times 260. If the number of hours worked per day is not fixed by the employer, seven and one-half (7 1/2) hours shall be used;(g)
For an employee who receives a fixed amount in addition to an hourly, daily, weekly, monthly, or annual rate, the current rate shall include all fixed amounts, averaged into the same period;(h)
For an employee simultaneously employed in more than one (1) of the Systems(2)
Final compensation shall be determined as of the cost calculation date, except that the final compensation of nonhazardous members of the County Employees Retirement System or Kentucky Employees Retirement System with an effective retirement date within the window provided in KRS 61.510(14)(b) and 78.510(14)(b) shall be based on the three (3) fiscal years with the highest average monthly earnings if the sum of the employee's service when added to his age would equal at least seventy-five (75), assuming the employee's service includes:(a)
All service remaining on an active installment purchase agreement;(b)
All service which the employee is eligible to purchase under KRS 61.552(2), 61.552(3), and 78.545(c)
All service the employee would accrue if employment continued through December 31, 2008.(3)
The employee's age rounded to the nearest year as of the cost calculation date shall be used.(4)
The benefit factor used to determine the actuarial cost, in accordance with KRS 61.552(10)(a) and 78.545(a)
(b)
Section 8.Section 5.
Correction upon discovery of error or omission in service purchase costs.(1)
After the employee, member, or retired member has purchased service, the Agency(2)
If the recalculation results in an increase in the cost of $100 or more, the employee or person, member, or retired member shall have thirty (30) days to pay the additional amount.(3)
If the employee, member, retired member, or the employer, fails to pay the additional amount, the employee's, member's, or retired member's service shall be reduced to the next lower increment or number of months for which the employee, member, or retired member is eligible based on the original payment, and the difference shall be refunded to the employee, member, or retired member.Section 9.Section 6.
Special considerations for purchase of refunded or past service.(1)
The verified wages associated with service purchased under the provisions of KRS 61.552 and 78.545 that(2)
An employee purchasing service under the preceding subsectionSection 10.Section 7.
Incorporation by Reference.(1)
The following material is incorporated by reference:[(a)
(a)(b)
Form 4172, "Notice of Intent to Transfer Lump Sum Payment(s) to Qualified Employer Sponsored Plan,"(b)(c)
Form 4170, "Direct Transfer/Rollover Authorization Form"(c)
Form 4225, "Verification of Past Employment," April 2021;(d)
Form 4160, "Affidavit and Certification for Documentation of Service," September 2010;(e)
Form 4120, "Verification of Employment with a State University," April 2021;(f)
Form 4115, "Federal Verification," April 2021;(g)
Form 4131, "Verification of Urban-County Government Service," April 2021; and(h)
Form 4140, "Verification of Out-of-State Service," April 2021.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Public Pensions AuthorityDAVID L. EAGER, Executive Director
APPROVED BY AGENCY: July 29, 2021
FILED WITH LRC: July 29, 2021 at 11:17 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on Thursday, October 21, 2021 at 9:00 a.m. Eastern Standard Time at the Kentucky Public Pensions Authority, 1270 Louisville Road, Frankfort, Kentucky. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given the opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through October 31, 2021. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Michael Board, Executive Director Office of Legal Services, Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, phone (502) 696-8800 ext. 8647, fax (502) 696-8801, email Legal.Non-Advocacy@kyret.ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Michael Board
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the authorizing statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist in the effective administration of the statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendment updates the regulation to reflect the changes enacted by the General Assembly in House Bill 484 (2020) and House Bill 9 (2021). The amendment also clarifies the existing regulation and incorporates by reference multiple newer forms in use by the Kentucky Public Pensions Authority for service purchases.
(b) The necessity of the amendment to this administrative regulation:
The amendment is necessary to update the regulation to reflect the changes enacted by the General Assembly in House Bill 484 (2020) and House Bill 9 (2021), clarify the existing regulation, and incorporate by reference multiple newer forms in use by the Kentucky Public Pensions Authority for service purchases.
(c) How the amendment conforms to the content of the authorizing statutes:
The amendment conforms to the authorizing statute because it is necessary to carry out the provisions of KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(d) How the amendment will assist in the effective administration of the statutes:
The amendment will assist in the effective administration of the statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
The Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System, and the members of the Kentucky Retirement Systems and the County Employees Retirement System. Number of individuals is unknown. Number of businesses, organizations, or state and local governments affected is three (3): the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
This amendment should not substantially alter the actions that the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System will have to take to comply with this regulation.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
This regulation should not cost any additional funds.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The amendment allows the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System to conform with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415. (5) Provide an estimate of how much it will cost to implement this administrative regulation:
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The costs associated with the implementation of this administrative regulation should be negligible.
(b) On a continuing basis:
The costs associated with the implementation of this administrative regulation should be negligible. (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Administrative expenses of the Kentucky Public Pensions Authority are paid from the Retirement Allowance Account (trust and agency funds).
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
There is no increase in fees or funding required. (8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This administrative regulation does not establish any fees or directly or indirectly increase any fees.
(8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees:
(9) TIERING: Is tiering applied?
Tiering is not applied. All members are subject to the same processes and procedures.
FISCAL NOTE ON STATE OR LOCAL GOVERNMENT
(1) What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 61.505(1)(f).
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
None.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
None.
(c) How much will it cost to administer this program for the first year?
The cost to Kentucky Public Pensions Authority should be negligible.
(d) How much will it cost to administer this program for subsequent years?
The cost to Kentucky Public Pensions Authority should be negligible.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation:
FINANCE AND ADMINISTRATION CABINET
Kentucky Retirement Systems
(Amendment)
105 KAR 1:330.Purchase of service credit.
Section 1.
Definitions.(1)
Definitions contained in KRS 16.505, 61.510, and 78.510 shall apply to this regulation, unless otherwise defined herein.(2)
Prior to April 1, 2021, "the Agency" means the Kentucky Retirement Systems, which administers the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System. Effective April 1, 2021, "the Agency" means the Kentucky Public Pension Authority, which is authorized carry out the day-to-day administrative needs of the Kentucky Retirement Systems (comprised of the State Police Retirement System and the Kentucky Employees Retirement System) and the County Employees Retirement System.(3)
"File" means the following methods for delivering or submitting a form to the retirement office: mail, fax, secure email, in-person delivery, and upload via Self Service on the Web site maintained by the Agency (if available). A form shall not be deemed filed until it has been received at the retirement office.(4)
"Provide," when used in reference to a form or other document, means the following methods for the Agency to make a form or document available to a member, retired member, or person: mail, fax, secure email, and upload via Self Service on the Web site maintained by the Agency (if available).(5)
"The Systems" means the State Police Retirement System, the Kentucky Employees Retirement System, and the County Employees Retirement System.(6)
"Valid," when used in reference to a form, means that all required sections on a form are completed and all required signatures on a form are executed.Section 2.
Cost Calculation Date for Determining the Cost of the Service Purchase.(1)
The cost calculation date for determining the cost of the service to be purchased shall be the later of:(a)
The last day of the month in which the request for the cost of the service is filed at the retirement office;(b)
The last day of the month the employee or person designates as the intended purchase date;(c)
The last day of the month in which documentation of the service is filed at the retirement office;(d)
The last day of the month in which the employee attains sufficient service credit to be eligible to make the purchase; or(e)
The last day of the month in which the employee terminates employment if the employee files a completed Form 4172, Notice of Intent to Transfer Lump Sum Payment(s) to Qualified Employer Sponsored Plan, at the retirement office indicating that the employee intends to defer the employee's lump sum payment for accrued compensatory and annual leave to be paid to the employee at termination to the Kentucky Public Employees Deferred Compensation Authority or other qualified employer sponsored plan. The employee shall then rollover the funds from the Kentucky Public Employees Deferred Compensation Authority or other qualified employer sponsored plan to the Agency as payment, in whole or in part, for the employee's service purchase.(2)
(a)
The purchase deadline date shall be the later of the cost calculation date or thirty (30) days from the date the purchase cost is provided to the employee, unless day thirty (30) is a Saturday, Sunday, a public holiday listed in KRS 2.110, a day on which the public office is actually and legally closed, or any other federal or state holiday that disrupts mail service, then the purchase deadline date shall be the next business day.(b)
Upon discovery of a delay in providing the purchase cost to the employee or person, the Agency may extend the purchase deadline date in paragraph (a).(3)
An employee or person may not make a new request for cost calculation for purchase of service previously requested until the purchase deadline date has passed.(4)
Payment for purchase of service credit shall be filed at the retirement office while the employee is participating in an eligible retirement system and prior to the employee's termination date, except in the following circumstances:(a)
The purchase of service credit is made under KRS 61.552(2);(b)
If the employee files a Form 4170, "Direct Transfer/Rollover Authorization Form," at the retirement office while the employee is participating in an eligible retirement system and prior to the employee's termination date, so long as the financial institution completes the transfer or rollover within sixty (60) days of the payment due date, the payment for purchase of service credit by transfer or rollover may occur when the employee is no longer participating in an eligible retirement system and after the employee's termination date; or(c)
If the Agency discovers an error or omission in the service purchase cost, then the Agency may provide corrected costs to the employee, person, member, or retired member and, in order to have the service purchase credited to his or her account, the employee, person, member, or retired member shall pay any additional amount due for the corrected costs.(5)
If the employee elects to purchase only a portion of the service for which he or she has requested a cost calculation, the employee shall be required to obtain a new cost calculation for the remaining service unless the remaining service is service under KRS 61.552(2) or (3).Section 3.
General Requirements to Purchase Service.(1)
The employee or person shall file at the retirement office all documentation necessary for the Agency to determine that the service meets the eligibility requirements for purchase of service.(2)
The Agency may require that any statement, letter, form, or other document required in this regulation be notarized, made under oath as defined in KRS 523.010, or both.(3)
No employee or person shall certify his or her own service on any of the statements, letters, forms, or other documents required by this regulation.(4)
(a)
The Agency shall determine how much service is eligible for purchase by statute and shall notify the employee or person in writing of the cost of the service that qualifies for purchase.(b)
If the Agency determines that the service is not eligible for purchase, the Agency shall notify the employee or person in writing of the reasons.Section 4.
Purchase of Omitted Service.(1)
(a)
To purchase omitted service pursuant to KRS 61.552(2) and 78.545, the employee or person shall file at the retirement office a valid Form 4225, "Verification of Past Employment."(b)
If the employee or person is seeking to purchase omitted service based on employment with the Executive Branch, copies of personnel and wage records provided by the employer shall be filed at the retirement office instead of the Form 4225, "Verification of Past Employment."(2)
If the Agency determines that the employer records submitted on the Form 4225, "Verification of Past Employment," or the personnel and wage records from the Executive Branch employer are not sufficient, the Agency may require the employee or person to supplement the employer records with copies of check stubs, W-2 forms, personnel action forms, or payroll records in the employee's or person's possession.(3)
If the employee or person does not have additional documentation of the service, the employee or person may file at the retirement office a report of detailed earnings from the Social Security Administration for the period of service, along with two (2) Form 4160s, "Affidavit and Certification for Documentation of Service" completed by persons who earned, or were eligible for, service for the same period in a state administered retirement system with the same employer. Each affiant shall detail the employee's or person's employment status and length of service.Section 5.
Purchase of School Board Service.[For service with a school board, the employee shall file at the retirement office a valid Form 4225, "Verification of Past Employment."Section 6.
Vested Service Purchases.(1)
(a)
In order to purchase service credit for active duty service in the Armed Forces of the United States pursuant to KRS 61.552(5)(d) and 78.545, the employee shall file at the retirement office a copy of the federal form DD-214 or other official military documents clearly indicating:1.
The date of entry into active duty service;2.
The date of discharge from active duty service; and3.
The type of discharge.(b)
In order to purchase service credit for service in the National Guard or the military reserve forces pursuant to KRS 61.552(5)(e) and 78.545, including periods of active duty training, or for service in the National Guard, the employee shall file at the retirement office copies of official military documents clearly indicating the date of entry and current participation or date of discharge.(c)
The documents required in paragraphs (a) or (b) of this subsection shall be verified by a statement or letter signed by an authorized employee of the military.(d)
The Agency shall verify with the employer the beginning and ending dates of the period of leave associated with active duty service in the Armed Forces of the United States, service in the National Guard, or service in the military reserve forces.[(2)
(a)
To purchase service for a period when the employee was on educational, maternity, or sick leave without pay pursuant to KRS 61.552(5)(i) and 78.545, the employee shall file at the retirement office a statement or letter from the reporting official, personnel director, or agency head certifying the beginning and ending dates of the period of leave and the type of leave designated by the employer.(b)
The Agency shall verify with the employer the beginning and ending dates of the period of educational, maternity, or sick leave without pay.(3)
To purchase state university service pursuant to KRS 61.552(5)(b) and 78.545, the employee shall file at the retirement office a valid Form 4120, "Verification of Employment with a State University."(4)
To purchase federal service pursuant to KRS 61.552(5)(f) and 78.545, the employee shall file at the retirement office a valid Form 4115, "Federal Verification."(5)
(a)
To purchase past seasonal, emergency, interim, probationary, temporary, or part-time employment that averages the required hours of work per month pursuant to KRS 61.552(5)(g) and 78.545, the employee shall file at the retirement office a valid Form 4225, "Verification of Past Employment."(b)
If the employee is seeking to purchase service based on past seasonal, emergency, interim, probationary, temporary, or part-time employment with the Executive Branch, copies of personnel and wage records provided by the employer shall be filed at the retirement office instead of the Form 4225, "Verification of Past Employment."(6)
To purchase service with a non-participating agency whose service is authorized pursuant to KRS 61.552(5)(j) and 78.545, the employee shall file at the retirement office the following documentation and may be required to file additional information, if necessary for determination:(a)
The beginning and ending dates of the service and any breaks that may have occurred during the service, listed by fiscal year;(b)
The number of calendar months worked;(c)
The position title and status, including full time, part time, probationary, emergency, seasonal, temporary, or interim; and(d)
If the employee participated in a retirement plan, and if so, if the plan was a defined contribution or defined benefit plan, and if the employee has taken a refund of contributions to the plan.(7)
To purchase urban-county government service pursuant to KRS 61.552(5)(k) and 78.545, the employee shall file at the retirement office a valid Form 4131, "Verification of Urban-County Government Service."(8)
(a)
To purchase service credit for out-of-state public service pursuant to KRS 61.552(5)(c) and 78.545, the employee shall file at the retirement office a valid Form 4140, "Verification of Out-of-State Service."(b)
To purchase out-of-state service credit for a hazardous duty position, the employee shall also file at the retirement office a copy of the description of the duties of the out-of-state position from his or her former out-of-state employer.[(c)
Out-of-state service credit shall be eligible for purchase as hazardous duty if the position is the same as or substantially similar to positions for which hazardous duty credit has been approved under KRS 61.592 or 78.5522.Section 7.
Service purchase calculations based on actuarial cost. For a purchase based on the actuarial cost, in accordance with KRS 61.552(10)(a) and 78.545, the higher of the current rate of pay, final rate of pay, or final compensation times the actuarial age factor shall be determined as follows, except that for an employee of a local school board paid under an employment contract, the current rate of pay shall be equal to the final compensation as of the cost calculation date:(1)
Except for a classified employee of a local school board, current rate of pay shall be determined as follows:(a)
For an hourly employee paid on a seven and one-half (7 1/2) hour day, the hourly rate times 1,950;(b)
For an hourly employee paid on an eight (8) hour day, the hourly rate times 2,080;(c)
For an employee paid by the day, the daily rate times 260;(d)
For an employee paid by the week, the weekly rate times fifty-two (52);(e)
For an employee paid by the month, the monthly rate times twelve (12);(f)
For a part-time employee who averages 100 or more hours per month, the hourly rate times hours per day times 260. If the number of hours worked per day is not fixed by the employer, seven and one-half (7 1/2) hours shall be used;(g)
For an employee who receives a fixed amount in addition to an hourly, daily, weekly, monthly, or annual rate, the current rate shall include all fixed amounts, averaged into the same period;(h)
For an employee simultaneously employed in more than one (1) of the Systems, the higher of the combined current rate of pay, combined final rate of pay, or combined final compensation shall be used as of the cost calculation date.(2)
Final compensation shall be determined as of the cost calculation date, except that the final compensation of nonhazardous members of the County Employees Retirement System or Kentucky Employees Retirement System with an effective retirement date within the window provided in KRS 61.510(14)(b) and 78.510(14)(b) shall be based on the three (3) fiscal years with the highest average monthly earnings if the sum of the employee's service when added to his age would equal at least seventy-five (75), assuming the employee's service includes:(a)
All service remaining on an active installment purchase agreement;(b)
All service which the employee is eligible to purchase under KRS 61.552(2), 61.552(3), and 78.545; and(c)
All service the employee would accrue if employment continued through December 31, 2008.(3)
The employee's age rounded to the nearest year as of the cost calculation date shall be used.(4)
The benefit factor used to determine the actuarial cost, in accordance with KRS 61.552(10)(a) and 78.545, shall be the benefit factor to which the employee is entitled on the first day of the month following the cost calculation date, except that the benefit factor for nonhazardous employees of the County Employees Retirement System and the Kentucky Employees Retirement System with an effective retirement date within the window provided in KRS 61.510(14)(b) and 78.510(14)(b) shall be the highest benefit factor to which the employee would be entitled, assuming total service as determined in subsection (2) of this section.Section 8.
Correction upon discovery of error or omission in service purchase costs.(1)
After the employee, member, or retired member has purchased service, the Agency may recalculate the cost of the service if, upon audit, the Agency determines that any of the information utilized to calculate the cost of the service was incorrect.(2)
If the recalculation results in an increase in the cost of $100 or more, the employee or person, member, or retired member shall have thirty (30) days to pay the additional amount.(3)
If the employee, member, retired member, or the employer, fails to pay the additional amount, the employee's, member's, or retired member's service shall be reduced to the next lower increment or number of months for which the employee, member, or retired member is eligible based on the original payment, and the difference shall be refunded to the employee, member, or retired member.Section 9.
Special considerations for purchase of refunded or past service.(1)
The verified wages associated with service purchased under the provisions of KRS 61.552 and 78.545 that would have qualified as creditable compensation shall be added to the employee's account and shall be used in determining the employee's final compensation.(2)
An employee purchasing service under the preceding subsection by increments or by installment purchase agreement shall have the service credited in chronological order beginning with the earliest service.Section 10.
Incorporation by Reference.(1)
The following material is incorporated by reference:[;(a)
Form 4172, "Notice of Intent to Transfer Lump Sum Payment(s) to Qualified Employer Sponsored Plan," April 2021;(b)
Form 4170, "Direct Transfer/Rollover Authorization Form" April 2021;(c)
Form 4225, "Verification of Past Employment," April 2021;(d)
Form 4160, "Affidavit and Certification for Documentation of Service," September 2010;(e)
Form 4120, "Verification of Employment with a State University," April 2021;(f)
Form 4115, "Federal Verification," April 2021;(g)
Form 4131, "Verification of Urban-County Government Service," April 2021; and(h)
Form 4140, "Verification of Out-of-State Service," April 2021.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.DAVID L. EAGER, Executive Director
APPROVED BY AGENCY: July 29, 2021
FILED WITH LRC: July 29, 2021 at 11:17 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on Thursday, October 21, 2021 at 9:00 a.m. Eastern Standard Time at the Kentucky Public Pensions Authority, 1270 Louisville Road, Frankfort, Kentucky. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given the opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted through October 31, 2021. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.
CONTACT PERSON: Michael Board, Executive Director Office of Legal Services, Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky 40601, phone (502) 696-8800 ext. 8647, fax (502) 696-8801, email Legal.Non-Advocacy@kyret.ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Michael Board
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the authorizing statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist in the effective administration of the statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendment updates the regulation to reflect the changes enacted by the General Assembly in House Bill 484 (2020) and House Bill 9 (2021). The amendment also clarifies the existing regulation and incorporates by reference multiple newer forms in use by the Kentucky Public Pensions Authority for service purchases.
(b) The necessity of the amendment to this administrative regulation:
The amendment is necessary to update the regulation to reflect the changes enacted by the General Assembly in House Bill 484 (2020) and House Bill 9 (2021), clarify the existing regulation, and incorporate by reference multiple newer forms in use by the Kentucky Public Pensions Authority for service purchases.
(c) How the amendment conforms to the content of the authorizing statutes:
The amendment conforms to the authorizing statute because it is necessary to carry out the provisions of KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(d) How the amendment will assist in the effective administration of the statutes:
The amendment will assist in the effective administration of the statutes by establishing the procedures and requirements for purchases of service credit with the Kentucky Public Pensions Authority in accordance with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
The Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System, and the members of the Kentucky Retirement Systems and the County Employees Retirement System. Number of individuals is unknown. Number of businesses, organizations, or state and local governments affected is three (3): the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
This amendment should not substantially alter the actions that the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System will have to take to comply with this regulation.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
This regulation should not cost any additional funds.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The amendment allows the Kentucky Public Pensions Authority, the Kentucky Retirement Systems, and the County Employees Retirement System to conform with KRS 16.545, 16.645, 61.505, 61.543, 61.552, 61.592, 78.5520, 61.685, 78.545, 78.610, and 26 U.S.C. 415. (5) Provide an estimate of how much it will cost to implement this administrative regulation:
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
The costs associated with the implementation of this administrative regulation should be negligible.
(b) On a continuing basis:
The costs associated with the implementation of this administrative regulation should be negligible. (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Administrative expenses of the Kentucky Public Pensions Authority are paid from the Retirement Allowance Account (trust and agency funds).
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
There is no increase in fees or funding required. (8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This administrative regulation does not establish any fees or directly or indirectly increase any fees.
(8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees:
(9) TIERING: Is tiering applied?
Tiering is not applied. All members are subject to the same processes and procedures.
FISCAL NOTE ON STATE OR LOCAL GOVERNMENT
(1) What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 61.505(1)(f).
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
None.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
None.
(c) How much will it cost to administer this program for the first year?
The cost to Kentucky Public Pensions Authority should be negligible.
(d) How much will it cost to administer this program for subsequent years?
The cost to Kentucky Public Pensions Authority should be negligible.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation: