Purchasing and Redepositing Service Credit
Purchasing Service Credit
In general, the more service credit you have as an ACERA member, the higher your retirement benefit. ACERA will also use service credit to determine when you can retire and receive a benefit. Thus, by purchasing service credit, you can increase your retirement benefit and, in some cases, become eligible to retire at an earlier date. If applicable, it would also count towards 30-year membership.
Use the Purchase Request Form to initiate a service credit purchase request and/or have ACERA calculate the cost of making a service credit purchase. Avoid paper, ink, scanning, and hassle by using the DocuSign Form:
Time Eligible For Service Credit Purchase
There are specific periods of employment that may be purchased as service credit:
- First pay period of employment prior to your entry into ACERA membership (days prior). Your ACERA member entry date is the typically first day of the second pay period of employment in an ACERA-covered position (a permanent, full-time position). You may purchase the days worked prior to your ACERA entry date (commonly the two weeks between your date of hire and your ACERA entry date), to increase your service credit. However, this purchase of service does not change your entry date.
- Non-contributing work with an ACERA participating employer. If you are employed in a retirement-ineligible position by a participating employer, you may be eligible to purchase this service if you become eligible for ACERA membership at some point in the future. (You may not purchase service credit for time worked as an independent contractor or for an outside temporary agency or employment agency.) Here are types of time that fall into this category:
- Part-Time Work (that you didn’t already earn service credit for)
- Temporary Assignment Pool (TAP) Work
- Project Work
- Service-As-Needed Work
- Seasonal Work
- Intermittent Work
- Per Diem Work
- Medical leave without pay (including FMLA and/or maternity leave). If you were on leave for a medical reason, and you were not receiving pay from your employer, that means you were not earning service credit. (This includes time that is considered FMLA—Family Medical Leave Act which is the federal law that allows you to be away from work for up to 12 weeks in a year for certain medical reasons, even if you’re out of earned leave time.) You can buy that time back once you return from that leave for periods of up to one year per instance, with a doctor’s certification. This is only for your medical conditions, not when you’re on leave caring for family members. You must provide documentation—see section below.
- State disability insurance (SDI) leave or uncompensated worker’s compensation time. If you were receiving partial pay from the state’s disability insurance system, and partial pay from your employer, you didn’t earn service credit for the state disability insurance time. You can purchase any service credit you didn’t earn from this time once you return from that leave. You must provide documentation—see section below.
- Military leave without pay during membership. If you go out on military leave during your active membership, you can purchase that time when you return from that leave. (Military time prior to membership isn’t purchasable, unless it was prior to August 9, 1972.)
- Redeposit of withdrawn ACERA contributions. (further explained in section below)
- Redeposit of community property. This situation is where you divorced or dissolved your state-registered domestic partnership and part of your ACERA employee contributions and interest (and also service credit) was divided off as community property for your ex-spouse or ex-partner. If your ex-spouse or ex-partner takes a refund of their portion of the contributions and interest, you can redeposit that money to regain the service credit that was divided off.
- Other prior public service / other agency service (further explained in section below)
Time NOT Eligible For Service Credit Purchase
- Educational or sabbatical leaves
- Strike, except “blue flu” for sheriffs
- Non-medical leave without pay
- FMLA to take care of family member’s illness
- Paternity leave
- Child bonding
- Out of state service
- Service from schools outside Alameda County
- Contract or consultant services
- Work for a temporary agency or employment agency
- Vacation purchase/buy-back
Alameda Health System employees working at Alameda Hospital or San Leandro Hospital, please note: Health and Safety Code §101851 gives AHS the ability to determine which of its employees will participate in ACERA through the Memorandum of Understanding (MOU) process. Under the MOU that applied to you when you were hired at Alameda Hospital or San Leandro Hospital, you would have been excluded from ACERA membership even if you had been working on a full-time basis. Service under those circumstance is not eligible for purchase under Government Code §31641.5 and ACERA’s Membership Policy.
How Much Does Service Credit Cost to Purchase?
When you purchase service credit, you must pay 2 amounts:
- The amount of employee retirement contributions you would have contributed if you had been able to during the time you’re trying to buy.
- For example: if you’re trying to buy 3 months of Medical Leave Without Pay time, had you worked that time, you would have made 3 months worth of retirement contributions out of your paycheck; during that 3 months, you would have paid a percentage of your paycheck into the retirement fund at your individual contribution rate. So that 3 months’ worth of employee contributions is what you have to pay to buy that time as service credit.
- Note: If you work in a management-level position, you may receive an “employer offset” where your employer pays 3 percentage points of your employee contributions; for example, if you normal employee contribution rate is 8% of your gross salary, your employer pays 3% of your gross salary as your employee contributions and you pay the remaining 5%. When purchasing service credit, your employer will not pay the normal offset you receive, so you will be responsible for paying your full employee contributions.
- The interest that money would have earned had it been invested in the fund between the time you’re trying to buy and now, when you’re trying to buy it. So the more time that passes, the more expensive a service credit purchase costs, because it would have earned more and more interest. Review past interest rate on our Historical Interest Rates page.
- For example: if you’re trying to buy 3 months worth of Medical Leave Without Pay time from 5 years ago, had you worked that time and paid your required employee contributions during that time, that money would have been invested with the rest of ACERA’s fund and earned 5 years’ worth of interest, at the rate that ACERA’s fund earned interest over those particular 5 years. So in addition to paying the employee contributions for that 3 months, you’ll have to pay the 5 year’s worth of interest on that money.
How to Request to Purchase Service Credit and/or Request to Know How Much a Service Credit Purchase Will Cost
First, submit a Purchase Request Form:
DocuSign Purchase Request Form
ACERA staff will do research and calculations, and send you a letter telling you whether your time is purchasable and how much it’s going to cost. At the time you receive the letter, you can determine whether you want to make the service credit purchase or not.
For all of the types of purchases except for redeposits, you can purchase just a portion of the service credit if you want. Redeposits are all or none.
For all of the types of purchases except for other prior public service purchases, you will only pay the employee contributions and interest amount. For other prior public service purchases, you will pay the employee and employer contributions and interest, so those purchase can cost double or triple what the other types cost.
Redeposit of Withdrawn ACERA Contributions from Prior Memberships
If you terminate membership with ACERA, withdraw your accumulated contributions and interest, then become an ACERA member again at a later date, you may redeposit the withdrawn funds plus interest that would have accrued up to the redeposit payment date. ALL previous service credit must be purchased; partial purchases of service credit are not allowed. A decision to forego redeposit means your prior service credit does not count towards establishing your eligibility for retirement.
In effect, a redeposit of your contributions restores your past service credit earned. This will increase your retirement benefit allowance when you retire. In addition, this purchased service will count toward determining your retirement eligibility date and toward becoming vested in the retirement plan and 30-year membership, if applicable.
Initiating a redeposit is the same process as purchasing service described as above.
In a written response to your request, ACERA will inform you if you are eligible to redeposit withdrawn contributions and, if so, provide the cost for doing so.
Other Prior Public Service / Other Agency Service
If you worked for another public agency prior to becoming an ACERA member, you may be eligible to purchase that service. Some of the types of other agency or public service you may be eligible to purchase are listed below:
- County employment within the State of California
- Any public employer covered by a retirement plan under Public Employees’ Retirement System (PERS) (State of California) or reciprocal with PERS
- East Bay Municipal Utility District (EBMUD)
- Port of Oakland
- State of California
- Any public school district in Alameda County
- Federal government service or military service for employees hired on or before August 9, 1972
Purchasing previous public employer service credit would increase your retirement benefit allowance but would NOT count toward determining your retirement eligibility date or becoming vested in the retirement plan. However, it would count towards 30-year membership eligibility.
For purchase of prior public service, verification of the dates worked is required. In addition, you cannot be eligible for a pension from the other agency. Usually this means you either didn’t work for the other public employer for very long, or you took a refund of your contributions to that employer’s pension system, making you ineligible to collect a pension from that system. If you still have retirement contributions on deposit with that other agency, you must take a refund of them before you can purchase the time as ACERA service credit. Additionally, the service must have been earned before your ACERA entry date.
The cost of purchasing prior public service includes employee and employer contributions based on the contribution rates and salary at your ACERA entry date. Interest is also charged from your ACERA entry date to the date of purchase.
You can obtain a retirement estimate, account balance, or current service credit total from Web Member Services.
Service Purchase and Redeposit Payment Methods
Members may purchase service credit or redeposit prior membership by using one or more of the following payment methods:
- Lump sum payment (post-tax) - You may make post-tax payment in full by paying with a personal check, cashier’s check, or money order made payable to ACERA. Cash and credit is not accepted.
- Direct rollover or trustee-to-trustee transfer (pre-tax)
- Direct rollover - This is a transfer of pre-tax funds from a qualified retirement account, usually earned from your former employment. ACERA will accept a direct rollover of pre-tax funds from these types of plans: 401(k) tax qualified plan; 457 deferred compensation plan maintained by a California public agency; 403(b) tax-sheltered annuity plan; pre-tax IRA (not Roth IRA). If you are eligible to purchase service through ACERA, you can ask your former employer’s plan administrator to disburse the funds directly to ACERA for service purchase. The plan administrator will determine and must certify that the distribution qualifies for a direct rollover. The check should be made payable to “ACERA For the Benefit Of [your name]”.
- Trustee-to-Trustee Transfer - This is a transfer of pre-tax funds from a qualified retirement account, such as a 457 plan (deferred compensation plan), from your current employer to ACERA. When ready to purchase service, the funds may be disbursed from the plan administrator directly to ACERA for redeposit or service purchase. Any check from the plan administrator must be made payable to “ACERA For the Benefit Of [your name]”.
- Payroll deduction payments (post-tax) - You may purchase service credit using post-tax payroll deductions. The payments are divided equally over the term of the contract. The specific contract term may vary depending on the type of service purchased. The amount is in addition to your normal employee retirement plan contributions. All purchases must be completed before retirement. To set up a payment plan for a service purchase, you must sign a contract and submit it to ACERA. If you subsequently decide during your payment contract period that you wish to complete the contract by making a lump sum payment, please send ACERA a letter stating your request to make a lump sum payment.
- Combination – Any combination of the above methods.
To initiate a service purchase or redeposit request, visit Web Member Services and click on the Web Forms link or submit a Purchase Request Form or Redeposit Request Form to ACERA. Upon receipt and completion of your request, ACERA will calculate the required payment and provide information regarding payment options. Once you inform ACERA that you are interested in making this purchase and your choice of payment type (lump sum or payment plan), ACERA will issue a payment contract. Your service purchase or redeposit request itself is not an authorization to begin a redeposit or service credit purchase; you must return the signed contract in order for your redeposit/purchase payments to begin. For help with purchasing service credit or redeposits, contact us.
Documentation Needed For Some Purchases
You can upload your documents securely within your online account. Click Login at the top of the page.
Otherwise you can mail us copies of your documents or QIC code them over to us at 22901 if you’re a county employee.
Please don’t email us documents, as email is not a secure method of transmitting your personal documents which contain confidential information.
State Disability Insurance Leave Time
- State Disability Insurance approval (if applicable)
- FMLA approval (if applicable)
- Workers compensation approval (if applicable)
- Signed doctor’s authorization (if applicable)
Unpaid Medical Leave Time
- FMLA approval (if applicable)
- Child’s birth certificate (if you were away from work for the birth of your child)
- Signed doctor’s authorization (if applicable)