Your monthly benefit at retirement, in part, is based on your creditable service. The amount of your retirement benefit is directly related to how much retirement credit you have.
Most retirement credit is earned by making contributions to the retirement systems while working and receiving pay from an employer that participates in one of the retirement systems. However, in some cases you may be eligible to purchase retirement credit that may increase the amount of your monthly benefit or allow you to retire at an earlier age, in accordance with North Carolina retirement laws.
You must carefully weigh your options when considering the purchase of retirement credit. There are situations where a purchase of retirement credit may be advantageous and other situations where it may be cost prohibitive, depending on your individual circumstance. The Retirement Systems Division makes available a retirement purchase estimator through ORBIT where you can obtain an estimate of the cost for many of the types of purchases before submitting your request for the actual cost to the Retirement Systems Division. You can also find the Service Purchase forms in ORBIT.
Pre-tax money from an eligible retirement plan or IRA may be accepted by rollover or in-service plan-to-plan transfer in order to purchase creditable service in the Teachers’ and State Employees’ Retirement System, Local Governmental Employees’ Retirement System, Consolidated Judicial Retirement System and Legislative Retirement System. For more information and instructions, please see Form 398, Using a Distribution of Tax-Sheltered Savings to Purchase Retirement Credit.
It is recommended that members begin the rollover process at least 60 days before the expiration of the cost statement.
State law specifies how the cost of each type of creditable service that may be purchased is calculated. For example, the cost for purchasing previously withdrawn service in the Retirement System is often less expensive than the cost for purchasing other types of eligible retirement service credit.
Individual forms for each type of eligible retirement service purchase are located on our website. Each purchase form includes a description of the cost calculation method used for that individual type of purchase.
Carefully study the impact this purchase may have on your retirement benefit. Running an estimate through ORBIT will assist you in making this decision. After the Retirement System receives your properly completed service purchase form, the Retirement System will officially calculate your purchase cost and mail you an official purchase cost statement letter. If you choose to make the purchase, you may use pre-tax money from an eligible retirement plan or IRA to make the purchase (see and prepare Form 398 available in ORBIT).
In that case, your plan administrator will give you a check to forward to the Retirement Systems Division. Otherwise, you will provide a check to the Retirement Systems Division. All checks for one purchase must be received together. Under certain and limited circumstances, your beneficiary(ies) may complete the purchase process if your death occurs while you are waiting for or evaluating a cost statement.
All cost statements have an expiration date. If you do not make the purchase by that date, the cost of the purchase will have to be recalculated based on the cost method specified by law for the purchase.
If you make a purchase, you are guaranteed that the cost of the purchase (less the $25 administrative fee for making the purchase) will be refunded to you if you decide to withdraw all of your service and contributions from the Retirement System at a later date.
If you die before retiring, or you die in retirement but before receiving benefits equaling the contributions and purchases you made, your beneficiary(ies) will be entitled to the undistributed contributions and purchases. (No contributions or purchase amounts provided by your employer will be refunded to you.)
North Carolina retirement law recognizes that you, a participant in one of North Carolina's Retirement Systems, may not have had the opportunity to make contributions and receive credit for certain periods in your public service career. The following list generally describes other circumstances for which a purchase may be allowed. This is not the complete list of all purchase types available in all systems. Check with your employer to see if you qualify.
- Your employer was not eligible to participate in a Retirement System, but you have public service (federal, federally-funded, military, or out-of-state service) that you may be eligible to purchase.
- Your employer did not participate in a System, although it was eligible.
- Your employer did participate in a Retirement System, but your position was not eligible for participation at the time.
- You are or were participating in the Retirement System with your employer, but a life or career event caused your service to be interrupted over a period during which you did not work and make contributions.
- You withdrew your service credit and contributions from the Retirement System, but you wish to restore that credit following a return to contributing service for five years.
Visit ORBIT to run a Service Purchase estimate, download the appropriate form, or contact us at the address or telephone number below for further guidance.
Contact the Retirement Systems Division at (919) 814-4590.