What does it mean to purchase FRS service credit?
Purchasing service credit — often called "buying back" time — lets an FRS Pension Plan member add eligible periods of past or non-FRS employment to their total years of creditable service. Because the FRS pension formula multiplies your years of creditable service by a per-year percentage and your Average Final Compensation (AFC), each additional year of service increases the projected monthly benefit. Buying service credit is optional, has a cost set by the Division of Retirement, and generally applies to the Pension Plan rather than the Investment Plan.
What types of service can you buy?
Eligible categories include: past service; refunded service (FRS service you previously withdrew as a contribution refund, repurchasable after you return and complete a year of FRS service); approved leaves of absence without pay (up to two years total); out-of-state public service, including federal service; non-FRS public service and non-public service in certain accredited Florida schools or colleges (up to five years total, combining in-state and out-of-state service); military service; and credit related to a prior disability retirement, in some cases. Military service comes in two forms with different limits — a military leave of absence under USERRA (up to five years), and wartime military service (up to four years, available to members first employed before January 1, 1987, and credited at Regular Class value). Each category has its own eligibility rules and cost basis, so the type of service you are claiming determines what you pay.
How much does it cost to buy FRS service credit?
Cost depends on the type of service. For each year of in-state or out-of-state public service purchased, MyFRS states you must pay "20% of the salary you earned for the first full work year as a member of the FRS or 20% of $12,000, whichever is greater, plus interest at 6.5% compounded annually from your first year of membership in the FRS." Refunded service is generally restored by repaying the contributions you previously withdrew, plus interest. Because interest compounds from an early date, the longer ago the service was, the larger the cost tends to be. The Division of Retirement calculates the exact amount due for your specific service.
Does FRS accept payment plans for buying service credit?
You do not have to pay the entire cost in a single payment. Under the optional-service provisions of Chapter 121, Florida Statutes, creditable service is granted once the amount due is paid, with interest compounded annually on any unpaid balance — currently 6.5%. The FRS Employer Handbook states that annual partial payments are accepted (a minimum of $100 each), and that a payment must reach the Division on or before June 30 to avoid another year’s interest being added to the unpaid balance. In practice that means you can pay the balance down over time before you retire, with interest accruing each year on whatever remains unpaid. Paying earlier reduces the total interest you accrue; carrying a balance longer increases it. The full cost must be paid before your retirement is finalized for the purchased service to count.
Can you use a 457(b), 403(b), or IRA to pay?
In addition to direct payment, the Division of Retirement accepts payment funded by a rollover or trustee-to-trustee transfer of pre-tax money from an eligible plan — for example, a governmental 457(b) deferred compensation plan (including the State of Florida Deferred Compensation Plan), a 403(b) tax-sheltered annuity, a traditional IRA, or another qualifying tax-deferred plan. Moving money directly from one plan to the Division avoids having the distribution pass through your hands. The Division provides the transfer paperwork on request, and rollover payments are sent to a different address than ordinary check payments — so members confirm the current form and remittance details with the Division before initiating a transfer.
When do you have to pay by?
Payment must be completed before your retirement is finalized — purchased service that is not paid for does not count toward your benefit. Interest is added to any unpaid balance each June 30, so the timing of your payments affects the total. There is no separate enrollment deadline to begin a purchase, but the interest mechanics mean that the cost of the same service grows the longer you wait.
How purchased service affects your pension
Each year of creditable service you add flows through the FRS Pension Plan formula — Years of Service × Service-Class Percentage Value × AFC — so additional years raise the projected annual benefit proportionally to your per-year percentage (3.0% for Special Risk Class, a 1.6% base rate for Regular Class). Added service can also affect when you reach vesting or normal retirement. Whether the projected increase in lifetime benefit is greater than the cost to purchase the service depends on individual factors — your class, age, AFC, and how long you expect to collect the benefit — that only you and your financial advisor can weigh. The Pension Calculator lets you compare projected benefits at different years of service for educational purposes.
Figures reflect the FRS Employer Handbook (Chapter 7), the MyFRS “Purchase of Additional Retirement Service Credit” guidance, and the optional-service provisions of Chapter 121, Florida Statutes. The Division of Retirement calculates the exact amount due for your service; confirm current costs and forms at FRS.MyFlorida.com.