Service Purchase and Makeup Payments

Active members may purchase certain past service that isn't already credited. Buying it back adds it to your creditable service, which directly increases your retirement allowance.

The categories of purchasable service and the calculation rules are defined in MGL Chapter 32 §§ 3 and 4 and in 840 CMR.

Categories you can typically purchase

Prior Massachusetts public service

If you previously worked for a Massachusetts public employer and either took a refund of your contributions or weren't eligible at the time, you can usually buy that service back. Cost depends on whether you took a refund, what the rate would have been, and how long ago.

Military service

Active duty in the U.S. armed forces is generally creditable under MGL Chapter 32 § 4(1)(h) and the federal USERRA statute. Limits and rules vary:

• Up to 4 years of active military service can typically be purchased
• Periods of active duty during a national emergency may have separate rules
• Reserve drill is generally not creditable; mobilized active service is

Documentation: DD Form 214 (Certificate of Release or Discharge from Active Duty) is the canonical proof of active service.

FMLA / parental leave

Federal Family and Medical Leave Act time and statutory parental leave can usually be made up via contributions to cover the unpaid period.

Out-of-state public service (limited)

A small set of out-of-state public service (e.g., teaching service in another state for current MTRS members) is purchasable under specific statutory provisions. Most other out-of-state service is not purchasable.

How the cost is calculated

The cost depends on:

1. The contributions you would have made at the time (or the contributions you took as a refund), plus
2. Interest at the actuarial rate (currently set by PERAC) compounded from the original date of service to the date of purchase

So the longer you wait, the more it costs. If you suspect there's service you can purchase, get a cost estimate sooner rather than later.

Makeup contributions for periods of leave

If you take an unpaid leave that doesn't fall under FMLA, you can sometimes "make up" the contributions you would have made during the leave. This keeps your service unbroken. Makeup contributions must be made within a specific window (usually before retirement and often within a few years of returning); rules vary by leave type.

How to start a purchase

1. Contact our office and request a service-purchase estimate.
2. Provide documentation: W-2s, employment verifications, retirement-system letters (if applicable), and DD-214 for military service.
3. The board calculates the cost and sends you a written estimate with a payment plan.
4. Pay the cost — by lump sum, payroll deduction, or rollover from a qualified plan.
5. Once paid in full, the service is credited and reflected on your next annual statement.

Tax treatment

In most cases, service-purchase contributions are made on a post-tax basis — you've already paid income tax on the money. When you retire, the portion of your monthly benefit attributable to those post-tax contributions comes back to you tax-free over time (the "exclusion ratio"). Rollovers from a 401(k) or 403(b) that you use to fund a buyback have different tax treatment.

The board cannot give individual tax advice. Consult a tax professional if the amounts are large.