# Title 71 — Retirement Board

## Article 71-02 — Public Employees Retirement System

## Chapter 71-02-03 — Service Credit

### § 71-02-03-01. Service credit - General rule.

A member receives credit for each month a contribution is made. Service credit shall be granted
upon proper verification without member contribution after an employee has participated in eligible
employment not less than two years for prior service employment as defined in North Dakota Century
Code section 54-52-01. For employees employed prior to July 1, 2004, service credit shall be granted
upon proper verification without member contribution after an employee has participated in eligible
employment not less than two years for:
1. Probationary employment prior to July 1, 1979, that was previously excluded from eligible
employment.
2. Eligible employment between the ages of eighteen and twenty-one that was previously
excluded by the age limitation of twenty-one for participation in the retirement program.
3. Summer months for eligible school employees for the period July 1, 1979, to July 1, 1982.
4. Former members of the teachers' fund for retirement, job service North Dakota, or highway
patrolmen's retirement systems will be granted credit for previous service in these funds if they
received a lump sum refund prior to September 1, 1976.
History: Amended effective September 1, 1982; November 1, 1990; June 1, 1996; May 1, 2004.
General Authority: NDCC 54-52-04, 54-52-17
Law Implemented: NDCC 54-52-01(11)(12)(16), 54-52-17
### § 71-02-03-01.1. Noneligible service credit.

Service credit will not be granted for:
1. Prior service if the member received a refund of contributions after July 1, 1966, unless
service has been repurchased in its entirety.
2. Service if the member received a refund of contributions after July 1, 1966, unless it is
repurchased or purchased in its entirety or in part as specified by the member.

3. Prior service for any member whose employer joined the retirement system on or after July 1,
1977, unless purchased for the member at the time the employer joined or unless purchased
by the member.
4. Service the member waived when transferring into the defined contribution retirement plan,
including service not yet granted pursuant to section 71-02-03-01.
History: Effective November 1, 1990; amended effective April 1, 1992; July 1, 2000.
General Authority: NDCC 54-52-04, 54-52-17
Law Implemented: NDCC 54-52-05, 54-52-17, 54-52-19.2
### § 71-02-03-01.2. Service credit given for leave taken.

A member may take leave pursuant to policies, rules, and statutes applicable to the member's
employing unit. However, service credit may only be given for leave that is part of a participating
member's continuous service. Service credit may not be given for isolated leave that is not part of
continuous service.
History: Effective June 1, 1996.
General Authority: NDCC 54-52-04, 54-52-17
Law Implemented: NDCC 54-52-01(11)(12)(16), 54-52-17
### § 71-02-03-02. Military credit.

Repealed effective November 1, 1990.
### § 71-02-03-02.1. Purchase of additional service credit and repurchase of past service.

In order to purchase additional credit or repurchase past service, a member must notify the office,
in writing, of the service for which they wish to receive credit. In addition to the written request, the
following information must be submitted if applicable:
1. Verification by the former employer of previous North Dakota or out-of-state public service, or
service with the federal government.
2. Documentation of military service by submitting a DD214 or NGB22.
3. Certification of approval by the member's employer of any leave of absence and length of that
leave.
4. Statement from employee or former employer that service credit being applied for does not
qualify for retirement benefits under another retirement system.
History: Effective November 1, 1990; amended effective July 1, 1994; June 1, 1996; May 1, 2004.
General Authority: NDCC 54-52-02.6, 54-52-04, 54-52-17, 54-52-17.2, 54-52-17.4
Law Implemented: NDCC 54-52-02.6, 54-52-17, 54-52-17.2, 54-52-17.4
### § 71-02-03-02.2. Payment.

The total dollar amount for the purchase or repurchase may be paid in a lump sum or on a monthly,
quarterly, semiannual, or annual basis. Payments may be subject to contribution limitations established
under 26 U.S.C. 415. Payments must begin within ninety days of the date the written cost confirmation
is prepared. If the installment method is used, the following conditions apply:
1. Simple interest at the actuarial rate of return must accrue monthly on the unpaid balance.
Interest is calculated from the fifteenth of each month.

2. The installment schedule may extend while the employee is employed by a participating
employer but for no longer than a fifteen-year time period.
3. Installment payments may be made by a payroll deduction where available. However, it is the
responsibility of the member to initiate and terminate the payroll deduction.
4. Payments may only be received until the fifteenth of the month following the month of the
member's termination date with a participating employer.
5. Payments are due by the fifteenth of the month to be credited for the month.
6. Payments must be greater or equal to fifty dollars per month, large enough to pay the current
interest plus a portion of principal, and an amount necessary to complete the payment
contract within the fifteen-year time period.
History: Effective November 1, 1990; amended effective July 1, 1994; June 1, 1996; May 1, 2004;
July 1, 2006; July 1, 2010.
General Authority: NDCC 54-52-02.6, 54-52-04, 54-52-17, 54-52-17.2, 54-52-17.4
Law Implemented: NDCC 54-52-02.6, 54-52-17, 54-52-17.2, 54-52-17.4
### § 71-02-03-02.3. Delinquent payment.

If no payment is received within thirty days of the due date, the public employees retirement system
shall send a letter to the member advising them of the delinquency. If no payment is received within
sixty days after the due date, the account must be closed. Payments received on closed accounts must
be returned to the member. The member may submit written documentation as to the cause for the
delinquency to the executive director for review and to request that the purchase contract be
reestablished without a new calculation.
History: Effective November 1, 1990; amended effective July 1, 1994; June 1, 1996; May 1, 2004.
General Authority: NDCC 54-52-02.6, 54-52-04, 54-52-17, 54-52-17.2, 54-52-17.4
Law Implemented: NDCC 54-52-02.6, 54-52-17, 54-52-17.2, 54-52-17.4
### § 71-02-03-02.4. Crediting purchased or repurchased service.

Service purchased or repurchased will be credited in the following manner:
1. For each month the system receives a payment toward a purchase contract, the member will
earn a proportion of service credit.
2. Member acceptance of a service purchase contract extinguishes all pending service purchase
cost estimates, excluding purchase of unused sick leave.
3. Service purchase contracts set up on a payment plan and only partially paid will have the
remaining unpaid portion of service credit included when preparing the new service purchase
cost calculation.
4. For members converting service under the public employees retirement system to service
under the judge's retirement system, each month of county judge service under the public
employees retirement system will be converted to one month of judicial service credit. The
account balance from the public employees retirement system will be transferred to the
judges' retirement system account once the contract is paid in full or closed.
History: Effective November 1, 1990; amended effective July 1, 1994; June 1, 1996; May 1, 2004;
July 1, 2010; April 1, 2020.
General Authority: NDCC 54-52-02.6, 54-52-04, 54-52-17, 54-52-17.2, 54-52-17.4
Law Implemented: NDCC 54-52-02.6, 54-52-17, 54-52-17.2, 54-52-17.4

### § 71-02-03-02.5. Costs.

If purchasing under North Dakota Century Code section 54-52-02.6 or subdivision d of subsection 1
of North Dakota Century Code section 54-52-17.4, the cost will be the higher of the amount refunded to
the member plus interest at the actuarial rate of return or the actuarial cost to provide the credit. All
other types of service purchases must be actuarially determined. An actuarial cost must be calculated
by applying actuarial factors to the amount of retirement and retiree health insurance credit being
purchased by the member. The member's current age, average salary, current credited service, and
actuarial factors on record and in effect with the North Dakota public employees retirement system in
the month in which the member's written request is processed by the office must be used in the cost
calculation. A member's written request must be processed by the office within sixty days of receipt.
The amount of retirement and retiree health insurance credit being purchased must be calculated using
the benefit formulas in place at the time the written request from the member is processed by the office.
When calculating the cost, enhancements to the benefit formula must be considered to be in place at
the time the law is signed by the governor.
The member's average salary shall be calculated as follows:
1. For members working full time with more than twelve months of service credit, by using the
calculation found in subsection 2 of North Dakota Century Code section 54-52-17.
2. For members working full time with less than twelve months of service credit, by using the
calculation found in subsection 2 of North Dakota Century Code section 54-52-17, but
disregarding any month in which the member was paid less than a full-month salary. A
full-month salary is the compensation the member and the member's employer agreed the
member would be paid for working a full month.
3. For members who have not yet received a full-month salary, the member's average salary
shall equal the member's full-month salary, as defined in subsection 2.
4. For members working part time, by using the applicable calculations found in subsections 1
and 2, but using a monthly salary equal to the equivalent of the salary the member would have
received if the member was working full time.
The retirement board must adopt actuarial assumptions necessary to determine the actuarial
factors for the cost calculation. The assumptions must be reviewed concurrently with the assumptions
for the retirement program.
Upon receipt of the written request from the member, and all required documentation, a written cost
confirmation must be prepared and mailed to the member. The cost stated in the confirmation letter is
valid for a period of ninety days from the date of the letter unless the contributor terminates
employment with a participating employer. If the contributor terminates employment, then the cost
stated in the confirmation letter is valid only until the earlier of the end of the ninety-day period or the
fifteenth day of the month following the month of termination.
History: Effective July 1, 1994; amended effective June 1, 1996; July 1, 2000; April 1, 2002; May 1,
2004; July 1, 2006; July 1, 2018.
General Authority: NDCC 54-52-02.6, 54-52-04, 54-52-17, 54-52-17.2, 54-52-17.4
Law Implemented: NDCC 54-52-02.6, 54-52-17, 54-52-17.2, 54-52-17.4
### § 71-02-03-03. Service after age sixty-five.

Repealed as the result of S.L. 1981, ch. 547, § 1.

### § 71-02-03-04. Cancellation of credits.

If a member terminates service and receives a return of the member's accumulated contributions,
service credit for the years of such contributions shall be canceled.
General Authority: NDCC 54-52-04
Law Implemented: NDCC 54-52-17
### § 71-02-03-05. Coordination of multiple plan membership.

Upon providing proper documentation of retirement plan participation, a member who meets the
following criteria may use service credit in the teachers' insurance retirement fund for the purpose of
meeting the normal retirement date for vesting purposes under North Dakota Century Code chapter
54-52. The member:
1. Must have participated in both the teachers' fund for retirement and the teachers' insurance
and annuity association of America-college retirement equities fund.
2. Must have elected to transfer the member's teachers' insurance retirement fund account
balance to teachers' insurance and annuity association of America-college retirement equities
fund in connection with the administrative coordination of the various state retirement plans as
provided under chapter 133 of the 1973 North Dakota Session Laws.
3. Did not have a cash out since the time of the transfer of funds.
4. Did not relinquish such service credit in writing.
History: Effective June 1, 1996; amended effective July 1, 1998; April 1, 2020.
General Authority: NDCC 54-52-04, 54-52-17
Law Implemented: NDCC 54-52-01(11)(12)(16), 54-52-17
### § 71-02-03-06. Conversion of sick leave.

To convert unused sick leave to service credit, the member must submit an application to the office,
no later than the end of the month in which the member is no longer eligible to accrue the sick leave
hours, unless otherwise approved by the executive director. The member's employer must confirm the
member's unused balance of accumulated sick leave as of the date the member is no longer eligible to
accrue sick leave hours. For a member transferring from one participating employer to another
participating employer without terminating eligible employment, the public employees retirement system
shall record unused sick leave of a participating member if the new employer certifies that it will not
transfer that leave. The certification must include documentation from the previous employer detailing
the number of hours of sick leave. The public employees retirement system must receive the
certification within sixty days after the member leaves employment with the former employer. One
month of service credit must be awarded for each one hundred seventy-three and three-tenths hours of
unused accumulated sick leave. The employer and employee contributions rates used to calculate the
cost must be the rate of the retirement program of the member at termination.
1. Aftertax payments may be accepted from the member as early as six months prior to when
the member is no longer eligible to accrue sick leave hours, if the following requirements are
met:
a. A notice of employment change has been provided to the public employees retirement
system.
b. A written certification by the member's employer, as to the member's unused balance of
accumulated sick leave as of the date the member wishes to begin payment, is on file
with the public employees retirement system.

c. The sick leave conversion payment must be recalculated using the member's unused
balance of accumulated sick leave confirmed by the member's employer, and the
member's final average salary as of the date of calculation. If there is a difference
between the sick leave conversion payment amount and the amount the member has
paid, any overpayment must be refunded to the member and any underpayment must be
collected from the member by the fifteenth of the month following the month the member
is no longer eligible to accrue sick leave hours.
2. The member's record must be updated with the additional service credit once payment is
made in full.
3. Pretax rollover or transfer payments may be accepted from the member as early as sixty days
prior to when the member is no longer eligible to accrue sick leave hours, if the following
requirements are met:
a. A notice of employment change has been provided to the public employees retirement
system.
b. A written certification by the member's employer, as to the member's projected unused
balance of accumulated sick leave no sooner than sixty days prior to the date the
member is no longer eligible to accrue sick leave hours, is on file with the public
employees retirement system. This certification must also include a certification by the
employer of the projected salaries to be reported to the public employees retirement
system during the final months of employment.
c. The sick leave conversion payment must be recalculated using the member's unused
balance of accumulated sick leave confirmed by the member's employer and the
member's final average salary as of the date of calculation. If there is a difference
between the sick leave balance or conversion payment amount and the amount the
member has paid, then only the amount of sick leave available as of the date the
member is no longer eligible to accrue sick leave hours must be added to the member's
record. The member account balance must be credited with the full amount of funds from
the rollover or transfer.
d. If an underpayment has occurred, then the remaining amount must be collected from the
member by the fifteenth of the month following the month the member is no longer
eligible to accrue sick leave hours.
e. The retiree health credit portion must be paid as a personal aftertax payment.
4. The member's record must be updated with the additional service credit once payment is
made in full.
History: Effective June 1, 1996; amended effective April 1, 2002; May 1, 2004; July 1, 2006; April 1,
2008; July 1, 2018; January 1, 2025.
General Authority: NDCC 54-52-04
Law Implemented: NDCC 54-52-27
### § 71-02-03-07. Employer purchase of service credit or sick leave program.

An employer may elect to purchase up to five years of service credit for an employee and purchase
an employee's unused sick leave that meets the requirements of section 71-02-03-08. Before offering a
purchase program to its employees, the employer must create a program and an employer must
document the program in writing and submit a copy to the public employees retirement system. The
governing authority of the employer shall also submit to the executive director of the public employees
retirement system a letter indicating:

1. The program meets all the requirements of the North Dakota Century Code.
2. The program meets all applicable federal requirements.
3. The employer agrees to remit to the public employees retirement system a lump sum payment
of the cost of the purchase upon being billed.
4. The employer has not given the employee the option of a cash payment in lieu of the
employer purchase.
5. The employer shall clearly specify who is eligible for the program and indicate if the program is
intended to be permanent or will be for a specific time period only.
6. The employer agrees that all purchases for service credit will be based upon actuarial cost as
determined by the public employees retirement system and all unused sick leave purchases
will be based upon the computation specified in the North Dakota Century Code. The
employer also agrees that all purchases will be completed no later than the fifteenth day of the
month following the month of the employee's termination or sixty days from the date the
employer and employee agree to the purchase, whichever comes first.
7. The employer agrees that in offering such a program the employer will direct each employee
interested in the program to first apply to the employer's authorized agent who will then certify
the eligibility of the member, the amount of service credit to be purchased or sick leave to be
converted, and send such certification to the public employees retirement system. The
employer also agrees that the employer's authorized agent will coordinate the program,
authorize all purchases in writing to the public employees retirement system, and be the focal
point for communications between the public employees retirement system, the employer, and
the employee.
8. The employer agrees that for each employee certified to be eligible to have service credit
purchased or sick leave converted, the employer will first obtain from the employee
authorization for the public employees retirement system to share confidential information with
the employer.
9. The employer certifies that in offering the program, the employer is making it available to all
employees or a specified class of employees on a nondiscriminatory basis.
10. The employer agrees to provide information and policies relating to an employer purchase
program pursuant to North Dakota Century Code section 54-52-26.
When an employer files the above letter with the public employees retirement system, it may offer the
program to its employees. An employer may terminate this program at any time upon the governing
authority of the employer sending to the executive director of the public employees retirement system a
letter indicating when the program is to be canceled
History: Effective May 1, 2004; amended effective July 1, 2006; April 1, 2008; July 1, 2010.
General Authority: NDCC 54-52-04
Law Implemented: NDCC 54-52-17.4, 54-52-29
### § 71-02-03-08. Eligible sick leave.

An employer or a member may only purchase unused sick leave that has not been previously
purchased by a former employer or the member.
History: Effective May 1, 2004; amended effective July 1, 2006.
General Authority: NDCC 54-52-04
Law Implemented: NDCC 54-52-27
