A service credit represents one month of employment with an FPPA-covered employer. When retiring, a Member’s FPPA defined benefit retirement is based on ALL service credit a member has accumulated – the more service credit, the greater the defined benefit. Service credit can be earned by working for an FPPA-covered employer, or granted by a rollover, transfer, or payment of funds from another source. A service credit purchase allows Members to consolidate multiple retirement assets into one Plan.

This application process is initiated by the member

FPPA recommends you speak with a financial advisor if you are unsure if purchasing service credit is right for you. Consider the following:

• How much will your defined benefit increase as a result of being granted service credit for previous employment?
• How long will it take you in retirement to recoup your initial investment?
• What would you forfeit by withdrawing money from an old retirement plan?
• What account or source are you planning to use?
• Was the prior employment considered public or private and was it concurrent with any FPPA covered employment?
• Have you contacted an FPPA retirement administrator to understand what your options are?

Generally speaking, the cost of service credit increases with age (up to age 55) and raises in salary. For the Statewide Retirement Plan, the salary used to purchase service credit is the highest pensionable earnings (base salary) for any calendar year in the plan. In the Colorado Springs New Hire Pension Plan, FPPA uses Final Average Salary (FAS), which is basically the average of the member’s last 39 payroll periods.

Please use the calculator in the Member Account Portal to help estimate the cost of service credit. Or, contact an FPPA Benefit Administrator to review your service credit purchase options and estimated cost.

Payment for service credit purchases

Payments must be made in a lump sum for the full purchase amount. Service credit will not be granted until FPPA has approved the request and full payment has been received. Payment must be received by FPPA no later than the Member’s DROP entry date or the last day of active service in their retirement plan, whichever is earlier. 

FPPA Members may purchase service credit for various types of previous employment:

• Public employment within the United States not covered under the Statewide Retirement Plan or Colorado Springs New Hire Pension Plan
  • Eligible time to purchase: as much time as you worked with a previous public employer
• Private employment includes any service or employment within the United States that does not meet the definition of “public employment,” except military service
  • Eligible time to purchase: maximum of 5 years
• Military Service is defined as active duty in the Uniformed Services of the United States and can include reserve service
  • Eligible time to purchase: maximum of 5 years

Other requirements:

• Members cannot purchase the same month twice, even if there is overlap with previous employment
• Retirement funds associated with previous employers must be exhausted first, before other assets are used
• Private Employment: Purchase requires 5 years of service in the plan with the same employer
• Public Employment and Military: Purchase requires 1 year earned in the defined benefit plan with the same  employer

Special rules for departmental plan conversions (also known as Reentry)

A reentry Member is eligible to purchase service credit for previous public & military employment if they have at least one year of service with the same employer prior to reentry, or one year with a previous employer covered by the FPPA plan.

The following is the specific documentation required to purchase service credit:

• Service credit purchase application
• If the purchase is for military service, include a copy of the Military Discharge Papers (DD Form 214)
• Part-time employment: Provide dates of employment and proof of income received plus Social Security  summary or W2s

Service credit can be purchased using tax-deferred (pre-tax) or post-tax money from certain plans as allowed by the Internal Revenue Code (IRC) or from a Member’s checking or savings account. If a Member has an account in one of the following plans and wants to use it to fund all or part of the service credit cost, the Member will need to contact the plan administrator to ensure a distribution can be made from that plan and received by FPPA no later than the due date established by FPPA. If the remaining balance is not paid, the Member will be granted service credit based on the dollar amount received by FPPA.

Tax-deferred money from the following plans may be used:

• 401(a) plans: Many public and private sector defined benefit and defined contribution pension plans are qualified under IRC section 401(a)
• 401(k) plans: These plans are set up by many private sector employers and a few public sector employers for employees to invest tax-deferred dollars for retirement
• 457(b) Governmental Deferred Compensation plans: These plans are set up under IRC section 457 by many public sector employers (usually states or municipalities) for employees to invest tax-deferred dollars for retirement
• 403(b) Tax Sheltered Annuities: These plans are set up under IRC section 403(b) by many educational institutions and non-profit employers for employees to invest tax-deferred dollars for retirement
• Traditional IRA, SEP-IRA, SIMPLE IRA: Please consult the Individual Retirement Account (IRA) custodian to ensure eligibility of these funds

Post-tax money from a personal checking or savings account: Funds from a personal checking or savings account may also be used to be granted service credit for previous employment or military time.

The following may not be used:

• Roth IRA
• Designated Roth Account (401(k), 403(b) or 457(b))
• Coverdell Educational Savings Account, 529 Plans, or any other college savings accounts
• Health Savings Accounts (HSAs) 

Follow these steps to complete a service credit purchase application:

• Login to your Member Account Portal (Available once FPPA receives your first payroll contribution) 
• Locate the Service Credit Purchase Application, located under the Member Accounts tab
  • If this is your first purchase, you will need to purchase any applicable time with your current employer using your Money Purchase Component account first
  • If you have already completed a purchase using yourMoney Purchase Component transfer account, you can complete another purchase using other funds (457(b), IRA, 401(k), etc.) and/or purchase time with another previous employer
• Complete the online application
• Once your application has been processed and approved, staff will request the funds if you are using a FPPA Fidelity account for the purchase (SWH-MP, FPPA 457, SWMP)
  • FPPA will email a Cost Approval Letter to your email address on file. This letter details the cost of your purchase and provides direction to your financial institution to have the funds transferred to FPPA. You must request the funds, FPPA Staff cannot request the funds on your behalf. Funds must be received within 60 days from your purchase date
• Once the funds are received by FPPA the funds and service credits purchased will be credited to your account
• FPPA will email a Confirmation letter providing details of the transaction