NYSTRS Service Credit Purchase: Types, Costs, and Deadlines Before Retirement

Why Purchased Service Credit Matters for Your Pension

Every year of credited service in NYSTRS increases your pension factor, which directly raises your monthly retirement benefit. If you worked as a substitute teacher, served in the military, taught out-of-state, or held other New York State public employment before joining NYSTRS, those years may be purchasable — but only if you pay before your effective retirement date.

If you do not complete the purchase before your effective retirement date, NYSTRS cannot credit that service.

What Types of Service Can You Purchase?

NYSTRS allows members to buy back several categories of prior service:

Prior New York State public employment. If you have eligible prior service with a public school district, BOCES, state agency, or municipal employer in New York before joining NYSTRS, you can submit a claim using Form PRS-2. NYSTRS will determine whether the service qualifies and verify the employment with your former employer, a process that typically takes six to eight months.

Substitute teaching. Days spent as a per-diem substitute in New York public schools may count toward your service credit total. You'll need to document the districts and approximate dates through the prior service claim process.

Military service. Eligible active-duty military service may qualify for credit. Submit your DD-214 separation papers along with the claim. NYSTRS will determine eligibility and calculate the cost in its Cost Submittal statement.

Out-of-state public teaching. If you taught in another state's public school system, that time may be purchasable as New York public service credit. Ask NYSTRS to determine eligibility and provide the cost in a Cost Submittal statement.

How Much Does a Service Buyback Cost?

The cost depends on your membership tier and when the service was rendered:

• Tiers 3 and 4: 3% of the earnings you would have received during the claimed period, plus 5% annual compound interest from the date of service to the date of payment
• Tier 5: 3.5% of earnings plus 5% compound interest
• Tier 6: 6% of earnings, plus 5% annual compound interest

The longer you wait to purchase, the more expensive it gets. NYSTRS's Cost Submittal statement shows the interest period and total for your service.

To get your exact cost, request a formal Cost Submittal statement from NYSTRS through your MyNYSTRS account or by contacting the system directly.

Payment Methods

The payment methods described for service credit purchases are:

1. Lump-sum payment — a single check or electronic payment covering the full cost
2. Direct trustee-to-trustee rollover — transfer funds from an eligible IRA or 403(b) plan directly to NYSTRS, which defers the federal income tax hit

The full amount must be received by NYSTRS before your effective retirement date. Confirm the available payment options in your Cost Submittal statement.

The Hard Deadline You Cannot Afford to Miss

Here is the rule that catches people: NYSTRS cannot credit any prior service purchased after the effective date of retirement. If your retirement date is July 1 and your payment arrives July 2, that service credit does not count.

Because the prior service verification process takes six to eight months — your former employer must confirm dates and earnings — you should file Form PRS-2 at least 12 months before your planned retirement date. File it the day you start seriously planning your retirement timeline.

How to Start the Process

1. Log in to MyNYSTRS and navigate to Service Credit > Claim Prior Service
2. Submit Form PRS-2 for each period of uncredited service
3. Wait for NYSTRS to investigate and issue a Cost Submittal statement (six to eight months)
4. Review the cost and decide whether the additional service credit justifies the payment
5. Submit full payment or arrange a trustee-to-trustee rollover before your retirement date

Run the numbers before committing. Each purchased year increases your pension factor, but the compound interest can make decades-old service expensive. Compare the monthly pension increase against the lump-sum cost to determine your breakeven point.

The NYSTRS Retirement Guide walks through the full service credit audit process alongside your tier-specific pension factor calculations, so you can see exactly how purchased credit changes your monthly benefit.

See more New York guides →