STRS Ohio Service Credit Purchase

Why Service Credit Purchases Matter

Every year of qualifying service credit adds 2.2% of your Final Average Salary to your annual Defined Benefit pension. Buying back two years of credit on a $70,000 FAS adds $3,080 per year — $256 more per month for the rest of your life. Service credit also counts toward eligibility thresholds: the difference between 31 and 32 years is the difference between a reduced and an unreduced retirement benefit.

What You Can Purchase

Restored refunded service. If you previously left Ohio public teaching and withdrew your STRS Ohio accumulated contributions, you can restore that credit by repaying the withdrawn amount plus compound interest. The longer ago the withdrawal, the more interest has accrued.

Out-of-state and federal teaching. Public school teaching in other states or at federal overseas defense schools can be purchased, subject to statutory limits and certification requirements. This credit counts toward service years but not toward FAS (only Ohio public earnings feed the salary calculation).

Military service. Active duty military service that interrupted Ohio public teaching can be credited or purchased under federal USERRA provisions and Ohio law. You'll need documentation of the military service and the teaching position it interrupted.

Approved leaves of absence. Credit for medical, pregnancy, professional improvement, or parental leaves approved by your employer can be purchased.

Calamity days. If your school year extends into June due to weather make-up days and you choose to retire June 1 without working those extra days, you can purchase calamity credit by remitting the required member contribution. This preserves a June 1 effective date instead of pushing it to July 1.

How to Pay for It

Lump-sum payment. Pay the full cost directly to STRS Ohio from personal funds. Simple, but the money comes from after-tax dollars.

Pretax rollover. Transfer funds directly from a qualified 403(b) plan, Ohio Deferred Compensation 457(b) account, or Traditional IRA to STRS Ohio using Form 20-101. The money moves trustee-to-trustee, maintaining its tax-deferred status. You avoid current-year income tax on the transferred amount.

The pretax rollover option is significant for members with substantial 403(b) or 457(b) balances. Instead of withdrawing those funds (triggering income tax and potentially a 10% early withdrawal penalty), you redirect them to purchase service credit that permanently increases your monthly pension.

The Non-Negotiable Deadline

All service credit purchases must be fully completed and paid before your effective date of retirement. Not submitted — completed. If a rollover transfer is in transit on your effective date, the purchase is not considered complete and the credit does not count.

Start the process at least six months before your target retirement date. Request formal cost statements from STRS Ohio for every type of purchasable credit you hold. The cost statement shows exactly what you owe, including accrued interest, and gives you time to arrange payment or set up a rollover.

Combined Service Credit

Service credit earned under OPERS (Ohio Public Employees Retirement System) or SERS (School Employees Retirement System) can be combined with your STRS Ohio credit at retirement. The system where you earned the most service credit pays the unified benefit. Combined credit counts toward both eligibility thresholds and the service-year multiplier in the benefit formula.

If you spent part of your career as a classified school employee (custodial, transportation, food service) under SERS before moving into a teaching role under STRS Ohio, that SERS time can boost your total.

Running the Math Before You Commit

Before purchasing credit, calculate the return on investment. Compare the purchase cost to the increase in monthly benefit it produces, then figure out your breakeven point — how many months of the higher pension it takes to recoup the purchase price.

For most teachers within a few years of retirement, the breakeven is well under 10 years. After that, every additional month of the higher pension is pure gain.

Our STRS Ohio Retirement Guide includes a service credit audit worksheet to help you identify every type of purchasable credit in your history and calculate whether buying it back is worth the cost.

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