VRS Service Credit Purchase: Deadlines, Costs and How to Buy Prior Service

Purchasing prior service credit through VRS can add years to your retirement calculation, increase your monthly benefit, and move up your earliest unreduced retirement date. But there is one rule that catches people off guard: once you separate from employment or retire, any unpurchased service credit is permanently forfeited. There is no buying it back after the fact.

What Types of Service Credit Can You Purchase

VRS allows active members to purchase several categories of prior service:

Refunded VRS service — if you previously worked for a VRS-participating employer, left, and took a refund of your member contributions, you can buy that service back. This is the most common purchase type.

Active duty military service — eligible periods of active military duty can be purchased as VRS creditable service. You will need DD-214 documentation to verify your service dates.

Out-of-state or federal public service — eligible periods of employment with other public retirement systems may qualify, though VRS evaluates each case individually.

Leave without pay — certain approved leaves of absence can be purchased to fill gaps in your service record.

The Two Cost Windows

The cost of purchasing service credit depends on when you initiate the purchase relative to your current employment start date.

Within the first two years of employment, purchase costs are calculated at approximate normal cost — essentially what the contributions would have been had you been enrolled during that period. This is significantly cheaper.

After two years, purchases are priced on an actuarial basis, which factors in your current age, salary, and the expected benefit increase. Actuarial pricing is substantially more expensive because VRS is pricing the full future value of the additional pension income.

If you are considering a purchase and you are still within your two-year window, act now. The price difference is not marginal.

How the Purchase Changes Your Benefit

Purchased service credit increases your total creditable service in the pension formula (AFC × Multiplier × Service Credit ÷ 12). Each additional year at a 1.70% multiplier (Plan 1) adds 1.70% of your AFC to your annual benefit. At a $60,000 AFC, that is $1,020 more per year — $85 more per month, every month, for life, plus COLAs.

Purchased service also counts toward the vesting threshold (5 years) and toward eligibility rules like Plan 1's age 50 + 30 years or Plan 2's Rule of 90. However, purchased service does not count toward the active-service requirement for PLOP eligibility. You need 12, 24, or 36 months of actual active work past your unreduced date for a 1-, 2-, or 3-year PLOP.

How to Initiate a Purchase

Start by contacting VRS or your employer's HR office to request a purchase cost estimate. VRS will calculate the exact cost based on your plan, current salary, age, and the type and length of service being purchased.

If you proceed, you will complete Form VRS-26 (Purchase of Prior Service Credit). Payment options include a lump sum, payroll deductions, or an eligible rollover from a 457 or 403(b) account. Using a rollover avoids out-of-pocket costs and keeps the money in a tax-advantaged structure.

The Hard Deadline

All service credit purchases must be completed — meaning fully paid — before your effective retirement date. If you are making installment payments through payroll deduction, the final payment must process before you separate from employment. An outstanding balance at separation means you either pay the remainder in a lump sum immediately or lose the unpurchased portion permanently.

Plan your purchase timeline backward from your target retirement date. If you are within 12 months of retirement and have not started a purchase, get the cost estimate now.

The VRS Retirement Guide includes a service credit audit worksheet that walks you through identifying eligible prior service, comparing purchase costs at different payment methods, and building a timeline that fits within VRS deadlines.

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