Changes to Methods of Payment for Purchase of Service Credit

Date: May 20, 2013


At its May 17, 2013 meeting, the SDCERS Board of Administration voted to limit the ability to use post-tax payments for Purchase of Service Credit (PSC) contracts, except as indicated below. Post-tax payments, whether by lump-sum or payroll deductions, for Service Credit purchases that do not fall within the exceptions noted below are no longer available to Members. 
The following payment options remain available to eligible Members for any type of eligible purchase of service:

  • Transfer of pre-tax funds from tax-qualified DC plans maintained by the City, Port or Airport; 
  • Rollover of pre-tax funds from a qualified plan or individual retirement account (IRA);
  • Any other pre-tax source allowable under federal law.
Exceptions apply to City of San Diego members who participated in SDCERS before July 1, 1998 (Grandfathered Members) who are purchasing service credit allowed under the plan before August 5, 1997 (Grandfathered Permissive Service Credit).
If purchased by a Grandfathered Member, the following types of Grandfathered Permissive Service Credit remain eligible for post-tax payments (lump-sum or payroll deductions):
  • Probation
  • Prior City service periods eligible for Membership where no contributions were made
  • 1981 Plan Waiting Period
  • Part-time or hourly service
  • Reinstatement occurring prior to January 1, 1997
  • Leave of Absence occurring before February 1, 1997
  • Any period of time for long-term Disability, FMLA, or leave without pay with job to be saved
  • Service not previously included within field of membership
  • Military service not covered under Uniformed Services Employment, Re-employment Rights Act (USERRA)
Another exception applies to USERRA time, which remains eligible via post-tax payments based on federal law.
For additional information, you may contact SDCERS’ Call Center at 619-525-3600.

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