Section 303-15-007 - Payment Methods007.01 Installment Method007.01(a) Members electing to purchase optional service credit with the installment method may choose tax deferred payroll deduction or direct after-tax installment payments. Payments made are subject to IRS code section 415 annual limits. If the contributions qualify as a repayment of original mandatory contributions as described under section 002 of this regulation the section 415 limits do not apply.007.01(b) Before direct after-tax installment payments can be accepted for purchase of service each year during the installment period, the member must substantiate his or her current compensation in such manner as may be required by NPERS. If a member's direct after-tax installment payments exceed the applicable code section 415 limit, the excess shall be refunded to the employee and the service credit adjusted accordingly.007.01(c) Direct after tax installment payments made to NPERS by the member must be by cashier's check, bank draft or money order. Personal checks will not be accepted except for de minimus amounts in order to meet a purchase cost.007.01(d) A member may elect to purchase service through payroll deduction pursuant to an irrevocable payroll deduction agreement with the member's employer that authorizes the employer to deduct the payment from the employee's compensation. One copy of the agreement must be on file with the employer and one copy with NPERS before payments may begin. In the event a member elects to purchase service by payroll deduction, the covered employer shall be responsible for making timely remittances of the member's contributions for his or her service purchases.007.01(e) Notwithstanding anything to the contrary in this Chapter 15, NPERS will accept payments made via payroll deduction after the member's last working day, through and including the member's final paycheck, if the members employment contract calls for part of the member's compensation to be paid in arrears after the member's last working day.007.01(f) In the event a member's irrevocable purchase agreement becomes inoperative due to the employee's death, disability, or other termination of employment before full payment for the employee's service purchase has been completed, no further contributions for the purchase of creditable service shall be accepted and the employee's retirement benefit under the applicable retirement system shall be computed with service credit equal to the amount of service credit acquired in proportion to the amount of the installment payments paid by the member under the irrevocable purchase agreement.007.01(g) In the case of the School Employees Retirement System, termination of employment for the employee does not include ceasing work at one school district and then providing successive contributory service at another school district that participates in the School Employees Retirement System. If the employee transfers to another school district administered by the Retirement Board, then the employee shall continue, without interruption, direct after tax 6. monthly installment payments or monthly payroll deductions, whichever was specified in the member's irrevocable purchase agreement. In the case of payroll deductions, upon notification by the member, NPERS will contact the successor employer in order to make arrangements to continue, without interruption, monthly payroll deductions specified in the originating irrevocable purchase agreement.007.01(h) The finance interest rate used for the direct after tax installment payments and tax deferred payroll deductions shall be the actuarial interest rate assumption based on the expected long-term rate of return for each plan, recommended by the state's actuary and adopted by the Retirement Board.007.01(i) A late fee may be charged when direct payments are not received by the payment deadline. The fee will be based on the finance interest rate as defined by this section.007.02 Rollovers007.02(a) Consistent with the Internal Revenue Code, NPERS will accept rollovers in payment for lump-sum purchases of service credit, provided the money is an eligible rollover distribution received from one of the following: 007.02(a)(i) A code section 401(a) or 401(k) tax qualified plan.007.02(a)(ii) A code section 403(a) or (b) tax sheltered annuity account.007.02(a)(iii) A code section 408(a) individual retirement account (IRA) or a code section 408(b) individual retirement annuity.007.02(a)(iv) A code section 457(b) deferred compensation plan.007.02(b) A rollover or transfers from a qualifying tax-deferred account will not be accepted by NPERS without the member certifying that the originating rollover/transfer account has maintained its proper tax qualification conditions under the applicable sections of the Internal Revenue Code.007.02(c) A direct rollover payment for purchase of service may be made by check from the transferring institution to the Nebraska Public Employees Retirement Systems, or a check delivered to the member but negotiable only by the Nebraska Public Employees Retirement System will be accepted as a direct rollover.007.02(d) The amount of the rollover payment accepted by NPERS will be based on the cost of the service purchased and determined only by NPERS. Funds in excess of the actual purchase cost will not be accepted.007.02(e) All other federal tax laws governing eligible rollover distributions shall apply.007.03 Lump Sum Payments007.03(a) A lump sum payment is a one-time, direct payment by the member for the purchase of eligible service credit.007.03(b) In all cases, except for eligible rollover distributions, the payment shall be on an after-tax basis and subject to the code section 415 defined contribution annual limits. If the contributions qualify as a repayment of original after-tax, mandatory contributions as described under section 002 of this regulation the code section 415 limits do not apply.007.03(c) Before a lump sum after-tax payment can be accepted as a purchase of service, the member must substantiate their current compensation in such a manner as may be required by NPERS. If a member's lump sum after-tax payment ultimately exceeds the applicable code section 415 limit, the excess shall be refunded to the employee and the service credit adjusted accordingly.007.03(d) If a member elects to purchase service by lump sum after-tax payments and such purchase exceeds the annual code section 415 limits, the member may be permitted to make payments in immediate succeeding periods to complete the member's purchase of service. Members who are unable to make a lump sum payment due to the limitations of code section 415 may be required by NPERS to use the installment method to complete the payments.007.03(e) Payments will only be accepted via cashier's check, bank draft or money order. Personal checks will not be accepted as payment except for de minimus amounts in order to meet a purchase cost.303 Neb. Admin. Code, ch. 15, § 007