Los Angeles Municipal Code § 4.1020 Government Service Buy Back Program

(a) Definitions. For the purpose of this section, the following words and phrases shall have the meaning ascribed to them in this subsection, unless a different meaning is clearly indicated by the context:

Buy Back shall mean purchase by a member of retirement credit for periods of eligible service with other governmental entities or purchase by a member of retirement credit for uncompensated maternity leave.

Full-time Service shall mean a minimum of six (6) months of uninterrupted service with an eligible governmental entity, excluding part-time service.

Governmental Entity shall mean the United States Government, including its territories, any agency of the United States Government, the United States Postal Service and any branch of the United States military service; any State or political subdivision thereof; any local government or special district within any State in the United States, and shall exclude non-governmental agencies supported by government contracts or grants and any prior service with the City of Los Angeles.

Government Service Buy Back Program or GSB shall mean the method for the buy back of retirement credit set forth in this section.

Prior Plan shall mean a retirement plan of a governmental entity in which the member was a participant during full-time service.

Uncompensated Maternity Leave shall mean a leave of absence from City Service taken for maternity reasons without pay, provided that such leave shall be a minimum of one (1) month and a maximum of twelve (12) months with respect to any one pregnancy.

(b) Eligibility. A member is eligible to buy back credit for periods of full-time service with other governmental entities and to buy back credit for periods of uncompensated maternity leave. Notwithstanding the foregoing:

(1) Members may not buy back credit for periods of service for which they are currently eligible or will become eligible to receive a retirement benefit from a prior plan, provided, however, that to the extent required by federal law, periods of service in the United States military reserve may be purchased even if the Member is eligible to receive a retirement benefit from the prior plan. For purposes of the previous sentence, a member shall be treated as eligible for such benefit from a prior plan even if the member will not receive such benefit solely due to the member’s withdrawal of member contributions and interest from the prior plan, unless such withdrawal occurred prior to the later of the member’s date of hire by the City or December 20, 1996, or unless the member deposits the amount of such withdrawal as the buy back purchase price, in accordance with Subsection (e)(2) hereof, within ninety (90) days of such withdrawal. In addition, a member shall be treated as eligible for such benefit from a prior plan if the member received at any time a distribution from the prior plan in excess of member contributions and interest with respect to such period of service. The Board may extend the ninety (90) day period if required for compliance with Section 415 of the Internal Revenue Code. In the event that prior to the attainment of the minimum age and service for a service retirement under LACERS the member becomes eligible to receive currently or in the future a retirement benefit from the prior plan with respect to such period of service, the corresponding buy back credit shall be canceled, and the member shall receive a refund of the payments made under Subsection (e) with respect to such buy back credit, with interest, payable upon the earlier of death, termination of employment, or retirement from City Service.

(2) Members are not allowed to buy back credit for periods of service from a governmental entity which provides reciprocal

benefits with LACERS and for which that member would be entitled to those reciprocal benefits. For purposes of the previous sentence, a member shall be treated as entitled to reciprocal benefits even if the member will not receive such benefits solely due to the member’s withdrawal of member contributions and interest from the prior plan, unless such withdrawal occurred prior to the later of the member’s date of hire by the City or December 20, 1996.

(3) Only a member performing City Service as defined in Section 4.1001 shall be eligible to execute a buy back agreement.

(4) For purposes of this section, the date of a withdrawal shall be deemed to be the date of receipt of the proceeds of the withdrawal

by the member or other designated recipient.

(5) Uncompensated Maternity Leave. Only a member who was on an active employment status immediately before and after

taking a leave of absence for maternity reasons without pay shall be eligible to buy back credit for such leave of absence.

(c) Application of Buy Back Credit. The service credit purchased under this section shall be treated the same as service credit under LACERS, except that it shall not be taken into account for establishing the minimum five-year service requirement for service retirement, disability retirement or vested retirement.

(d) Minimum Periods of Purchase. A member electing to buy back credit for previous service with other governmental entities or for periods of uncompensated maternity leave shall file with the Board of Administration a written application identifying the time periods and agencies for which credit is to be purchased, and shall submit proof acceptable to the Board of Administration establishing the fact of such other service with another governmental entity or such uncompensated maternity leave. Buy back credit for one or more periods of full-time service with another governmental entity prior to entrance or re-entrance into the Retirement System may be purchased, except, however, such purchase shall be limited to not less than six (6) months of uninterrupted service from a single entity. The six-month minimum requirement does not apply to the uncompensated maternity leave.

(e) Agreement with the Los Angeles City Employees’ Retirement System - Buy Back Methods. A member electing to buy back credit described herein shall enter into a written agreement with the Retirement System. Such agreement shall specify the amount to be paid for the purchase of this service credit.

(1) The amount to be paid pursuant to the buy back agreement shall equal (A) the member’s contribution rate, (B) times the

member’s annual salary rate at the time the agreement is entered into, and (C) times the number of full and partial years of service to be purchased. Partial years of service shall be rounded down to the full month. Such agreement shall identify the method of payment of the additional contributions required to fund the purchased credit, which will be a specific dollar payment.

(2) Notwithstanding Paragraph (1), if the member had made employee contributions and left the member’s contributions on deposit

with the government entity for which full-time service is being purchased until after the later of the member’s date of hire by the City or December 20, 1996, the buy back purchase price will be the amount of the member contributions and interest on deposit in the member’s account with that government entity. For the purpose of purchasing service credit, the Retirement System may either receive (A) eligible rollover distributions, as defined in Section 401(a)(31) of the Internal Revenue Code, (B) rollover contributions, as defined in Section 408(d)(3) of the Internal Revenue Code, or (C) direct cash contributions, the timing of which shall be governed by Subsection (b)(1) herein. The Board of Administration shall prescribe such rules and forms as are necessary to determine when proposed contributions hereunder qualify as rollover contributions.

(f) Method of Purchase.

(1) The member may elect to pay on an after-tax basis in a lump sum or in biweekly installments through payroll deduction, subject to any applicable Internal Revenue Code restrictions.

(2) The member may elect to pay via rollovers of pre-tax and/or after-tax funds pursuant to Section 401(a)(31) or Section 408(d)(3)

of the Internal Revenue Code.

(3) Should the member elect to purchase the buy back service credit through payroll deduction, annual interest at a rate determined

by the Board and set at the commencement of the agreement shall be charged. The minimum biweekly payroll deduction shall be $25.00.

(g) Execution of the Agreement. A member entering into a buy back agreement shall complete all contributions prior to the effective date of retirement in order to receive agreed upon buy back credit. In the event the member elects to retire prior to completion of the buy back agreement, the member may receive prorated buy back credit for that portion of the service with other governmental entities or uncompensated maternity leave which have been purchased by contributions already made and forfeit the remainder of credit covered by the agreement; or the member may make a lump sum payment sufficient to complete the total payment covered by the agreement. Additionally, a member who elects to terminate an after-tax agreement prior to its completion, or at the time of retirement, may elect to receive a cash refund of the buy back contributions and interest payable upon the earlier of death, termination of employment or retirement or prorated buy back credit.

(h) Member’s Death. In the event of the death of a member who has entered into a buy back agreement, the surviving eligible beneficiary of the member may elect a refund of the buy back contributions and interest thereon; elect to apply the credit, or a portion thereof, to the calculation of the benefits for which the survivor qualifies without the addition of buy back service credit; or elect to complete the terms of the agreement with a lump sum payment of the remaining amount owed.

(i) Benefit Adjustment. The annuity attributable to contributions made pursuant to this section, as well as the service purchased with such contributions, shall not be utilized in the calculation to determine whether a retirement allowance is to be increased to provide a minimum pension of fifty percent (50%), pursuant to the provisions of Section 4.1007(a)(4).

(j) Administration. The administration of this section shall be under the exclusive management and control of the Board of Administration. Said Board shall have, and is hereby granted, full power and authority to adopt and enforce all such rules and regulations as it may deem necessary for the carrying out of the provisions of this section. The Board of Administration shall have the right to construe this section, to interpret any provision thereof, to make rules and regulations relating to this section, and to determine any factual questions arising in connection with this section’s operation after such investigation or hearing as the Board may deem appropriate. Any decision made by the Board under the provisions of this section shall be conclusive and binding on all parties concerned.

(k) El Pueblo Employees. Notwithstanding the above, persons who were employed by El Pueblo de Los Angeles State Historic

Monument between May 17, 1977 and June 30, 1995, and who became members of LACERS on July 1, 1995, may purchase service credit for their employment with the El Pueblo between May 17, 1977, and June 30, 1995. The service credit purchased under this section for employment at El Pueblo shall be treated as same as service credit under LACERS including vesting, disability retirement and minimum

qualification for service retirement.

(l) Effect of Transfer to Fire and Police Pension Plan. For any Member who has entered into a buy back agreement and elects to transfer membership to the Fire and Police Pension Plan pursuant to Section 4.2216, LACERS shall transfer all service credit and associated contributions that have been purchased, subject to the terms and conditions of the LACERS Peace Officer Transfer Program and the terms and conditions provided in this section.

SECTION HISTORY

Added by Ord. No. 182,629, Eff. 7-25-13. Amended by: Subsec. (b)(1), Ord. No. 184,853, Eff. 4-6-17; Subsec. (l) added, Ord. No. 188,756, Eff. 11-16-25.

A member may purchase credit for periods of service with the Water and Power Employees’ Retirement Plan (WPERP) on the terms and conditions set forth below, except that periods of noncontributory WPERP service may not be purchased.

(a) Contributions Must Be Transferred. A member may not purchase credit for periods of service with WPERP so long as the member’s contributions remain on deposit with WPERP unless the member authorizes a transfer of the member’s WPERP contributions to the Retirement Plan, to be credited towards payment pursuant to this section.

(b) Treatment of Purchased Service. Service purchased under this section shall be treated the same as LACERS service for purposes of establishing the minimum ten (10) years of continuous service required to qualify for retirement under Subsection 4.1005(c), including the minimum five (5) years required to be based on actual service with the City, the minimum five (5) years of continuous service required to qualify for retirement under Subsection 4.1006(a), or the minimum five (5) years of continuous service required to qualify for disability retirement under Subsection 4.1008(a), except that WPERP service purchased under WPERP’s Other Governmental Service (OGS) program shall not be treated the same as LACERS service for the aforementioned purposes. WPERP service purchased under WPERP’s OGS program when purchased with the Retirement Plan shall only count as service credit for purposes of calculating the member’s service retirement allowance or disability retirement allowance, as applicable. Service purchased under this section shall not count as service or service credit for the purpose of qualifying for any benefits provided in Chapter 11 of Division 4 of this Code.

(c) Written Agreement and Cost of Purchase. A member electing to purchase WPERP service under this section shall enter into a written agreement with the Retirement System. Such agreement shall specify the amount to be paid for the purchase of this service. The cost to purchase service shall be determined as follows:

The member’s contribution rate shall be combined with the “City Contribution Rate” (the average annual percent of payroll contributed by the City to the Retirement Fund, excluding contributions allocated to fund the 401(h) account, based upon the City’s payments for the seven (7) years prior to the time of purchase) to establish the total percent of the member’s compensation, at the time of purchase, that is to be paid for the total length of the period of service that the member agrees to purchase. Compensation as used in this subsection shall refer to the member’s compensation earnable, as defined in Subsection 4.1001(a), at the time of purchase.

As an example, assuming the member’s compensation at the time of purchase is $100,000.00 per year, the member’s contribution rate is ten percent (10%), the City Contribution Rate is twenty percent (20%), and the period of service to be purchased is two (2) years, the cost would be determined as follows:

The ten percent (10%) member contribution rate plus the twenty percent (20%) City Contribution Rate results in a total contribution rate of thirty percent (30%). Thus, to purchase two (2) years of service would cost the member a total of $60,000.00 (thirty percent (30%)) of the member’s $100,000.00 compensation for each year of service purchased).

(d) Method of Purchase.

(1) The member shall transfer any contributions the member has on deposit with WPERP as payment towards the member’s

purchase cost.

(2) The member may elect to pay on an after- tax basis in a lump sum or in biweekly installments through payroll deduction,

subject to any applicable Internal Revenue Code restrictions.

(3) The Board may establish rules to allow members to pay for purchases via rollovers of funds.

(4) Should the member elect to purchase the buy back service credit through payroll deduction, annual interest at a rate determined

by the Board and set at the commencement of the agreement shall be charged. The Board may establish a minimum biweekly payroll deduction.

(e) Execution of the Agreement. A member entering into a purchase agreement shall complete all payments prior to the effective date of retirement in order to receive full credit for the service purchased. In the event the member elects to retire prior to completing payment under the purchase agreement, the member may receive prorated credit for that portion of the service for which payments have already been made and forfeit the remainder of service covered by the agreement; or the member may make a lump sum payment sufficient to complete the total payment covered by the agreement. Additionally, a member who elects to terminate an after-tax agreement prior to its completion, or at the time of retirement, may elect to receive a cash refund of the purchase contributions and interest payable upon the earlier of death, termination

of employment or retirement, or to receive prorated service at retirement.

(f) Member’s Death. In the event that a member who has entered into a purchase agreement dies prior to retirement, the funds paid for this purchase shall be considered to be a part of the member’s accumulated contributions and shall be refunded accordingly, with interest thereon computed at the rate applicable to regular member contributions. In the event of the death of a member who has entered into a purchase agreement, the surviving eligible beneficiary of the member may elect a refund of the purchase contributions and interest thereon; elect to apply the credit, or a portion thereof, to the calculation of the benefits for which the survivor qualifies without the addition of buy back service credit; or elect to complete the terms of the agreement with a lump sum payment of the remaining amount owed.

(g) Limits on Purchase. In the event part or all of the purchased service credit at the time of retirement would cause the member’s service retirement allowance to exceed one hundred percent (100%) of final compensation, the purchase cost attributable to any excess service credit that may not be used in the retirement formula, including interest thereon, shall be refunded or may be applied by the member to purchase a larger annuity if doing so does not cause the retirement allowance to exceed any federal limitations that may apply.

(h) Administration. The administration of this section shall be under the exclusive management and control of the Board of

Administration. Said Board shall have, and is hereby granted, full power and authority to adopt and enforce all such rules and regulations as it may deem necessary for the carrying out of the provisions of this section. The Board of Administration shall have the right to construe this section, to interpret any provision thereof, to make rules and regulations relating to this section, and to determine any factual questions arising in connection with the operation of this section after such investigation or hearing as the Board may deem appropriate. Any decision made by the Board under the provisions of this section shall be conclusive and binding on all parties concerned.

(i) Effect of Transfer to Fire and Police Pension Plan. For any Member who has entered into a purchase agreement and elects to transfer membership to the Fire and Police Pension Plan pursuant to Section 4.2216, LACERS shall transfer all service credit and associated contributions that have been purchased, subject to the terms and conditions of the LACERS Peace Officer Transfer Program and the terms and conditions provided in this section.

SECTION HISTORY

Added by Ord. No. 182,824, Eff. 12-19-13. Amended by: Subsec. (c), Ord. No. 183,163, Eff. 8-8-14; Subsec. (c), Ord. No. 184,853, Eff. 4-6-17; Subsec. (i) added, Ord. No. 188,756, Eff. 11-16-25.