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Allowed Service (ERA)

Allowed Services:

Five types of allowed service credit may be purchased and credited to a members account under the ERA. The member and former employer are required to provide verification of the allowed service credit sought. Members may purchase, at 12% of their annual New Mexico salary for each year sought, the following five types of allowed service credit.

This cost is effective through June 30, 2001.  Purchases as of July 1, 2001 will be based on actuarial cost which in most cases will be considerably more expensive.

(1) Out-of-State Employment in a public or accredited private school or a public institution of higher learning in a state or territory of the United States.

(2) US Military Dependents School

(3) Federal Educational Service in New Mexico

(4) New Mexico Private School Experience:

The school must be accredited by the state Department of Education or an accreditation agency approved by the state.

(5) Military Service:

The cost to purchase each year of military service is 10.5% of the members annual New Mexico salary for all years of covered employment.

Members engaged in the United states Military or the Commissioned Corps of the Public Health Service may purchase up to five years of allowed service credit for such service.  The member must have received an honorable discharge in order to qualify.  This buy-in provision is available to members within three years following the initial date of employment.  The member must provide a copy of their DD-214 or other type of military discharge notice.

Under some special circumstances, members who leave covered employment to enter into active military service and reenter covered employment within 18 months of discharge may receive up to five years of free allowed service credit for the time spent in active duty.

Under the provisions of the ERA, a member may purchase a maximum of five years of allowed service credit in each category or in any combination thereof.  When any single category or combination of categories is combined with military service, the maximum allowable is ten years.

The 1998 legislature passed legislation that made it easier for members to purchase allowed service in two ways:

(1) The first provision makes it possible for educational employers to payroll deduct, on a pre-tax basis, monthly payments for the purchase of allowed service credit such as out-of-state teaching employment.

(2) The second change is the roll-over provision.  A roll-over is a transfer of retirement contributions from one plan to another.  The Educational Retirement Board may accept roll-overs to the extent allowed by the IRS.  This provision will let a member transfer funds from another retirement plan like ours, which is a 401(a) plan.  No roll-overs are allowed from a tax sheltered annuity 403(b) plan, or an IRA at this time.

Allowed service credit is included in the computation of the members retirement benefit and is also included in determining retirement eligibility in the 25 and Out retirement provision; but is not included in determining retirement eligibility under the Rule of 75.