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Can I finance a purchase of service credit or a redeposit?

Yes, you can make monthly installments on your service credit purchase or redeposit. However, interest will be added to your unpaid balance on a monthly basis until the purchase or redeposit is paid in full. To estimate the total cost of your purchase use our Web finance calculators.

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What interest rate will I pay?

The interest rate for your purchase is based on the date your service credit cost was calculated by CalSTRS and is locked in for the duration of your purchase. The regular interest rate, set each fiscal year by the Teachers' Retirement Board is currently 4.5 percent for fiscal year 2004-2005.

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What payment methods are offered?

You can finance your purchase by monthly cash installments or, if you employer offers it, by monthly payroll deduction. You can also pay for your purchase by rollover of acceptable funds.

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How can I select the payment schedule I want?

The billing statement you receive from CalSTRS will show your payments based on a five-year schedule, unless you request otherwise on your billing statement. You can, however, elect to make payments over a period of as long as 10 years.

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What is the process for making cash payments?

You must request a billing from CalSTRS by using the form found in the Purchase Additional Service Credit brochure or by calling (800) 228-5453 and selecting option 3. After you submit your request, you will receive a billing statement from CalSTRS that will list the different options including the monthly installment cost.

If you decide to make monthly cash installments, send your initial payment to CalSTRS within 35 days of the date on the original billing statement to avoid additional interest. Please include your Social Security number on your check.

Payments may be submitted in amounts larger than the regular monthly installment. Payments are due the 20th of the month, and you will receive a billing invoice each month. If payments become 120 days delinquent, CalSTRS may cancel your election to purchase service or redeposit and refund all payments received.

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Can I pay for my purchase through a payroll deduction?

Yes, if your employer offers this option.

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What is the process for selecting payroll deduction payments?

You should check with your employer to see if they offer payroll deduction payments.

You must request a billing from CalSTRS by using the form found in the Purchase Additional Service Credit brochure or by calling (800) 228-5453 and selecting option 3. After you submit your request, you will receive a billing statement from CalSTRS that will list the different options including the payroll deduction cost. If you decide to pay by payroll deduction, a copy of the billing statement should be given to your payroll office within 35 days of the date on the original billing statement. Deductions will be made according to the payroll schedule on the original billing statement.

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Will my payroll deductions be made on a pretax or post-tax basis?

You should check with your employer to see what type of payroll deduction they offer. If your employer offers pretax payroll deductions and you decide on this payment method, you must sign a payroll authorization form. This authorization is an irrevocable and binding agreement that requires the employer to continue deductions until the payments are made in full. Therefore, you cannot make extra payments either by cash or rollover after you have started a tax-deferred payroll deduction plan.

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How is interest calculated for payroll deduction if I am working on an 10 or 11-month contract basis?

Since regular interest is charged monthly, you would be charged interest for 12 months. This means that you would accrue interest on the unpaid balance during the month or months you do not receive a paycheck.

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Can I continue to make payments after I retire or while I am receiving a disability retirement?

No, you cannot continue installment payments after you retire or start receiving a disability retirement allowance. If you are making payments and will retire, you must make your final payment no later than the end of the month of your retirement. The final amount can be paid as a lump sum. If you have not finished your payments by the time you retire, you can receive prorated service credit for the total amount received at retirement.

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Can I make extra payments?

Yes, but only if you are making cash payments or post-tax payroll deductions. If you are paying through a pretax payroll deduction plan, you cannot make extra payments either by cash or rollover. Include your Social Security number when sending payments to CalSTRS.

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Can I refinance my purchase?

No, once you have started your purchase your interest rate is locked in and you cannot refinance the purchase.

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Can I change the installment period?

Yes. If you want to change the payment terms of your purchase, make your requests to:

CalSTRS Accounts Receivable Unit
MS-11
PO Box 15275
Sacramento, California 95851-0275

Please include your Social Security number with your request.

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