(a) If a member first joined the plan before July 1, 1990, and has military service or Alaska Bureau of Indian Affairs (BIA) service, or if a member joined the plan before July 1, 1978, and has creditable outside service, the member may claim this service. If the member claims the service, the member is indebted to the plan as follows:

(1) at the time of first becoming a member of the plan, the arrearage indebtedness is seven percent of the base salary multiplied by the total number of years of creditable outside, military, and Alaska BIA service; the administrator shall add compound interest at the rate prescribed by regulation to the arrearage indebtedness beginning July 1, 1963, or at the time the member first becomes eligible to claim the service, whichever is later, to the date of payment or the date of retirement, whichever occurs first;

(2) if a member terminates from the plan and is subsequently reemployed as a member, the arrearage indebtedness to the plan for outside, military, or Alaska BIA service accumulated in the interim is seven percent of the base salary upon reentering membership service, multiplied by the number of years of interim outside, military, and Alaska BIA service; compound interest at the rate prescribed by regulation shall be added to the arrearage indebtedness beginning July 1, 1963, or the date of reemployment as a member, whichever is later, to the date of payment or the date of retirement, whichever occurs first.

(b) If a member joins the plan on or after July 1, 1978, and has creditable outside service, the member may claim this service. If claimed, the member is indebted to the plan as follows:

(1) The arrearage indebtedness is the full actuarial cost of providing benefits for the service being claimed. Compound interest at the rate prescribed by regulation shall be added to the arrearage indebtedness beginning the date the actuarial cost is established to the date of payment or the date of retirement, whichever occurs first.

(2) If a member terminates from the plan and is subsequently reemployed as a member, the arrearage indebtedness for outside service during the interim is the full actuarial cost of providing benefits for the interim service being claimed. Compound interest at the rate prescribed by regulation shall be added to the arrearage indebtedness beginning the date the actuarial cost is established to the date of payment or the date of retirement, whichever occurs first.

(c) The total military service claimed may not exceed five years. The combined total of outside and military service may not exceed 10 years, except that, if entry into the armed forces is immediately preceded by membership service and within one year after discharge is continued by membership service, that service may not be counted for purposes of determining the applicability of the 10-year limitation on the combined total of outside and military service.

(d) If a member first joined the plan on or after July 1, 1990, and has military service or Alaska BIA service, the member's indebtedness shall be determined under (a) of this section except that the percentage multiplier is 8.65 percent.