(a) Except as provided in (c) of this section, an inactive employee, not on leave-without-pay status or layoff status, is entitled to receive a refund of the balance of the employee contribution account.

(b) An employee who is reemployed with an employer and whose contributions have not been refunded before reemployment is not eligible for a refund.

(c) An employee who is terminated and is a vested employee, deferred vested employee, or who is entitled to benefits under AS 39.35.385, and who is married at the time of application for a refund or whose rights to a refund are subject to a qualified domestic relations order is entitled to receive a refund of the balance of the employee contribution account only if the employee's present spouse and each person entitled under the order consent to the refund in writing on a form provided by the administrator. The administrator may waive written consent from the person entitled to benefits under the order if the administrator determines that the person cannot be located or for other reasons established by regulation. The administrator may waive written consent from the spouse if the administrator determines that

(1) the employee was not married to the spouse during any period of the employee's employment with an employer;

(2) the spouse has no rights under AS 39.35.095 - 39.35.680 because of the terms of a qualified domestic relations order;

(3) the spouse cannot be located;

(4) the employee and spouse have been married for less than two years and the member establishes that they are not cohabiting; or

(5) other reasons established by regulation exist.

(d) An employee who receives a refund of contributions in accordance with this section forfeits corresponding credited service under AS 39.35.095 - 39.35.680.