(a) Notwithstanding any other law to the contrary, any individual who is exempt from the Fair Labor Standards Act (29 U.S.C. § 201 et seq.) and who is employed in a state-supported institution of higher education, including, but not limited to, the Tennessee colleges of applied technology, may elect membership either in the retirement system established in § 8-34-201 or in the optional retirement program established under this part. In all cases of doubt, the state treasurer shall determine whether the employee is eligible to participate in the optional retirement program.

(b) As used in this part, the term “retirement system” has the same meaning as in § 8-34-101.

(c) Each eligible employee who elects to participate in an optional retirement program rather than the retirement system shall make the election in the manner prescribed by the state treasurer and shall file the election with the state treasurer and with the institution where the employee is employed. Any such election shall be irrevocable.

(d) Any such eligible employee who is not already a member of the retirement system and who has not accumulated creditable service thereunder as a member of a local retirement fund shall make this election on the employee's initial date of employment with a state-supported institution of higher education.

(e) Any member of the retirement system or any member of a local retirement fund having rights under the retirement system may elect to participate in the optional retirement program established under this part in lieu of participating in the retirement system while employed in a state-supported institution of higher education. Any such election shall become effective no later than the first day of the month following thirty (30) days' written notice to the retirement system and to the institution where the employee is employed. Such notification shall be made in a manner prescribed by the state treasurer.

(f) Any eligible employee who fails to make the election as prescribed in this section shall be a member of the retirement system.

(g) Notwithstanding any provision of this part or any other law to the contrary, any employee who, on or after January 1, 2005, attains either five (5) or more but less than six (6) years of creditable service in the optional retirement program, or five (5) or more but less than six (6) years of creditable service in the retirement system and the optional retirement program combined, shall have the option of transferring membership from the optional retirement program to the retirement system under the following terms and conditions:

(1) The employee is employed in a position covered by the retirement system;

(2) The election must be made in the manner prescribed by the state treasurer and filed with the state treasurer and the institution where the employee is employed by no later than the end of the calendar year following the year the employee completes five (5) years of creditable service;

(3) Any such transfer shall include both past and prospective membership;

(4) The transfer shall be irrevocable;

(5) The employee must pay to the retirement system a sum equal to twelve and sixty-five hundredths percent (12.65%) of the employee's earnable compensation during the period of the employee's membership in the optional retirement program, plus interest on the amount at the rate provided in § 8-37-214;

(6) Notwithstanding § 8-37-220, the payment required under this subsection (g) shall be made in a lump sum to the retirement system by no later than the end of the calendar year following the year the employee completes five (5) years of creditable service, and may be funded in whole or in part from amounts transferred from the employee's accounts in the optional retirement program, from other eligible retirement accounts, or from other funds available to the employee. For the purposes of this subdivision (g)(6), amounts transferred from an eligible retirement account shall have the same meaning as described in § 8-37-214(g)(1). Any difference between the payment required under this subsection (g) and the amount transferred from the optional retirement program or an eligible retirement account shall be paid to the retirement system within sixty (60) days following the transfer, but in any event no later than the end of the calendar year following the year the employee completes five (5) years of creditable service. Notwithstanding § 8-35-111 or any other law to the contrary, if the payment is not funded in whole or in part from amounts transferred from the optional retirement program, the employee shall be permitted to retain ownership of the amounts without violating § 8-35-111;

(7) The employee shall have no rights, benefits, or privileges in the retirement system until the full amount of the payment required under this subsection (g) is received by the retirement system. In the event the employee fails to remit the full amount by the time specified in subdivision (g)(6), the employee shall irrevocably lose the employee's right to transfer membership from the optional retirement program to the retirement system; and

(8) All payments made under this subsection (g) shall be credited to the state accumulation fund pursuant to § 8-37-301 and not to the individual accounts of members in the members' fund.

(h) Any individual participating in the optional retirement program established under this part whose position is reclassified from exempt to non-exempt from the Fair Labor Standards Act (29 U.S.C. § 201 et seq.) after at least one (1) year of service in the exempt position shall maintain participation in the optional retirement program with respect to such non-exempt position.