(a) Subject to the approval of the board of trustees, any member who has one (1) year of current membership service or previous service established pursuant to chapter 35, part 2 of this title may make a back payment or redeposit in accordance with the applicable provisions of chapters 34-37 of this title.

(1) A back payment shall be equal to the amount of contributions such member would have made had such member been a member of the state retirement system during the period claimed, plus interest compounded annually from the date the contributions would have been made to the date of payment.

(2) A redeposit shall be equal to the total amount that was previously withdrawn, plus interest compounded annually from the date of withdrawal to the date of payment.

(3) The rate of interest to be used under this section shall be the assumed actuarial interest rate of return established by the board of trustees under § 8-34-505 at the time the payment is made.

(b) Any back payment or redeposit must be made in a lump sum, unless otherwise authorized in § 8-37-220.

(c) Except for payments previously made to establish retirement credit under chapters 34-37 of this title and for payments being made through monthly installments pursuant to § 8-37-220 on May 23, 2005, the interest rate as provided for under this section shall have application in all cases where a different rate of interest was provided for in making back payments or redeposits.

(d) This section shall not apply to any person coming under [former] § 8-34-609(b) [repealed] with respect to the one (1) year membership service requirements; and application of this section shall be subject to § 8-35-111.

(e) A “noncontributory member,” as defined in § 8-34-206, who has one (1) year of current membership service may establish withdrawn or lost noncontributory service upon application and repayment of any withdrawn contributions, including contributions made by the employer on behalf of the employee, plus interest at the rate provided for in this section.

(f) Any member applying for prior service must establish all back service before such service is creditable, except as otherwise provided in chapters 34-37 of this title.

(g)

(1) Lump sum payments to establish service credit in the Tennessee consolidated retirement system in accordance with this section and chapter 34, part 6 of this title may be funded in whole or in part through amounts transferred from an eligible retirement account to the Tennessee consolidated retirement system. For the purposes of this subsection (g), amounts transferred from an eligible retirement account means:

(A) Amounts transferred to the Tennessee consolidated retirement system directly from a retirement account that are eligible for rollover treatment under the Internal Revenue Code (26 U.S.C.); or

(B) Lump sum distributions received by a member from a retirement account that are eligible for rollover treatment under the Internal Revenue Code and which are transferred by the member to the Tennessee consolidated retirement system within sixty (60) days following the member's receipt of such lump sum distribution.

(2) Prior to accepting any such transfers, the consolidated retirement system may require the member to establish that the amounts to be transferred meet the requirements of this subsection (g) and the Internal Revenue Code. Amounts transferred shall not be forfeitable for any reason and may not be distributed to the member except as otherwise provided in this chapter and chapters 34-37 of this title.

(3) This subsection (g) will be administered in accordance with the rollover provisions of the Internal Revenue Code.