(a) The retirement system shall establish in the participating municipality’s account in the benefit accumulation fund an individual account for each person who is a member of the system through employment in that municipality. The retirement system shall credit to a member’s individual account:
(1) the amount of contributions to the retirement system deducted from the member’s compensation;
(2) interest allowed on amounts credited to the account in accordance with this subtitle; and
(3) the portion of a deposit required by § 853.003 to reinstate credited service previously canceled that represents the amount withdrawn.
(b) On December 31 of each year the retirement system shall credit to each member’s individual account interest as allowed by this subtitle on the amount of accumulated contributions credited to the member’s account on January 1 of that year. On a person’s retirement under this subtitle on a date other than December 31, the retirement system shall credit to that person’s individual account interest and supplemental interest, if any, at the rate credited on members’ accounts for the preceding year. The interest must be:
(1) on the amount of accumulated contributions credited to the member’s account on January 1 of the year in which retirement occurs; and
(2) prorated from January 1 of the year in which retirement occurs to the effective date of retirement.

(c) The retirement system may not pay interest on money in a person’s individual account:
(1) for a part of a year except as provided by Subsection (b); or
(2) after the person’s membership has been terminated in accordance with § 852.104 because of absence from service.
(d) If a retiree resumes employment under § 854.308, the retirement system shall reestablish an individual account for the member in the participating municipality’s account in the benefit accumulation fund and credit to that account the portion of the balance of the person’s retirement reserve that is attributable to the person’s prior accumulated contributions.