Sec. 8. If an employee is a contributing fund member at the time the employee elects under section 5 of this chapter to participate in a retirement benefit system:
(1) the employee's rights in the fund on the date the employee's election is effective are the same as if the employee had terminated employment on that date; and
(2) the employee's election and suspension of membership in the fund are effective on July 1 immediately following the date the employee files the election with the state educational institution.