Senate Engrossed House Bill |
State of Arizona House of Representatives Fiftieth Legislature Second Regular Session 2012
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HOUSE BILL 2409 |
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AN ACT
Amending section 38‑816, Arizona Revised Statutes; amending title 38, chapter 5, article 3, Arizona Revised Statutes, by adding section 38‑816.01; amending sections 38-844.05, 38-844.08 and 38‑853.01, Arizona Revised Statutes; amending title 38, chapter 5, article 4, Arizona Revised Statutes, by adding section 38‑853.02; amending section 38‑909, Arizona Revised Statutes; amending title 38, chapter 5, article 6, Arizona Revised Statutes, by adding section 38‑909.01; relating to the public safety personnel retirement system.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-816, Arizona Revised Statutes, is amended to read:
38-816. Redemption of prior service
A. Any present active elected official who has at least ten five years of credited service with the plan may elect to redeem up to sixty months of any part of the following prior service or employment by paying into the fund the amounts required under subsection B of this section if the prior service or employment is not on account with any other retirement system or plan:
1. Prior service in this state as an elected official with an employer now covered by the plan before the effective date of participation if the elected official has received a refund from a prior retirement system or plan on termination of employment before the elected official's application for redemption of prior service.
2. Prior service in this state as an elected official with an employer now covered by the plan before the effective date of participation if the elected official was not covered by a retirement system or plan during the elected official's prior elected official service.
3. Prior service as an elected official of this state or a city, town or county of this state if the elected official was not covered by a retirement system or plan during that service whether or not the city, town or county is an employer now covered by the plan.
4. Prior employment with the United States government, a state of the United States or a political subdivision of a state of the United States.
B. Any present active elected official who elects to redeem any part of the prior service or employment for which the elected official is deemed eligible by the board under this section shall pay into the plan the amounts previously withdrawn by the elected official as a refund of the elected official's accumulated contributions, if any, plus the additional amount, if any, that is computed by the plan's actuary and that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions that are prescribed by the plan's actuary.
C. On approval by the governing body of an incorporated city or town that executes a joinder agreement under section 38‑815, the city or town may pay into the fund all or any part of the amount sufficient to provide retirement benefits for elected officials or former elected officials for the time of service as an elected official of the city or town before the joinder agreement if no retirement benefits were in effect for elected officials during the time of service being redeemed under this section.
D. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the plan, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 2. Title 38, chapter 5, article 3, Arizona Revised Statutes, is amended by adding section 38-816.01, to read:
38-816.01. Purchase of service; payment
A member who purchases service pursuant to this article or section 38‑922 shall make payments directly to the plan in whole or in part by any one or a combination of the following methods:
1. In lump sum payments.
2. Through an arrangement with the plan that the payments be made in installment payments over a period of time.
3. Subject to the limitations prescribed in sections 401(a)(31) and 402(c) of the internal revenue code, accepting a direct transfer of any eligible rollover distribution or a contribution by a member of an eligible rollover distribution from one or more:
(a) Retirement programs that are qualified under section 401(a) or 403(a) of the internal revenue code.
(b) Annuity contracts described in section 403(b) of the internal revenue code.
(c) Eligible deferred compensation plans described in section 457(b) of the internal revenue code that are maintained by a state, a political subdivision of a state or any agency or instrumentality of a state or a political subdivision of a state.
4. Subject to the limitations prescribed in section 408(d)(3)(a)(ii) of the internal revenue code, accepting from a member a rollover contribution of that portion of a distribution from an individual retirement account or individual retirement annuity described in section 408(a) OR 408(b) of the internal revenue code that is eligible to be rolled over and would otherwise be includable as gross income.
Sec. 3. Section 38-844.05, Arizona Revised Statutes, is amended to read:
38-844.05. Deferred retirement option benefits and participation accounts
A. A deferred retirement option plan participation account is an account established within the system on behalf of each deferred retirement option plan participant. All benefits accrued pursuant to this article shall be accounted for in the deferred retirement option plan participation account. A deferred retirement option plan participant does not have a claim on the assets of the system with respect to the member's deferred retirement option plan participation account and assets shall not be set aside for any deferred retirement option plan participant that are separate from all other system assets.
B. All amounts credited to a member's deferred retirement option plan participation account are fully vested.
C. A member's deferred retirement option plan participation account shall be credited with the following:
1. An amount, credited monthly, that is computed in the same manner as a normal retirement benefit using the factors of credited service and average monthly benefit compensation in effect on the date of deferred retirement option plan participation.
2. An amount, credited monthly, that represents interest on the amount credited pursuant to paragraph 1 of this subsection at a rate equal to the assumed rate of return determined by the board, except that for a member who has less than twenty years of credited service on January 1, 2012 and who elects to participate in the deferred retirement option plan on or after January 1, 2012, the amount credited monthly is the amount that represents interest at a rate equal to the average annual return of the system over the period of years established by the board for use in the calculation of the actuarial value of assets for the previous year, but not to exceed the system's assumed investment rate of return but at least two per cent.
3. If applicable, employee contributions made pursuant to section 38‑844.06, subsection B.
D. The participant is not entitled to receive any amount prescribed by section 38‑856, 38‑856.02 or 38‑857 during the deferred retirement option plan participation period.
Sec. 4. Section 38-844.08, Arizona Revised Statutes, is amended to read:
38-844.08. Payment of deferred retirement option plan benefits
A. On the simultaneous termination of deferred retirement option plan participation and employment, a member is entitled to receive both all of the following:
1. The monthly retirement allowance in the amount determined pursuant to section 38‑845 that was credited monthly to the member's deferred retirement option plan participation account at the date of termination of deferred retirement option plan participation.
2. All amounts credited to the member's deferred retirement option plan participation account on the effective date of termination of deferred retirement option plan participation.
3. Interest on the amount credited pursuant to section 38‑844.05, subsection C, paragraph 3 at a rate equal to two per cent but only if the average annual return of the system over the period of years established by the board for use in the calculation of the actuarial value of assets is at least two per cent for the previous fiscal year.
B. The form of payment shall be a lump sum distribution. If allowed by the internal revenue service, the participant may elect to transfer the lump sum distribution to an eligible retirement plan or individual retirement account.
Sec. 5. Section 38-853.01, Arizona Revised Statutes, is amended to read:
38-853.01. Redemption of prior service
A. Each present active member of the system who has at least ten five years of service with the system may elect to redeem up to sixty months of any part of the following prior service or employment by paying into the system any amounts required under subsection B if the prior service or employment is not on account with any other retirement system:
1. Prior service in this state as an employee with an employer now covered by the system or prior service with an agency of the United States government, a state of the United States or a political subdivision of this state or of a state of the United States as a full‑time paid firefighter or full‑time paid certified peace officer.
2. Subject to any limitations prescribed by federal law, prior employment as an employee of a corporation that contracted with an employer now covered by the system to provide firefighting services on behalf of that employer as a full-time paid firefighter or that provided firefighting services for a political subdivision of this state.
B. Any present active member who elects to redeem any part of the prior service or employment for which the employee is deemed eligible by the board under this section shall pay into the system the amounts previously withdrawn by the member, if any, as a refund of the member's accumulated contributions plus accumulated interest as determined by the board and the additional amount, if any, computed by the system's actuary that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions prescribed by the system's actuary.
C. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the system, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 6. Title 38, chapter 5, article 4, Arizona Revised Statutes, is amended by adding section 38-853.02, to read:
38-853.02. Purchase of service; payment
A member who purchases service pursuant to this article or section 38‑922 shall make payments directly to the system in whole or in part by any one or a combination of the following methods:
1. In lump sum payments.
2. Through an arrangement with the system that the payments be made in installment payments over a period of time.
3. Subject to the limitations prescribed in sections 401(a)(31) and 402(c) of the internal revenue code, accepting a direct transfer of any eligible rollover distribution or a contribution by a member of an eligible rollover distribution from one or more:
(a) Retirement programs that are qualified under section 401(a) or 403(a) of the internal revenue code.
(b) Annuity contracts described in section 403(b) of the internal revenue code.
(c) Eligible deferred compensation plans described in section 457(b) of the internal revenue code that are maintained by a state, a political subdivision of a state or any agency or instrumentality of a state or a political subdivision of a state.
4. Subject to the limitations prescribed in section 408(d)(3)(A)(ii) of the internal revenue code, accepting from a member a rollover contribution of that portion of a distribution from an individual retirement account or individual retirement annuity described in section 408(a) or 408(b) of the internal revenue code that is eligible to be rolled over and would otherwise be includable as gross income.
Sec. 7. Section 38-909, Arizona Revised Statutes, is amended to read:
38-909. Redemption of prior service; calculation
A. Each present active member of the plan who has at least ten five years of credited service with the plan who had previous service in this state as an employee with an employer now covered by the plan or who had previous service with an agency of the United States government, a state of the United States or a political subdivision of a state of the United States as a full‑time paid corrections officer or full‑time paid certified peace officer may elect to redeem up to sixty months of any part of the prior service by paying into the plan any amounts required under subsection B if the prior service is not on account with any other retirement system.
B. Any present active member who elects to redeem any part of the prior service for which the employee is deemed eligible by the board under this section shall pay into the plan the amounts previously withdrawn by the member, if any, as a refund of the member's accumulated contributions plus accumulated interest as determined by the board and the additional amount, if any, computed by the plan's actuary that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions prescribed by the plan's actuary.
C. The discount rate used by the actuary for the redemption calculation pursuant to subsection B is an amount equal to the lesser of the assumed rate of return that is prescribed by the board or an amount equal to the yield on a ten year treasury note as of March 1 that is published by the federal reserve board plus two per cent. This discount rate is effective beginning in the next fiscal year and shall be recalculated each year.
D. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the plan, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 8. Title 38, chapter 5, article 6, Arizona Revised Statutes, is amended by adding section 38-909.01, to read:
38-909.01. Purchase of service; payment
A member who purchases service pursuant to this article or section 38‑922 shall make payments directly to the plan in whole or in part by any one or a combination of the following methods:
1. In lump sum payments.
2. Through an arrangement with the plan that the payments be made in installment payments over a period of time.
3. Subject to the limitations prescribed in sections 401(a)(31) and 402(c) of the internal revenue code, accepting a direct transfer of any eligible rollover distribution or a contribution by a member of an eligible rollover distribution from one or more:
(a) Retirement programs that are qualified under section 401(a) or 403(a) of the internal revenue code.
(b) Annuity contracts described in section 403(b) of the internal revenue code.
(c) Eligible deferred compensation plans described in section 457(b) of the internal revenue code that are maintained by a state, a political subdivision of a state or any agency or instrumentality of a state or a political subdivision of a state.
4. Subject to the limitations prescribed in section 408(d)(3)(a)(ii) of the internal revenue code, accepting from a member a rollover contribution of that portion of a distribution from an individual retirement account or individual retirement annuity described in section 408(a) or 408(b) of the internal revenue code that is eligible to be rolled over and would otherwise be includable as gross income.