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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
ASRS; supplemental employee deferral plans
Purpose
Repeals the Governing Committee for Deferred Compensation Plans (Governing Committee) and includes the state as an eligible employer participant in a supplemental employee deferral plan administered by the Arizona State Retirement System (ASRS).
Background
Laws 1972, Chapter 133 established the Governing Committee. A state employee may participate in an established deferred compensation plan and must authorize an employer to make reductions or deductions as provided in an executed deferred compensation agreement. The Governing Committee may: 1) investigate and approve deferred compensation plans that give state employees authorized income tax benefits; 2) enter into agreements with companies that demonstrate expertise in certain areas; and 3) adopt rules. Any benefits provided by a deferred compensation plan must be in addition to any other provided benefits and be supplemental to benefits provided by ASRS (A.R.S. §§ 38-871; 38-872; and 38-874).
Laws 2009, Chapter 95 established the Supplemental Employee Deferral Plan (Plan) to provide public employees, other than state employees, an opportunity to save additional tax-deferred monies for retirement. State includes any department, office, board, commission, agency or university and excludes any school district or community college district. Statute allows ASRS to manage and operate the Plan and to administer the Plan through contracts with multiple vendors. If an employer elects to participate in the Plan, an employee of the employer may participate if the employee meets the eligibility requirements for participation prescribed by ASRS. Participation in the Plan authorizes the participant's employer to make salary reductions for payment to the Plan. Employee contributions and earnings on employee contributions are immediately vested. Employer contributions and the earnings must vest according to the schedule in the Plan (A.R.S. § 38-781).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Repeals the Governing Committee and the statutory authority of the Governing Committee.
2. Includes the state as an eligible employer participant in a supplemental employee deferral plan administered by ASRS.
3. Allows one or more supplemental employee deferral plans, rather than only one supplemental employee deferral plan, to be established and requires ASRS to administer any established supplemental employee deferral plans.
4. Allows, beginning July 1, 2022, an employee of an employer to elect to participate in a supplemental employee deferral plan if the employee meets the eligibility requirements for participation prescribed by ASRS.
5. Specifies that employee participation in a supplemental employee deferral plan requires, rather than authorizes, the participant's employer to make salary reductions from the participant's compensation at no cost to the employee, ASRS or any vendor retained by ASRS.
6. Requires employer contributions to vest according to the schedule established by the employer, rather than the Plan, if the employer completes and submits a schedule to ASRS.
7. Requires employer contributions and earnings, if an employer does not complete and submit a schedule to ASRS, to vest according to the default schedule established by ASRS.
8. Removes the permission of the Director of ASRS to hire and supervise employees and obtain services to administer the Governing Committee.
9. Makes technical and conforming changes.
10. Becomes effective on the general effective date.
Prepared by Senate Research
February 8, 2021
MG/gs