TITLE 2. ADMINISTRATION

Historical Note

Former Rule, Social Security Regulation 1; Former Section R2-8-01 renumbered as Section R2-8-101 without change effective May 21, 1982 (Supp. 82-3). Amended subsections (A) and (C) effective April 12, 1984 (Supp. 84-2). Section repealed by final rulemaking at 10 A.A.R. 669, effective February 3, 2004 (Supp. 04-1).

R2-8-102. Repealed

Historical Note

Former Rule, Social Security Regulation 2; Amended effective April 15, 1980 (Supp. 80-2). Former Section R2-8-02 renumbered as Section R2-8-102 without change effective May 21, 1982 (Supp. 82-3). Amended as an emergency by adding subsection (E) effective January 1, 1984, pursuant to A.R.S. § 41-1003, valid for only 90 days (Supp. 83-6). Emergency expired. Permanent rule, subsections (A), (B), and (D), amended effective April 12, 1984 (Supp. 84-2). Correction, subsection (B), as amended effective April 12, 1984 (Supp. 84-3). Section repealed by final rulemaking at 10 A.A.R. 669, effective February 3, 2004 (Supp. 04-1).

R2-8-103. Repealed

Historical Note

Former Rule, Social Security Regulation 3; Amended effective April 15, 1980 (Supp. 80-2). Former Section R2-8-03 renumbered as Section R2-8-103 without change effective May 21, 1982 (Supp. 82-3). Amended as an emergency by adding subsection (E) effective January 1, 1984, pursuant to A.R.S. § 41-1003, valid for only 90 days (Supp. 83-6). Emergency expired. Permanent rule, subsections (A) thru (C), amended effective April 12, 1984 (Supp. 84-2). Section repealed by final rulemaking at 10 A.A.R. 669, effective February 3, 2004 (Supp. 04-1).

R2-8-104. Definitions

A. Proprietary functions: Services performed in a single proprietary function for a political subdivision are those services normally carried on by private enterprises. These include, but are not limited to, municipal water departments, municipal transportation departments, municipal housing and airport authorities. For other political subdivisions such as school districts, these functions include cafeteria workers and bookstore employees. School district bus drivers engaged in transporting students without charge are not engaged in a proprietary function. Hospitals operated for the care of the indigent sick by political subdivisions constitute a governmental function, and the employees in such a hospital, therefore, are not performing services in proprietary functions.

B. Who are employees:

1. Every individual is an employee if the political subdivision for which he performs services has the right to control and direct him not only as to what shall be done but how it shall be done. It is not necessary that the political subdivision actually control or direct the manner in which the services are performed; it is sufficient if the subdivision has the right to do so. The right to discharge strongly implies the right to control.

2. Officers of a political subdivision are its employees. So are any individuals performing services under contract in the exercise of a governmental function. Individuals such as physicians, dentists, and lawyers, engaged in an independent profession in which they offer their services to the public, are employees if their services include the exercise of a governmental function. If not, they may or may not be employees depending upon the degree to which they are subject to control by the political subdivision.

3. Whether the individual is an employee depends upon the actual facts of his relationship with the political subdivision. A juror is not an employee since he is not a public officer and is not subject to control as to how he votes on a verdict. A physician who contracts with a county Board of Supervisors to furnish medical services to the indigent sick is an employee when the duty of caring for indigent sick is by law placed in the Board.

C. Mandatory exclusion: Prior to the 1967 Social Security Amendments, the state had the option of excluding emergency services. Beginning January 1, 1968, services performed by an individual as an employee serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency are mandatorily excluded. This mandatory exclusion is applicable to services for groups already covered as well as to services for groups which may be covered in the future.

D. Elective positions: Elective positions as used in agreements excluding such positions from coverage means those positions filled by a vote of a legislative body, a board or committee, or by the qualified electorate at large for the subdivision or instrumentality covered by the agreement, which would constitute an election under the law of Arizona.

E. Class or classes of part-time positions: Services performed in a position which does not require more than 150 hours of service in a calendar quarter are services in a part-time position. If a position is established during a calendar quarter and if such position would require more than 150 hours of service if it had been in existence for the entire quarter, such position would not be a part-time position and services in such a position would not be excluded under the state's definition. The time requirements of the position itself, and not the number of hours worked by an individual, is the determinative factor. For example, an individual may be employed and compensated for only a few hours in only one day of a calendar quarter and such individual may be subject to coverage if the position is one which requires more than 150 hours of service.

F. Class or classes of positions the compensation for which is on a fee basis:

1. Compensation is considered to be on a salary basis when the payments are made at regular and fixed intervals based on services for definite and regular periods of time; and on a fee basis when made for particular services rendered at irregular and uncertain periods. Persons performing personal services of a governmental nature for a political subdivision are employees regardless of whether compensation is on a salary or fee basis. The services of such a person may be excluded, however, if compensated on a fee rather than a salary basis and the agreement between the Arizona State Retirement System Board and the subdivision excludes positions on a fee basis.

2. Individuals performing governmental services in the practice of their profession, such as doctors or lawyers, may be on either a fee or salary basis depending on the nature of their contract of employment with the political subdivision. For example, a city attorney working full time for a regular monthly salary is not on a fee basis. An attorney employed by the city for special services to be rendered at irregular and uncertain periods for a fixed amount (even though weekly, monthly or other partial advances may be made) is compensated on a fee basis. When, as with some justices of the peace or tax collectors, the compensation is derived in part from fees and part from salary, the position is to be considered as on a fee basis if fees constitute the primary source of compensation. The fees may be received from either the public or the political subdivision. If the fee-basis exclusion is taken and if the position is a fee-basis position, all fees and salary received for services in such a position are not to be reported. If the exclusion is not exercised, all fees received, whether from the political subdivision or other sources, are to be reported.

3. Beginning January 1, 1968, services performed by state and local employees in positions compensated solely by fees, which are not covered under an agreement, are compulsorily covered as self-employment. However, an individual occupying such a fee-basis position in 1968 could elect not to have his fees covered as self-employment income, if he filed a certificate of election of exemption with the Internal Revenue Service on or before the due date of his 1968 federal income tax return.

4. An entity may modify its agreement to extend coverage to services performed after 1967 in any class or classes of positions compensated solely by fees not covered under an agreement prior to 1968. However, the entity must specifically include such services where this coverage is desired. Such coverage shall be effective with respect to services in such fee-basis positions performed beginning with the first day of the year after the year in which the agreement is approved.

5. An entity may at any time after 1967 modify its agreement to exclude services performed in any class or classes of positions compensated solely by fees. Such an exclusion from coverage is effective the first day of the year following the year in which the agreement is approved. If any class or classes of positions are so excluded, the entity cannot at a later date modify its agreement to again cover the services.

G. Exclusion by class or classes of positions:

1. Basic classifications may be made within either elective, part-time, or fee-basis positions according to a class or classes of positions having common characteristics or attributes, and exclusions limited to such classes. A class of positions includes all of the positions in the coverage group which have these common characteristics. Services in one or more classes or combinations of classes may be excluded. Positions may be excluded in one class and covered in another. For example, in a coverage group there may be excluded services in all elective positions or the exclusion could be limited to services in all elective positions except elective judicial positions and except part-time elective positions.

2. Positions in a single organizational unit of the coverage group do not constitute a class of positions. Therefore, while all of the part-time maintenance workers of a county could be excluded under the part-time option, the exclusion could not be limited to all or any class or part-time maintenance workers in the Office of the County Clerk, which is an organizational unit of the county.

H. Agricultural labor which would be excluded if performed for a private employer:

1. Under the federal Social Security Act, when the agricultural exclusion has been taken, tests as to services which are excluded should be applied to all reports covering reporting quarters beginning on or after January 1, 1957. Cash remuneration paid to an employee for agricultural services should be reported only if:

a. Such remuneration paid the employee during a calendar year (even though part of it was for services performed in a previous calendar year) amounts to $150 or more; or

b. The employee performs agricultural services for the employer on some part of a day on at least 20 days during a calendar year for cash remuneration computed on a time basis, as by the hour, day, or week; in which event the amount of cash remuneration is immaterial in determining if the services are covered.

2. Services performed by individuals lawfully admitted from any foreign country on a temporary basis to perform agricultural labor are excluded.

I. Student service exclusion: Only those student services which would be mandatorily excluded if performed for a private employer fall within this exclusion. Where this exclusion is taken, the following services are not covered:

1. Services performed by a student regularly enrolled and attending classes in the employ of his school, college, or university. This means the employing entity and not necessarily the individual institution. The exclusion applies only during periods of regular school attendance. Thus, the exclusion does not apply to work done during summer vacation unless the student is attending a summer session. This is true even though the student was enrolled and regularly attending classes in the school during the previous year and expects to return to school the following year. Services performed on holidays and weekends falling within the academic year when classes are not scheduled, on the other hand, are excluded.

2. Services performed as a student nurse in the employ of a hospital or nurses' training school by an individual who is enrolled and regularly attending classes in a nurses' training school chartered or approved pursuant to state law. It is not necessary that the nurses' training school in which the student nurse is enrolled and attending classes be located within the approving state as long as the school meets the educational standards established by state law for the approval of schools within the state.

J. Services performed by election officials or election workers if remuneration paid in a calendar quarter is less than $50:

1. Prior to the 1967 amendments to the Social Security Act, there was no provision for a specific exclusion of the services of election officials or election workers. The exclusion of such services was possible, however, by exclusion of a class of services for which an exclusion was permitted, i.e., exclusion of election officials and election workers as a class of part-time or fee-basis positions.

2. This optional exclusion of services performed by election officials or election workers is dependent on the amount paid in a calendar quarter for such services, e.g., if the remuneration paid in the third calendar quarter of a year amounts to $50 or more, the services are covered and must be reported regardless of the fact that the remuneration paid in any other calendar quarter for election officials' or election workers' services amount to $49.99 or less and is not reportable.

3. These services may continue to be excluded as a class of part-time or fee-basis positions without regard to the amount paid for such services. These services would, of course, be excluded already if a part-time or fee-basis position exclusion in broad enough terms was previously exercised. The purpose of the optional exclusion of services performed by election officials or election workers if remuneration in a calendar quarter is less than $50 is to permit the exclusion to be taken where one was not previously taken. The effective date of exclusion for these services may not be earlier than the last day of the calendar quarter in which the modification to state's Social Security agreement is mailed to the Secretary of Health and Human Services.

4. On or after January 1, 1978, a political entity can modify its agreement to specifically exclude the services of election officials or election workers if the remuneration paid in a calendar year is less than $100. A change to $100 in a year from $50 in a calendar quarter requires the execution of a new modification. For modification executed after December 31, 1977, the $100 in a year test must be used.

K. "Wages" -- (A.R.S. § 38-701(8)) means all remuneration paid to employees whose services are covered under an agreement in a calendar year not in excess of the maximum reportable wages on which social security contributions are due.

1. Wages include the cash value of remuneration paid to employees other than money, for example, the value of room and board. The valuation of room and board furnished an employee by a political entity shall be computed at the same valuation as computed by the Industrial Commission for payment of workmen's compensation premiums.

2. If, as a part of the employment, it is understood that the employee is entitled to meals and the employer is to furnish them, the value of such meals is wages and should be reported. If there is no understanding (either orally or in writing) that meals will be furnished the employee, but they are in fact provided, the value of the meals would be wages if it is substantial. The value of meals may be considered as not substantial if it is less than five percent of the cash pay.

3. The employer's report of wages paid for each calendar quarter to the Arizona State Retirement System Board shall include for each employee both the cash wages and the value of room and board as a lump sum for the quarter for which the report is made.

4. The employee tax shall be deducted from the wages paid in accordance with the method of including the value of remuneration paid in any medium other than cash in each pay period or in a single pay period in the calendar quarter.

5. The value of meals and lodging furnished by, or on behalf of an employer to an employee, the employee's spouse, or any of the employee's dependents is not wages for Social Security purposes if:

a. The meals or lodging are furnished on the business premises of the employer, and

b. The meals or lodging are furnished for the convenience of the employer, and

c. The employee is required to accept such lodging as a condition of employment.

Historical Note

Former Rule, Social Security Regulation 4; Former Section R2-8-04 renumbered as Section R2-8-104 without change effective May 21, 1982 (Supp. 82-3). Amended subsections (G), (J), and (K) effective April 12, 1984 (Supp. 84-2). Typographical error corrected in subsection (5)(c) "reqired" corrected to "required" (Supp. 97-1).

R2-8-105. Repealed

Historical Note

Former Rule, Social Security Regulation 5; Amended effective April 15, 1980 (Supp. 80-2). Former Section R2-8-05 renumbered as Section R2-8-105 without change effective May 21, 1982 (Supp. 82-3). Amended as an emergency by adding subsection (E) effective January 1, 1984, pursuant to A.R.S. § 41-1003, valid for only 90 days (Supp. 83-6). Emergency expired. Permanent rule amended effective April 12, 1984 (Supp. 84-2). Section repealed by final rulemaking at 10 A.A.R. 669, effective February 3, 2004 (Supp. 04-1).

R2-8-106. Reserved

R2-8-107. Reserved

R2-8-108. Reserved

R2-8-109. Reserved

R2-8-110. Reserved

R2-8-111. Reserved

R2-8-112. Reserved

R2-8-113. Emergency Expired

Historical Note

New Section made by emergency rulemaking at 11 A.A.R. 579, effective January 4, 2005 (05-1). Emergency rule expired (Supp. 05-2).

R2-8-114. Emergency Expired

Historical Note

New Section made by emergency rulemaking at 11 A.A.R. 579, effective January 4, 2005 (05-1). Emergency rule expired (Supp. 05-2).

R2-8-115. Return of Contributions Upon Termination of Membership by Separation from All ASRS Employment by Other Than Retirement or Death; Payment of Survivor Benefits Upon the Death of a Member

A. The following definitions apply to this Section unless otherwise specified:

1. "ASRS" means the same as in A.R.S. § 38-711.

2. "ASRS employer" has the same meaning as "employer" in A.R.S. § 38-711.

3. "Authorized employer representative" means an individual specified by the ASRS employer to provide the ASRS with information about a member who previously worked for the ASRS employer.

4. "Beneficiary" means the individual specified by a member to receive the balance of the member's account or, if applicable, selected benefits upon the death of the member.

5. "Contribution" means:

a. Amounts required by A.R.S. Title 38, Chapter 5, Article 2 to be paid to ASRS by a member or an employer on behalf of a member other than amounts attributed to the long-term disability program;

b. Any voluntary amounts paid by a System member to ASRS to be placed in the System member's account; and

c. Any amount credited to a non-retired System member's employer account or to a retired System member's non-guaranteed benefit as determined by Section 24(B) of Arizona Session Laws 1995, Chapter 32, Section 24, as amended by Arizona Session Laws 1999, Chapter 66, Section 1.

6. "Court" means a superior, appellate, or the Supreme court of this state, a corresponding court of another state of the United States, or a federal court of the United States.

7. "Designated beneficiary" has the same meaning as in A.R.S. § 38-762(H).

8. "Domestic relations order" has the same meaning as in A.R.S. § 38-773(G).

9. "Eligible retirement plan" has the same meaning as in A.R.S. § 38-770(C)(3).

10. "Employer number" means a unique identifier the ASRS assigns to a member employer.

11. "Employer plan" means the types of eligible retirement plans specified in A.R.S. § 38-770(C)(3)(c), (d), (e), and (f).

12. "Fiscal year" means July 1 of one year to June 30 of the next year.

13. "Individual retirement account" means the types of eligible retirement plans specified in A.R.S. § 38-770(C)(3)(a) and (b).

14. "Lump-sum payment" means a member receives the total amount in the member's ASRS account to which the member is entitled by law.

15. "Member" has the same meaning as in A.R.S. § 38-711.

16. "Personal representative" means a person who is authorized by law to represent the estate of a deceased individual.

17. "Process date" means the calendar day the ASRS generates contribution withdrawal documents to be sent to a member.

18. "Service year" has the same meaning as in A.R.S. § 38-711.

19. "System" means the same as "defined contribution plan" as defined in A.R.S. § 38-769, and which is administered by the ASRS.

20. "Terminate employment" means to end the employment relationship between a member and an ASRS employer with the intent that the member not return to employment with that ASRS employer.

21. "Trustee" means an individual who holds monetary assets in an eligible retirement plan under the Internal Revenue Code for the benefit of the member.

22. "United States" means the same as in A.R.S. § 1-215.

23. "Warrant" means a voucher authorizing payment of funds due to a member.

B. A member who terminates from all ASRS employment by other than retirement or death and desires a return of the member's contributions, including amounts received for the purchase of service, any employer contributions authorized under A.R.S. § 38-740, and interest on the contributions, shall request from the ASRS, in writing or verbally, the documents necessary to apply for the withdrawal of the member's contributions.

C. Upon receipt of the request, the ASRS shall provide the member with:

1. An Application for Withdrawal of Contributions and Termination of Membership form,

2. An Ending Payroll Verification - Withdrawal of Contribution and Termination of Membership form, and

3. The process date.

D. The member shall complete and return to the ASRS the Application for Withdrawal of Contributions and Termination of Membership form that includes the following information:

1. The member's full name;

2. The member's Social Security number;

3. The member's current mailing address;

4. The member's daytime telephone number, if applicable;

5. The member's birth date;

6. The date of termination;

7. Dated signature of the member certifying that the member:

a. Is no longer employed by any ASRS employer;

b. Is neither under contract nor has any verbal or written agreement for future employment with an ASRS employer;

c. Is not currently in a leave of absence status with an ASRS employer;

d. Understands that each of the member's former ASRS employers' payroll departments will complete a payroll verification form if payroll transactions occurred with the ASRS employer within the six months before the process date;

e. Has read and understands the Special Tax Notice Regarding Plan Payments the member received with the application;

f. Understands that the member is forfeiting all future retirement rights and privileges of membership with the ASRS;

g. Understands that long-term disability benefits will be canceled if the member elects to withdraw contributions while receiving or electing to receive long-term disability benefits;

h. Understands that if the member elects to roll over all or any portion of the member's distribution to another employer plan, it is the member's responsibility to verify that the receiving employer plan will accept the rollover and, if applicable, agree to separately account for the pre-tax and post-tax amounts rolled over and the related subsequent earnings on the amounts;

i. Understands that if the member elects to roll over all or any portion of the member's distribution to an individual retirement account, it is the member's responsibility to separately account for pre-tax and post-tax amounts; and

j. Understands that if the member elects a rollover to another employer plan or individual retirement account, any portion of the distribution not designated for rollover will be paid directly to the member and any taxable amounts will be subject to 20% federal income tax withholding and 5% state tax withholding;

8. Specify that:

a. The entire amount of the distribution be paid directly to the member,

b. The entire amount of the distribution be transferred to an eligible retirement plan, or

c. An identified amount of the distribution be transferred to an eligible retirement plan and the remaining amount be paid directly to the member; and

9. If the member selects all or a portion of the withdrawal be paid to an eligible retirement plan, specify;

a. The type of eligible retirement plan;

b. The eligible retirement plan account number, if applicable; and

c. The name and mailing address of the eligible retirement plan.

E. If a payroll transaction for the member occurred with any ASRS employer within six months before the process date the member shall complete and return to the ASRS an Ending Payroll Verification - Withdrawal of Contributions and Termination of Membership form for each ASRS employer that includes the following information:

1. Filled out by the member:

a. The member's full name, and

b. The member's Social Security number; and

2. Filled out by each ASRS employer:

a. The member's termination date,

b. The member's final pay period ending date;

c. The final amount of contributions, including any adjustments or corrections, but not including any long-term disability contributions,

d. The ASRS employer's name and telephone number;

e. The employer number;

f. The name and title of the authorized employer representative;

g. Certification by the authorized employer representative that:

i. The member terminated employment and is neither under contract nor bound by any verbal or written agreement for employment with the employer;

ii. There is no agreement to re-employ the member; and

iii. The authorized employer representative has the legal power to bind the employer in transactions with the ASRS; and

h. The signature of the authorized employer representative and date of signature.

F. If the member requests a return of contributions and a warrant is distributed during the fiscal year that the member began membership in the ASRS, no interest is paid to the account of the member.

G. If the member requests a return of contributions after the first fiscal year of membership, ASRS shall credit interest at the rate specified in Column 3 of the table in R2-8-118(B) to the account of the member as of June 30 of each year, on the basis of the balance in the account of the member as of the previous June 30. The ASRS shall credit interest for a partial fiscal year of membership in the ASRS on the previous June 30 balance based on the number of days of membership up to and including the day the ASRS issues the warrant divided by the total number days in the fiscal year. Contributions made after the previous June 30 are returned without interest.

H. Upon submitting to the ASRS the completed and accurate Application for Withdrawal of Contributions and Termination of Membership form and, if applicable, any Ending Payroll Verification - Withdrawal of Contributions and Termination of Membership forms, a member is entitled to payment of the amount due to the member as specified in subsection (F) or (G) unless a present or former spouse submits to the ASRS a domestic relations order that specifies entitlement to all or part of the return of contributions under A.R.S. § 38-773 before the ASRS returns the contributions as specified by the member.

I. Upon death of a member, the ASRS shall provide survivor benefits based on the deceased member's last dated, written designation of beneficiary that is on file with the ASRS before the date of the member's death.

J. If there is no designation of beneficiary or if the designated beneficiary predeceases the member, the survivor benefit is paid as specified in A.R.S. § 38-762(F). The designated beneficiary or other person specified in A.R.S. § 38-762(F) shall:

1. Provide a certified copy of a death certificate or a certified copy of a court order that establishes the member's death;

2. Provide a certified copy of the court order of appointment as administrator, if applicable; and

3. Except if the deceased member was retired and elected the joint and survivor option, complete and have notarized an application for survivor benefits, provided by the ASRS, that includes:

a. The deceased member's full name,

b. The deceased member's Social Security number,

c. The following, as it pertains to the designated beneficiary or other person specified in A.R.S. § 38-762(F):

i. Full name;

ii. Mailing address;

iii. Contact telephone number;

iv. Date of birth, if applicable; and

v. Social Security number or Tax ID number, if applicable.

Historical Note

Former Rule, Social Security Regulation 1; Amended effective Dec. 20, 1979 (Supp. 79-6). Former Section R2-8-15 renumbered as Section R2-8-115 without change effective May 21, 1982 (Supp. 82-3). Amended by final rulemaking at 11 A.A.R. 1416, effective April 5, 2005 (Supp. 05-2). Amended by final rulemaking at 12 A.A.R. 644, effective February 7, 2006 (Supp. 06-1).

R2-8-116. Reemployment after retirement

Reemployment after retirement:

1. A member who has retired and accepts temporary employment in a position covered by the Retirement System for a period of not more than three months and who elects to waive contributory membership in the System shall continue to receive his benefits and no change shall occur upon termination of such employment.

2. A member who has retired and accepts regular or part-time employment at a wage equal to, or in excess of, the individual's monthly Social Security (Old Age and Survivors' Insurance) and the Arizona State Retirement System retirement income shall have his retirement benefit suspended during the period of employment and must submit a new application for retirement upon termination. Such resumption of employment continuing for six months or more will result in the re-opening of the member's Retirement Fund balances in the amounts determined by the actuary to be the "present value" of the previous retirement benefit. The present value figure will be based upon the previously effective optional payment method and the date of resumption of employment and the balances so determined will be credited to the member's retirement accounts. A like calculation shall be made to determine the amount to be reversed from the Prior Service Credits Reserve for Retired Members to the corresponding Reserve for Active Members. Contributions made during re-employment shall be included in the new benefit computation. Resumption of employment foreseen by this subsection but of less than six months' duration shall not result in the re-opening of Retirement Fund or active Prior Service accounts. Benefit payments shall be suspended and such payments, without being modified by recalculation, shall resume the first of the month following verified resignation from service. In the event contributions are committed during the period of less than six months of re-employment, the member's contributions, with appropriate interest earnings, shall be refunded to him on termination of employment.

3. A member who has retired and accepts regular or part-time employment at a wage less than the individual's monthly Social Security and Arizona State Retirement System retirement benefit will continue to receive his retirement benefit during the period of re-employment. In the event contributions are committed during the period of re-employment, the member's contributions with appropriate interest earnings shall be refunded to him upon termination of employment.

Historical Note

Former Rule, Retirement System Regulation 2; Former Section R2-8-16 renumbered as Section R2-8-116 without change effective May 21, 1982 (Supp. 82-3).

R2-8-117. Repealed

Historical Note

Former Rule, Retirement System Regulation 3; Former Section R2-8-17 renumbered as Section R2-8-117 without change effective May 21, 1982 (Supp. 82-3). Section repealed by final rulemaking at 11 A.A.R. 2640, effective June 30, 2005 (Supp. 05-2).

R2-8-118. Application of Interest Rates

A. The following definitions apply to this Section unless otherwise specified:

1. "ASRS" means the same as in A.R.S. § 38-711.

2. "Member" has the same meaning as in A.R.S. § 38-711.

3. "Plan" means the same as "defined benefit plan" in A.R.S. § 38-769, and administered by the ASRS.

4. "System" means the same as "defined contribution plan" as defined in A.R.S. § 38-769, and that is administered by the ASRS.

B. Application of interest from inception of the ASRS through the present is as follows:

C. At the beginning of each fiscal year interest is credited to the retirement account of each member on the June 30 that marks the end of the fiscal year based on the balance in the member's account as of the previous June 30. The balance on which interest is credited includes:

1. Employer and employee contributions;

2. Voluntary additional contributions made by System members, if applicable;

3. Amounts credited by transfer under A.R.S. § 38-922;

4. Amounts credited to a non-retired system member's employer account or to a retired System member's non-guaranteed benefit as determined by Article 2 of this Chapter; and

5. Interest credited in previous years.

Historical Note

Former Rule, Retirement System Regulation 4; Amended effective July 1, 1975 (Supp. 75-1). Amended effective June 23, 1976 (Supp. 76-3). Former Section R2-8-18 renumbered and amended as Section R2-8-118 effective May 21, 1982 (Supp. 82-3). Amended by final rulemaking at 11 A.A.R. 1416, effective April 5, 2005 (Supp. 05-2).

R2-8-119. Retirement benefit payments

A. Payments: Retirement benefits shall be payable from the first day of the month following termination of services and submission of a retirement application and, subject to the limitation in the following subsection (C), the first payment shall be made on the last day of such month. Subsequent payments shall be made on the last day of the month for which each such payment is due. Services are deemed to be terminated on the last day for which compensation is paid. In cases where an applicant was over 65 at the time employment was concluded and has delayed submission of a retirement request, the benefit derived from the Prior Service Credits Fund will be retroactive to the first of the month following termination of a payroll status, provided that the retroactive period may not exceed six months.

B. Death payments: If a retired member dies prior to the payment of the first monthly amount pursuant to the foregoing subsection (A), such payment shall not be made and the death benefits specified in A.R.S. § 38-759(A), shall be paid to his designated beneficiary or his estate. If a retired member or the person he designated under A.R.S. § 38-759(B)(3) dies subsequent to the payment of the first monthly amount pursuant to the foregoing subsection (A), the retirement benefit payment shall be made for the full month in which death occurs.

C. Disability retirement: Application for disability shall be made by a member on forms supplied by the Board. The form for members of the State Employees Retirement System is shown here as Appendix A, whereas the form for participants in the Retirement Plan is shown as Appendix B.

APPENDIX A

ARIZONA STATE RETIREMENT SYSTEM

1777 West Camelback Road

P. O. Box 33910

Phoenix, Arizona 85067

APPLICATION FOR DISABILITY RETIREMENT

I hereby make application for a disability retirement under the provisions of A.R.S. § 38-760, as set out on the reverse side of this application. ¹

I have been a member of the Arizona State Retirement System for not less than five years; I have not attained the age of 60, my date of birth being ___________________________.

My Social Security Number is ___________________________.

My employer (is) (was) ________________________________________________ and my employment (will terminate) (terminated) on _____________________________.

I request that my application for a disability retirement become effective on _____________________________. (This date cannot be sooner than the first day of the month following conclusion of your employment and approval of this application.)

The physicians who affirm that I am unable "to engage in any substantial gainful activity" are:

______________________________________

name

______________________________________

address

______________________________________

name

______________________________________

address

My beneficiary under the provisions of A.R.S. § 38-760 will be _________________________________________________.

( If the beneficiary is not your husband or wife, )

( then your husband or wife must sign below to )

( acknowledge your beneficiary designation. )

( )

( ____________________________________ )

________________________________ _______________________________________

Signature of Applicant Date

________________________________ _______________________________________

Street Address City State Zip

¹ The reverse side of Appendix A cites A.R.S. § 38-760 not herein reproduced.

APPENDIX B

ARIZONA STATE RETIREMENT SYSTEM

1777 West Camelback Road

P. O. Box 33920

Phoenix, Arizona 85067

APPLICATION FOR DISABILITY RETIREMENT

I hereby make application for a disability retirement under the provisions of A.R.S. § 38-781.30, as set out on the reverse side of this application. ¹

I have been a member of the Arizona State Retirement System for not less than five years; I have attained the age of 50 but have not yet attained age 62, my date of birth being _________________________.

My Social Security Number is: ______________________________.

My employer (is) (was) ________________________________________________ and my employment (will terminate) (terminated) on _____________________________.

I request that my application for a disability retirement become effective on _____________________________. (This date cannot be sooner than the first day of the month following conclusion of your employment and approval of this application.)

The physicians who affirm that I am unable "to engage in any substantial gainful activity" are:

______________________________________

name

______________________________________

address

______________________________________

name

______________________________________

address

My beneficiary under the provisions of A.R.S. § 38-781.30 will be ______________________________________________.

( If the beneficiary is not your husband or wife, )

( then your husband or wife must sign below to )

( acknowledge your beneficiary designation. )

( )

( )

____________________________________ ________________________________________

Signature of Applicant Date

___________________________________ _ ________________________________________

Street Address City State Zip

¹ The reverse side of Appendix B cites A.R.S. § 38-760 not herein reproduced.

Historical Note

Former Rule, Retirement System Regulation 5; Amended effective July 1, 1975 (Supp. 75-1). Amended effective June 23, 1976 (Supp. 76-3). Former Section R2-8-19 renumbered and amended as Section R2-8-119 effective May 21, 1982 (Supp. 82-3).

R2-8-120. Repealed

Historical Note

Former Rule, Social Security Regulation 6; Amended effective June 19, 1975 (Supp. 75-1). Amended effective July 13, 1979 (Supp. 79-4). Former Section R2-8-20 renumbered and amended as Section R2-8-120 effective May 21, 1982 (Supp. 82-3). Repealed effective July 24, 1985 (Supp. 85-4).

R2-8-121. Repealed

Historical Note

Former Rule, Retirement System Regulation 7; Amended effective April 15, 1980 (Supp. 80-2). Former Section R2-8-21 renumbered as Section R2-8-121 without change effective May 21, 1982 (Supp. 82-3). Amended subsection (A) effective May 30, 1985 (Supp. 85-3). Section repealed by final rulemaking at 11 A.A.R. 444, effective January 4, 2005 (05-1).

R2-8-122. Remittance of contributions

A. Remittance of employee member contributions: Each state department and employer member of the Arizona State Retirement System, including, without limitation, any county, municipality or political subdivision, shall certify on each payroll the amount to be contributed by each one of their employee members of the Arizona State Retirement System and shall remit the amount of employee member contributions to the Arizona State Retirement System, together with such detailed report as may be required by the System to identify the individual owner of each such member contribution, not later than 14 calendar days after the last day of each payroll period. Payments of employee member contributions not received in the offices of the Arizona State Retirement System by the 14th calendar day after the last day of the applicable payroll period shall become delinquent after that date and shall be increased, by interest at the rate of eight percent per annum from and after the date of delinquency until payment is received by the Arizona State Retirement System.

B. Remittance of employer contributions: Each state department and employer member of the Arizona State Retirement System, including, without limitation, any county, municipality or political subdivision, shall remit the amount of employer contributions to the Arizona State Retirement System not later than 14 calendar days after the last day of each payroll period. Payments of employer contributions not received in the offices of the Arizona State Retirement System by the 14th calendar day after the last day of the applicable payroll period shall become delinquent after that date and shall be increased, by interest at the rate of eight percent per annum from and after the date of delinquency until payment is received by the Arizona State Retirement System.

Historical Note

Former Rule, Retirement System Regulation 8; Amended effective Dec. 8, 1978 (Supp. 78-6). Former Section R2-8-22 renumbered as Section R2-8-122 without change effective May 21, 1982 (Supp. 82-3).

R2-8-123. Actuarial Assumptions and Actuarial Value of Assets

A. The following definitions apply to this Section unless otherwise specified:

1. "Actuarial assumption" means an estimate of an uncertain future event that affects pension liabilities.

2. "Board" means the same as in A.R.S. § 38-711.

3. "Credited service" means the same as in A.R.S. § 38-711.

4. "Deferred benefit" means the monthly annuity a member would receive upon reaching normal retirement date.

5. "Disabled member" means a member who is receiving long-term disability payments.

6. "Investment yield rate" means a percentage of return on an asset.

7. "Market value" means an estimated monetary worth of an asset, based on the current demand for the asset, and the amount of that type of asset that is available for sale.

8. "Member" means the same as in A.R.S. § 38-711.

9. "Non-disabled member" means a member who is not receiving long-term disability payments.

10. "Normal cost" means the same as in A.R.S. § 38-711.

11. "Normal retirement date" means the same as in A.R.S. § 38-711.

12. "Present value" means the amount of money needed on a specified date, such as the date of termination, to fund a future payment or series of payments based on the actuarial assumptions approved by the Board.

13. "Select retirement rate" means a rate that is based on age and years of credited service.

14. "Ultimate retirement rate" means a rate that depends only on age, and not on years of credited service.

B. The Board adopts the following:

1. Actuarial Assumptions:

a. The interest and investment yield rate is 8% per annum, compounded annually.

b. Group long-term disability rates are in Table 1 for male disability rates and Table 2 for female disability rates.

c. For the purpose of calculating liability amounts, normal cost rates, and contribution rates, non-disabled member mortality rates are based on Table 3A. Disabled member mortality rates are based on Table 3B of this Section.

d. To calculate actuarial equivalent benefits, the non-disabled mortality rates are based on Table 4.

e. Retirement age is based on select and ultimate retirement rates at age and years of credited service shown in Table 5 of this Section.

f. The salary scale is as follows:

g. Rates of withdrawal for male members as provided in Table 6 and for female members as provided in Table 7.

h. Seventy-five percent of future retirees will be eligible to receive a post-retirement health insurance premium supplement. Of the 75%, 40% of the retirees will be eligible for single coverage and 60% of the retirees will be eligible for family coverage.

i. A member who terminates employment with five or more years of credited service, but before eligibility for retirement, will choose to receive the contributions under A.R.S. § 38-740 if the value of the contributions exceeds the present value of the deferred benefit. If the value of the contributions does not exceed the present value of the defined benefit, the member will elect the member's deferred benefits. A member who terminates employment with less than five years of credited service will withdraw that member's contributions with interest. A member who is eligible for early retirement when the member terminates employment will elect to begin receiving benefits immediately.

j. All members have beneficiaries of the opposite sex and the beneficiary of a male member is three years younger than the member and the beneficiary of a female member is three years older than the member.

k. To reflect the excess cost of service purchases, the credited service expected to be earned by a member in the future is increased by 2.15%.

2. The actuarial value of assets equals the market value of assets:

a. Minus, for years in which actual investment return exceeds expected investment return, a ten-year (five-year for fiscal years before fiscal year 2002) phase-in of the excess; and

b. Plus, for years in which actual investment return falls short of expected investment return, a ten-year (five-year for fiscal years before fiscal year 2002) phase-in of the shortfall.

Historical Note

Adopted effective July 1, 1975 (Supp. 75-1). Amended effective June 23, 1976 (Supp. 76-3). Amended effective December 20, 1977 (Supp. 77-6). Former Section R2-8-23 renumbered and amended as Section R2-8-123 effective May 21, 1982 (Supp. 82-3). Emergency amendments effective July 6, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Emergency amendments adopted again effective September 29, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Permanent amendments adopted effective December 22, 1993 (Supp. 93-4). Emergency amendments adopted effective January 30, 1997, pursuant to A.R.S. § 41-1026 for a maximum of 180 days (Supp. 97-1). Emergency expired. Permanent amendments adopted effective September 12, 1997 (Supp. 97-3). Amended by emergency rulemaking under A.R.S. § 41-1026 at 9 A.A.R. 1006, effective February 24, 2003 for a period of 180 days (Supp. 03-1). Emergency rulemaking renewed at 9 A.A.R. 3963, effective August 21, 2003 for a period of 180 days (Supp. 03-3). Amended by final rulemaking at 9 A.A.R. 4614, effective December 6, 2003 (Supp. 03-4). Amended by emergency rulemaking under A.R.S. § 41-1026 at 10 A.A.R. 2496, effective August 2, 2004 for 180 days (Supp. 04-2). Amended by final rulemaking at 10 A.A.R. 4012, effective November 13, 2004 (Supp. 04-3).

Table 1. Graduated Tabular Rates of Disability - Active Male Members

Historical Note

Emergency adoption effective July 6, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Emergency rule adopted again effective September 29, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Permanent rule adopted effective December 22, 1993 (Supp. 93-4). Emergency amendments to Table 1 adopted effective January 30, 1997, pursuant to A.R.S. § 41-1026 for a maximum of 180 days (Supp. 97-1). Emergency expired. Permanent amendments adopted effective September 12, 1997 (Supp. 97-3). Amended by emergency rulemaking under A.R.S. § 41-1026 at 10 A.A.R. 2496, effective August 2, 2004 for 180 days (Supp. 04-2). Amended by final rulemaking at 10 A.A.R. 4012, effective November 13, 2004 (Supp. 04-3).

Table 2. Graduated Tabular Rates of Disability - Active Female Members

Historical Note

Emergency adoption effective July 6, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Emergency rule adopted again effective September 29, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Permanent rule adopted effective December 22, 1993 (Supp. 93-4). Emergency amendments to Table 2 adopted effective January 30, 1997, pursuant to A.R.S. § 41-1026 for a maximum of 180 days (Supp. 97-1). Emergency expired. Permanent amendments adopted effective September 12, 1997 (Supp. 97-3). Amended by emergency rulemaking under A.R.S. § 41-1026 at 10 A.A.R. 2496, effective August 2, 2004 for 180 days (Supp. 04-2). Amended by final rulemaking at 10 A.A.R. 4012, effective November 13, 2004 (Supp. 04-3).

Table 3. Repealed

Historical Note

Emergency adoption effective July 6, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Emergency rule adopted again effective September 29, 1993, pursuant to A.R.S. § 41-1026, valid for only 90 days (Supp. 93-3). Permanent rule adopted effective December 22, 1993 (Supp. 93-4). Emergency amendments to Table 3 adopted effective January 30, 1997, pursuant to A.R.S. § 41-1026 for a maximum of 180 days (Supp. 97-1). Emergency expired. Permanent amendments adopted effective September 12, 1997 (Supp. 97-3). Table 3 repealed; new Table 3 renumbered from Table 4 by final rulemaking at 9 A.A.R. 4614, effective December 6, 2003 (Supp. 03-4). Table repealed by emergency rulemaking under A.R.S. § 41-1026 at 10 A.A.R. 2496, effective August 2, 2004 for 180 days (Supp. 04-2). Table repealed by final rulemaking at 10 A.A.R. 4012, effective November 13, 2004 (Supp. 04-3).

Table 3A. Non-disabled Member Mortality Rates, Based on the 1994 Group Annuity Mortality Static Table - Male and the 1994 Group Annuity Mortality Static Table - Female, Projected to 2005 Using Projection Scale AA