ARIZONA STATE SENATE
Phoenix, Arizona
FINAL
REVISED
Conforms Arizona State Retirement System (ASRS) statutes to comply with the federal Economic Growth and Tax Relief Reconciliation Act of 2001. Makes full-time return to work a permanent option for ASRS members. Appropriates $270,342 from the ASRS administration account in FY 2002-2003 for administrative implementation.
On June 7, 2001, the President signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). In addition to cutting federal income taxes, and repealing the federal estate tax, EGTRRA also includes several provisions that affect retirement plans. The retirement plan changes effected by EGTRRA are generally effective for plan years beginning after December 31, 2001. Some provisions have a retroactive effective date, and other provisions will be phased in over the next several years. In addition, all the provisions in EGTRRA will expire for taxable years, limitation years and plan years beginning after December 31, 2010. If Congress does not act to extend the EGTRRA provisions, the law will revert back to what is currently in place. S.B. 1095 makes the necessary changes to Arizona State Retirement System (ASRS) statutes to comply with federal law and additional definitional changes in order to prevent administrative problems.
Prior to 2000, members could only return to work if they either worked less than 20 weeks per year or 20 hours per week. Legislation was passed to allow teachers to return to work full-time after a year of retirement; furthermore, in 2001 this option was extended to all ASRS members. Members who chose to return to work continue to receive retirement benefits as well as the members negotiated salary. Participants are not allowed to make contributions to ASRS for retirement and can not accumulate additional benefits in ASRS.
Joint Legislative Budget Committee staff indicates that there is no actuarial fiscal impact associated with this legislation.
1. Increases, on July 1, 2002, from $150,000 to $200,000 the annual compensation limit that may be taken into account when determining benefits for public employees under ASRS.
2. Increases, on July 1, 2002, the annual contribution limit to an individual's defined contribution plan to the lesser of $40,000 or 100 percent of the individual's annual compensation.
3. Increases, retroactive to July 1, 2001, annual retirement benefit limit from $90,000 to $160,000 with an actuarial reduction required for benefits commencing prior to age 62 instead of Social Security retirement age.
4. Allows, retroactive to January 1, 2002, direct rollovers from 403(b), 457 and individual retirement plans on a pretax basis for the purchase of credited services.
5. Requires ASRS to account for direct transfers and rollovers separately.
6. Makes conforming changes and additions to the following definitions:
a) Compensation
b) Eligible retirement plan
c) Eligible rollover distribution
7. Makes the return to work option a permanent selection for ASRS members.
8. Appropriates $270,342 from the ASRS administration account in FY 2002-2003 for administrative implementation.
9. Makes technical and conforming changes.
Amendment Adopted by Committee
· Appropriates $270,342 from the ASRS administration account in FY 2002-2003 to administer this act.
Amendment Adopted by House of Representatives
· Makes technical changes.
Senate Action House
Action
FIN 3/18/02 DPA 5-0-3-0 RGO 4/9/02 DP 7-0-0-3
3rd Read 3/28/02 28-0-2-0 3rd Read 5/2/02 57-0-3-0
Final Read 5/9/02 27-0-3-0
Signed by Governor 5/15/02
Chapter 213
Prepared by Senate Staff
May 29, 2002