Section R2-8-513. Purchasing Service Credit by Irrevocable Payroll Deduction Authorization

A.      An eligible member may purchase service credit by Irrevoca- ble Payroll Deduction Authorization.

B.       By the due date specified on the SP invoice, the member shall ensure that the ASRS receives the completed Service Purchase Payment Request form with the information specified in R2-8- 502(D)(2).

C.      If the eligible member elects to pay for service credit by Irre- vocable Payroll Deduction Authorization, ASRS shall prepare an Irrevocable Payroll Deduction Authorization and send it to the eligible member for signature. The member shall ensure that the ASRS receives the signed Irrevocable Payroll Deduc- tion Authorization within 30 days after the date on the Irrevo- cable Payroll Deduction Authorization. The signed Irrevocable Payroll Deduction Authorization becomes irrevo- cable upon receipt by the ASRS.

D.      At the time the eligible member signs the Irrevocable Payroll Deduction Authorization the eligible member may elect to use

termination pay towards the balance of the Irrevocable Payroll Deduction Authorization if the eligible member terminates employment. If the eligible member chooses this option, the eligible member shall complete the Termination Pay Adden- dum to the Irrevocable Payroll Deduction Authorization and return it to the ASRS along with the remainder of the Irrevoca- ble Payroll Deduction Authorization that includes the follow- ing:

1.        A statement that the member:

a.         Understands and agrees that the member must con- tinue working at least three full calendar months after the date of submission of the form before ter- mination pay may be used on a pre-tax basis;

b.        Understands that if the termination payment exceeds the balance owed on the Irrevocable Payroll Deduc- tion Authorization, the overage will be returned to the ASRS employer to be distributed to the member; and

c.         Elects to irrevocably agree to have termination pay that may be payable to the member upon termination of employment sent to the ASRS on a pre-tax basis and used toward any remaining balance of the Irre- vocable Payroll Deduction Authorization if all scheduled payroll deductions have not been com- pleted upon termination of service; and

2.        A statement that either all termination pay or a specified amount of termination pay is to be applied to the balance of the Irrevocable Payroll Deduction Authorization.

E.       The ASRS shall:

1.        Charge interest on the unpaid balance at the assumed actuarial investment earnings rate approved by the Board in effect at the time the authorization was entered into;

2.        Limit the payroll deduction time period to a maximum of 20 years; and

3.        Require a minimum payment of $10.00 per payroll period, or payment in an amount to purchase at least .001 year of service credit per payroll period, whichever is greater.

F.       The ASRS shall transmit the Irrevocable Payroll Deduction Authorization to the active member’s ASRS employer, and the ASRS employer shall implement the deduction on the first pay period after receiving the Irrevocable Payroll Deduction Authorization.

G.      If a deduction is not made under an Irrevocable Payroll Deduc- tion Authorization within six months after the member signs the authorization, the authorization lapses and the member may make another request, which is recalculated based on the new request date unless the failure to begin deductions is due to an ASRS error.

H.      A period of leave of absence, long-term disability, or Presiden- tial Call-up shall not cancel the Irrevocable Payroll Deduction Authorization. The ASRS employer shall resume deductions immediately upon the member’s return to that employment. The period during which the member is on leave of absence, on long-term disability, or leaves work because of a Presiden- tial Call-up is not included in the 20-year payment time limita- tion under subsection (E)(2). If the member does not return to active working status, whether due to termination of employ- ment or retirement, the member may elect to purchase the bal- ance of unpaid service under the Irrevocable Payroll Deduction Authorization at the time of termination or retire- ment as specified in this Section.

I.        Deductions made pursuant to an Irrevocable Payroll Deduc- tion Authorization continue until the:

1.        Irrevocable Payroll Deduction Authorization is com- pleted;

2.        Member retires, whether or not the member continues employment as allowed in A.R.S. §§ 38-766.01 and 38- 764(J); or

3.        Member terminates all ASRS employment without trans- ferring employment.

J.        If a member retires or terminates employment from all ASRS employers without transferring employment as stated in R2-8-

513.01 before all deductions are made as authorized by the Irrevocable Payroll Deduction Authorization, the member’s purchase of service credit is canceled unless the member noti- fies the ASRS in writing during the period 14 days before to 14 days after retirement or termination from all ASRS employ- ment of the intent to purchase the remaining amount due in a lump sum.

K.      When the member notifies ASRS of retirement or termination from all ASRS employment and requests to pay off the Irrevo- cable Payroll Deduction Authorization, the ASRS shall send the member a PDA pay-off letter to the mailing address given by the member. The ASRS shall calculate the amount owed by the member and reduce the amount owed by any excess inter- est that the member has paid.

L.       Within 30 days of the date of the PDA pay-off letter, the mem-

ber shall ensure that the ASRS receives the completed SP Pay- ment Request form with the information specified in R2-8- 502(D)(2). The member may purchase the remaining service credit by one or more of the following methods:

1.        By check, cashier’s check, or money order made out to the ASRS under R2-8-512;

2.        By making a request to the ASRS for a rollover or trans- fer under R2-8-514 and completing the rollover or trans- fer within 90 days of the date of the PDA pay-off letter; or

3.        By termination pay distribution under R2-8-519, if the member authorized this option at the time the member signed the Irrevocable Payroll Deduction Authorization.

Historical Note

New Section made by final rulemaking at 11 A.A.R. 2640, effective June 30, 2005 (Supp. 05-2). Amended by final rulemaking at 12 A.A.R. 4667, effective December 5, 2006 (Supp. 06-4). Amended by final rulemaking at 18

A.A.R. 3130, effective January 6, 2013 (Supp. 12-4).