Section R2-8-519. Purchasing Service Credit by Termination Pay Distribution

A.      To purchase service credit using termination pay distribution, an eligible member shall, no more than six months before the date the eligible member plans to retire or terminate employ- ment, request to purchase service credit as specified in R2-8- 502 and specify that the member wants to use termination pay distribution to pay for the service credit. Upon receipt of the acknowledgement letter identified in R2-8-502, the eligible member shall provide documentation for service credit as required by this Article, within 30 days of the eligible mem- ber’s request to purchase service credit.

B.       Upon receipt of the documentation required by this Article from the eligible member and if the eligible member’s request to purchase service credit meets the requirements of this Arti- cle, the ASRS shall provide a:

1.        SP invoice stating the cost to purchase the requested amount of service credit and the date the payment is due, and

2.        Service Purchase Payment Request form as described in R2-8-502(D)(2).

C.      By the due date specified on the SP invoice, the member shall ensure that the ASRS receives the completed Service Purchase Payment Request form.

D.      Upon receipt of the Service Purchase Request form, if the member indicates the member wishes to purchase service credit by termination pay distribution, the ASRS shall send the member a Termination Pay Authorization for the Purchase of Service Credit form to complete and return within the time limitation specified in subsection (E) that includes:

1.        Member’s full name,

2.        Member’s Social Security number,

3.        Member’s daytime telephone number,

4.        The Request ID number listed on the SP invoice,

5.        Name of ASRS employer,

6.        Whether the member elects to use all termination pay or a specific amount of termination pay to purchase service credit,

7.        Signature of the member, certifying that the member understands that:

a.         The member is required to continue working at least three full calendar months after the date the member submits the Termination Pay Authorization for the Purchase of Service Credit form before termination pay may be used on a pre-tax basis;

b.        If the member terminates employment more than six months after the date on the SP invoice, the member may purchase the service credit at a newly calcu- lated rate and possibly at a higher cost;

c.         The Termination Pay Authorization for the Purchase of Service Credit form is binding and irrevocable;

d.        The member’s employer is required to make pay- ment directly to the ASRS after mandatory deduc- tions are made, and the member does not have the option of receiving the funds directly from the employer;

e.         The ASRS shall apply service credit to the mem- ber’s account upon the receipt of payments autho- rized by the member by the Termination Pay Authorization for the  Purchase of Service  Credit form;

f.         If the member elects to purchase with termination pay only a portion of the service credit that the mem- ber is entitled to purchase, the member may be eligi- ble to use other forms of payment to purchase additional service credit. However, using other forms of payment to purchase additional service credit does not alter, amend, or revoke the terms of the Termination Pay Authorization for the Purchase of Service Credit form;

g.        It is the member’s responsibility to ensure that the member’s employer properly deducts termination pay, as provided the Termination Pay Authorization for the Purchase of Service Credit form; and

h.        The amount of termination pay the member is allowed to apply to purchase service credit is subject to federal laws.

E.       In addition to the other time limitations in this Section, to apply termination pay to a service purchase the eligible mem- ber shall complete and sign the Termination Pay Authorization for the Purchase of Service Credit form, and the member shall ensure that the ASRS receives the Termination Pay Authoriza- tion for the Purchase of Service Credit form at least three full calendar months before the member retires or terminates employment.

F.       The ASRS shall not apply a termination pay distribution to a service credit purchase covered by an Irrevocable Payroll Deduction Authorization in effect at the time of termination unless the eligible member signed a Termination Pay Adden- dum to the Irrevocable Payroll Deduction Authorization speci- fied in R2-8-513(D) at the time the member signed the Irrevocable Payroll Deduction Authorization.

G.      If a member elects to use all of the member’s available termi- nation pay to purchase service credit, ASRS shall not apply any other form of payment to the service credit purchase until the ASRS receives the termination pay.

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).