Purchasing Service Credit by Irrevocable PDA

R2-8-513. Purchasing Service Credit by Irrevocable PDA A. An Eligible Member may purchase Service Credit by Irrevocable PDA. Irre- B. If the Eligible Member elects to pay for Service Credit by vocable PDA, the Eligible Member shall elect the terms of th e Irrevocable PDA and submit the Irrevocable PDA to the ASR S and the Employer with the following: 1. Acknowledgements: a. This Irrevocable PDA is binding and irrevocable; b. This Irrevocable PDA shall remain in effect until th e earlier of: i. The authorized payroll deductions are completed; or ii. The Eligible Member terminates employment. c. The ASRS cannot terminate the Irrevocable PD A due to financial hardship; d. The amount of Irrevocable PDA payments the Eligible Member makes is subject to federal laws; e. The cost to purchase Service Credit by Irrevocabl e PDA includes an administrative interest charge at the Assumed Actuarial Investment Earnings Rate i n effect at the time of the authorization as specified i n R2-8-118(A); f. Payments specified in this Irrevocable PDA are i n pursu- addition to the regular contributions required ant to A.R.S. §§ 38-736 and 38-797.05; g. The ASRS shall apply credited service to the Eligible Member’s account upon receipt of payment s authorized by the Eligible Member under this Irrevocable PDA; and h. The ASRS shall not transfer, refund, or disburse th e administrative interest that the ASRS charges pursuant to subsection (B)(1)(e); and 2. Statements of Understanding: a. It is the Eligible Member’s responsibility to ensur e the Eligible Member’s Employer properly deduct s payments and submits contributions as provided b y the terms of the Irrevocable PDA; b. Payments specified by the terms of this Irrevocabl e PDA shall be made directly to the ASRS from th e Eligible Member’s Employer and the Eligible Member does not have the option of receiving such payments directly from the Employer; c. The Eligible Member’s Employer shall make payments pursuant to this Irrevocable PDA after other mandatory deductions are made; d. The Eligible Member’s Employer cannot accept a n election to change this Irrevocable PDA; e. The Eligible Member has up to 14 days to request the ASRS calculate the remaining balance of thi s Irrevocable PDA after the earlier of: i. Terminating employment; ii. Terminating LTD without returning to wor k with an Employer; or iii. The effective ASRS retirement date; f. The Eligible Member must complete a purchase of the remaining balance on this Irrevocable PDA b y the due date specified on the PDA Pay-off Invoice; g. It is the Eligible Member’s responsibility to notif y the ASRS of any changes in the Eligible Member’ s Irrevo- employment that may affect the status of this cable PDA; 26-1 March 31, 2026 Arizona CHAPTER 8. STATE h. If the Eligible Member terminates employment an d returns to work with an Employer within 120 days of terminating employment, this Irrevocable PDA must continue with the new Employer pursuant to R2-8- 513.01; and i. If the Eligible member terminates employment an d does not return to work with an Employer withi n 120 days of terminating employment, the ASRS shall terminate this Irrevocable PDA pursuant to R2- 8-513.01. C. By submitting the Irrevocable PDA to the ASRS, the Irrevocable PDA is deemed to be signed by the Eligible Member. D. At the time the Eligible Member elects the Irrevocable PDA, the Eligible Member may elect to use Termination Pa y towards the balance of the Irrevocable PDA if the Eligibl e Member terminates employment. If the Eligible Member elects to use Termination Pay, the Eligible Member shall subinfor- mit the Irrevocable PDA to the ASRS with the following mation: 1. A statement that the Eligible Member: a. Understands and agrees that the Eligible Member must continue working at least Three Full Calendar Months after the date of submission of the form before Termination Pay may be used on a pre-ta x basis; b. Understands that if the Termination Pay exceeds th e balance owed on the Irrevocable PDA, the overag e will be returned to the Employer to be distributed t o the Eligible Member; c. Understands that the election to use Termination Pa y is binding and irrevocable; d. The Eligible Member’s Termination Pay must b e received and processed before the ASRS will accept any other form of payment; e. The Eligible Member’s Employer is required t o make payment directly to the ASRS after mandator y deductions are made, and the Eligible Member doe s not have the option of receiving the funds directl y from the Employer; f. It is the Eligible Member’s responsibility to ensur e that the Eligible Member’s Employer properl y deducts Termination Pay; g. The amount of Termination Pay the Eligible Member elects is irrevocable pursuant to § 414(h)(2) of the IRC; h. If the Eligible Member terminates employment an d immediately retires, the Eligible Member’s retirement processing may be delayed; and 2. Whether the Eligible Member is electing either all Termination Pay or a specified amount of Termination Pay t o be applied to the balance of the Irrevocable PDA. E. The ASRS shall: 1. Charge interest on the unpaid balance at the Assume d Actuarial Investment Earnings Rate in effect at the tim e the Eligible Member submitted the request to purchas e service as specified in R2-8-118(A); 2. Limit the payroll deduction time period to a maximum of 520 payments; and 3. Require a minimum payment of $10.00 per payroll period, or payment in an amount to purchase at least .00 1 years of Service Credit per payroll period, whichever i s greater. F. The Employer shall implement the payroll deduction on th e first pay period after receiving the Irrevocable PDA. March 31, 2026 Supp. Administrative Code 2 A.A.C. 8 ADMINISTRATION RETIREMENT SYSTEM BOARD G. If a deduction is not made under an Irrevocable PDA withi n six months after the Eligible Member submits the authorization, the authorization lapses and the Eligible Member ma y make another request, which is recalculated based on the ne w request date unless the failure to begin deductions is due to a n ASRS error. H. A period of leave of absence, LTD, or military call-up shall not cancel the Irrevocable PDA. The Employer shall resum e deductions immediately upon the Eligible Member’s return t o that Employer. The period during which the Eligible Member is on leave of absence, on LTD, or leaves work because of a military call-up is not included in the payment time limitatio n under subsection (D)(2). If the Eligible Member does not return to active working status, whether due to termination of employment or retirement, the Eligible Member may elect t o purchase the balance of unpaid service under the Irrevocabl e PDA at the time of termination or retirement as specified i n this Section. I. Deductions made pursuant to an Irrevocable PDA continu e until the: 1. Irrevocable PDA is completed; 2. Eligible Member retires, whether or not the Eligibl e Member continues employment as allowed in A.R.S. § § 38-766.01 and 38-764(I); 3. Eligible Member terminates all ASRS employment without transferring employment; or 4. Date of the Eligible Member’s death. J. If an Eligible Member retires or terminates employment fro m all Employers without transferring employment as stated i n R2-8-513.01 before all deductions are made as authorized b y the Irrevocable PDA, the ASRS shall cancel the Eligibl e Member’s Irrevocable PDA unless the Eligible Member notifies the ASRS of the Eligible Member’s intent to purchase th e remaining amount within 14 days after the earlier of either termination or retirement. K. When the Eligible Member notifies the ASRS of retirement or termination from all ASRS employment and requests to pa y off the Irrevocable PDA, the ASRS shall send the Eligibl e Mem- Member a PDA Pay-off Invoice through the Eligible ber’s secure ASRS account. The ASRS shall calculate th e amount owed by the Eligible Member. L. By the date payment election is due, the Eligible Member shall ensure that the ASRS receives the information specified in R2- 8-502(C). M. The Eligible Member may purchase the remaining Servic e Credit by one or more of the following methods by the du e date specified on the PDA Pay-off Invoice: 1. By any method specified in R2-8-512; 2. By making a request to the ASRS for a rollover or transfer under R2-8-514 and completing the rollover or transfer by the due date specified on the PDA Pay-off Invoice; or 3. By Termination Pay under R2-8-519, if the Eligibl e Member authorized this option at the time the Eligibl e Member signed the Irrevocable PDA. 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). Amended by final rulemaking at 25 A.A.R. 303, effective March 18, 2019 (Supp. 19-1). 26-1 Page 41 2 A.A.C. 8 Arizona CHAPTER 8. STATE