2013 Arizona Revised Statutes
Title 38 - Public Officers and Employees
§ 38-955 Defined contribution plan; establishment; administration

38-955. Defined contribution plan; establishment; administration

A. The Arizona state retirement system board shall establish, administer, manage and operate a defined contribution plan for employees enrolled pursuant to sections 38-728 and 38-956.

B. The Arizona state retirement system board may:

1. Delegate authority to implement the plan to its director appointed pursuant to section 38-715.

2. Employ services it deems necessary, including legal services, for the operation and administration of the plan.

3. Administer the plan through contracts with multiple vendors.

4. Perform all acts, whether or not expressly authorized, that it deems necessary and proper for the operation and protection of the plan.

5. For the purposes of this article, enter into intergovernmental agreements pursuant to title 11, chapter 7, article 3.

C. Notwithstanding title 41, chapter 23, the Arizona state retirement system board may employ the services of the third-party administrator that is contracted on the effective date of this section to administer the supplemental defined contribution plan pursuant to this article to also administer the defined contribution plan established pursuant to this section until the end of the current contract. On expiration of that contract, the Arizona state retirement system board shall participate in a competitive bid process at least once every five years to contract with a private person or any qualified company or companies to administer the defined contribution plan established pursuant to this section.

D. The defined contribution plan shall be designed to be a qualified governmental plan under section 401(a) of the internal revenue code. The legislature intends that the defined contribution plan is a qualified plan under section 401 of the internal revenue code, as amended, or successor provisions of law, and that the plan is exempt from taxation under section 501 of the internal revenue code. The board may adopt any additional provisions to the plan that are necessary to fulfill this intent.

E. Although designated as employee contributions, all employee contributions made to the plan shall be picked up and paid by the employer in lieu of contributions by the employee. The contributions picked up by an employer may be made through a reduction in the employee's compensation or an offset against future compensation increases, or a combination of both. An employee participating in the plan does not have the option of choosing to receive the contributed amounts directly instead of the employer paying the amounts to the plan. It is intended that all employee contributions that are picked up by the employer as provided in this subsection shall be treated as employer contributions under section 414(h) of the internal revenue code, shall be excluded from employees' gross income for federal and state income tax purposes and are includable in the gross income of the employees or their beneficiaries only in the taxable year in which they are distributed.