2016 Arizona Revised Statutes
Title 38 - Public Officers and Employees
§ 38-867 Contributions; member; employer; pickup
38-867. Contributions; member; employer; pickup
A. Each participant in the defined contribution plan shall contribute the following percentage of the participant's gross pensionable compensation by salary reduction that shall be deposited in the participant's annuity account:
1. For a participant as defined in section 38-865, paragraph 7, subdivision (b), three percent.
2. For a participant as defined in section 38-865, paragraph 7, subdivision (a), nine percent.
B. A participant as defined in section 38-865 may make a one-time irrevocable election, before the participant is eligible to participate in any qualified plan of the employer, to contribute more than the percentage of the participant's gross pensionable compensation specified in this section, up to the amount allowable under section 415(c) of the internal revenue code, which shall be the participant's contribution rate for the remainder of the participant's employment with any employer under the system.
C. Although designated as employee contributions, all participant contributions made to the defined contribution 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 participant's compensation. A participant in the defined contribution plan may not choose to receive the contributed amounts directly instead of the employer paying the amounts to the defined contribution plan. All participant 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 participant's gross income for federal and state income tax purposes and are includable in the gross income of the participant or the participant's beneficiaries only in the taxable year in which they are distributed.
D. Each employer shall annually make a contribution equal to the following percentages of each participant's gross pensionable compensation:
1. For a participant defined in section 38-865, paragraph 7, subdivision (b), three percent.
2. For a participant defined in section 38-865, paragraph 7, subdivision (a), nine percent.
E. The pro rata share of the amount paid in subsection D of this section shall be paid on each date that a participant contribution is made and shall be credited to the participant's annuity account.
F. A participant of the defined contribution plan may not take loans on any portion of the accumulated assets in the participant's annuity account.
G. Each participant as defined in section 38-865, paragraph 7, subdivision (a) and each employer shall contribute to the public safety personnel defined contribution retirement plan disability program established by article 4.2 of this chapter.
H. A participant's contributions and earnings on those contributions are immediately vested. A participant is fully vested in the defined contribution plan after ten years of service, with employer contributions vesting at a rate of ten percent per year.
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