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REFERENCE TITLE: correctional officers; supplemental contributions |
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State of Arizona Senate Fifty-seventh Legislature Second Regular Session 2026
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SB 1270 |
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Introduced by Senator Gowan
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AN ACT
Amending section 38-867, Arizona Revised Statutes; relating to the Public safety personnel defined contribution retirement plan.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-867, Arizona Revised Statutes, is amended to read:
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 (a), item (ii), three percent.
2. For a participant as defined in section 38-865, paragraph 7, subdivision (a), item (i), nine percent.
3. For a participant as defined in section 38-865, paragraph 7, subdivision (b), seven percent.
B. A participant as defined in section 38-865 may make a onetime 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. A participant as defined in section 38-865, paragraph 7, subdivision (b) may make a onetime irrevocable election, before the participant is eligible to participate in any qualified plan of the employer, to contribute less than the percentage of the participant's gross pensionable compensation specified in this section but may not elect to contribute less than five percent of the participant's gross pensionable compensation. The election made pursuant to this subsection shall be the participant's contribution rate for the remainder of the participant's employment.
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 the 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 as defined in section 38-865, paragraph 7, subdivision (a), item (ii), three percent.
2. For a participant as defined in section 38-865, paragraph 7, subdivision (a), item (i), nine percent.
3. For a participant as defined in section 38-865, paragraph 7, subdivision (b), five and one-half 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. Each participant as defined in section 38-865, paragraph 7, subdivision (a), item (i) and subdivision (b) and each employer shall contribute:
1. To the public safety personnel defined contribution retirement plan disability program established by article 4.2 of this chapter.
2. For participants who make an election pursuant to section 38-869, an equal amount for the group health benefits plan payments as specified in section 38-869 as determined by actuarial valuations reported by the board to the employer and local board, which shall be deposited in a separate account established pursuant to section 38-869.
G. A participant's contributions and earnings on those contributions are immediately vested.
H. A participant as defined in section 38-865, paragraph 7, subdivision (a) or section 38-865.01 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. If a participant described in this subsection dies or is determined to be eligible for an accidental or catastrophic disability pension pursuant to section 38-844 before completing ten years of service, the employer contributions are immediately fully vested.
I. A participant as defined in section 38-865, paragraph 7, subdivision (b) is fully vested in the defined contribution plan after three years of service, with the employer contributions vesting at the following rates:
1. Twenty-five percent after the first year of service.
2. Fifty percent after the second year of service.
3. One hundred percent after the third year of service.
J. If a participant as defined in section 38-865, paragraph 7, subdivision (b) dies or is determined to be eligible for an accidental or total and permanent disability pension pursuant to section 38-886 before completing three years of service, the employer contributions are immediately fully vested.
K. In addition to any employer contribution required pursuant to this section, an employer of a participant as defined in section 38-865, paragraph 7, subdivision (b) may make a supplemental contribution incentive payment to the participant's defined contribution plan account if the supplemental contribution meets all of the following:
1. Does not exceed $5,000 per participant as described in this subsection.
2. Is made only on a specified service interval such as five, ten or fifteen years of service.
3. Is made equally to all participants of the employer as described in this subsection who meet the service requirement.
4. Does not require the participant as described in this subsection to make any additional monetary contribution to receive the employer's supplemental contribution.
L. A supplemental contribution made pursuant to subsection K of this section does not affect any other employer or any other participant who is employed by the employer that made the supplemental contribution. An employer who makes a supplemental contribution pursuant to subsection K of this section is not obligated to make additional supplemental contributions to a participant as described in subsection K of this section who has received a previous supplemental contribution. An employer may discontinue supplemental contribution incentive payments pursuant to subsection K of this section at any time.