Arizona State Retirement System member benefit handbook

              MEMBER
HANDBOOK
Your Guide to One of the Best Public
Retirement Plans in the Country
Arizona State Retirement System
Dear Member:
You are now one of more than 300,000 active, inactive and retired members of the Arizona
State Retirement System (ASRS). This Member Handbook summarizes your benefits, rights
and obligations under the ASRS. We hope that you will share this information with your family
and find it helpful in your retirement planning.
We at the ASRS are proud of the performance of your retirement fund. In fact, we make the
bold statement on the cover that the ASRS is one of the best public retirement plans in the
country. The facts support the claim. The ASRS consistently places among the top perform-ers
in investment returns, and the financial condition of the retirement fund is one of the healthi-est
in the country. Finally, the ASRS contribution rates remain among the lowest in the coun-try.
We think the combination of investment performance, high level of benefits and low con-tribution
rates cannot be matched.
The ASRS will continue to improve services to our membership. This handbook is an ex-ample
of our efforts and will be revised as necessary.
In addition to the handbook, there is a separate Long-Term Disability (LTD) booklet that ex-plains
the LTD program in depth; see your employer for a copy. The ASRS also sends quar-terly
newsletters with updated information to active and retired ASRS members at their home
addresses.
If you need further assistance, call (602) 240-2000 in metro Phoenix, (520) 239-3100 in metro
Tucson or toll-free at 1 (800) 621-3778 outside metro Phoenix and Tucson.
You can also write to: Arizona State Retirement System
P.O. Box 33910
Phoenix, AZ 85067-3910
Sincerely,
LeRoy Gilbertson
Director
WELCOME TO THE ARIZONA STATE RETIREMENT SYSTEM
www.asrs.state.az.us
Introduction 1
Brief History 1
Purpose of the ASRS 1
What does the ASRS mean to me? 2
What kind of retirement plan is the ASRS? 2
ASRS Administration 2
How is the ASRS administered? 2
Who currently administers the ASRS? 2
Membership and Contributions 3
Am I required to be a member of the ASRS? 3
What are the criteria that need to be met to become a member? 3
When would I not be required to contribute to the ASRS, even though
I am working for an ASRS employer? 3
How do I enroll in the ASRS? 3
What is vesting? 3
When do I become vested in the benefits of the ASRS? 4
Can I contribute additional amounts to my retirement account? 4
Who pays for my benefits? 4
Can I Work for an ASRS Employer After Retirement? 4
When may a retired member return to employment? 4
Invalid retirement 5
Valid retirement 5
Rehired annuitant status 6
What Are My Responsibilities as a Member? 7
How do I change my address? 7
How do I change my name? 7
How do I change my beneficiary? 7
Where should I send changes to my information? 7
How do I notify the ASRS of a change or correction to my
Social Security number? 8
What Benefits are Offered to Me by the ASRS? 8
Disability 8
What if I become disabled? 8
When would I be considered totally disabled? 8
Who is eligible for a benefit under the LTD program? 8
How much will I receive from my LTD benefit? 9
Is there a minimum to my LTD benefit? 9
When do my LTD payments begin? 9
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Table of Contents
When do my LTD payments end? 9
How is my date of disability determined? 9
Do I receive credited service during the long-term disability period? 9
Is there a short-term disability program? 10
Survivor Benefits 10
What if I die before I retire? 10
What if my beneficiary dies while I am an active member? 10
What if I die after I retire (after my benefit begins)? 10
What if my beneficiary dies after I retire? 10
What if I die without naming a beneficiary? 10
How do I change my beneficiary? 11
How Can I Get Information About My Future Retirement Benefits? 11
Retirement Benefit Calculation 11
How is my benefit determined? 11
Is the 60-month average to my advantage? 12
Is there a minimum retirement benefit? 12
Are there limits on the amount of compensation used for retirement? 12
Is there a limit to how much I can receive in pension benefits? 12
Are there post-retirement increases to my retirement benefit? 13
How Can I Maximize My Retirement Benefit? 13
What is Credited Service? 13
Do I receive credited service on a contract basis? 14
I am a temporary legislative employee, do I get service credit? 14
Is my account subject to assignment, attachment and garnishment? 14
Do I receive service credit for Active Duty Military Call-up? 14
Do I receive credited service for overtime? 14
Can I obtain credited service for leave of absence with pay? 14
Can I obtain credited service for unpaid leave of absence? 14
Can I buy credited service for time I spent in the military? 14
Can I buy credited service for other public employment? 15
Can I buy previously forfeited ASRS credited service? 15
Can I transfer service between state retirement systems? 15
How can I make payment for my service purchase? 15
How is paying for my service purchase through a payroll
deduction agreement beneficial to me? 16
How is a rollover beneficial to me? 16
What type of information do I need to provide to the ASRS? 16
Retirement 16
When may I retire? 16
How do I apply for my retirement benefit? 18
Retirement timeline 18
When does my retirement benefit start? 19
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What are the different ways my retirement benefit may be paid? 19
What retirement option is best for me? 20
Partial Lump Sum distribution 21
What else should I consider before making my decision? 21
When will I receive payment of my benefit? 22
Can I have my monthly benefit sent directly to my bank? 22
Level Income Provision 22
Social Security Benefits 23
Health Insurance 23
If I have a pre-existing condition, am I eligible for
health insurance? 23
What is open enrollment? 24
What is a qualifying event? 24
When should I apply for coverage? 24
My current coverage will continue to be provided by
my participating employer and I do not want to change.
What do I need to do? 24
What will happen if I don’t submit my Enrollment Form
when I retire? 24
Does the ASRS provide assistance with health insurance
premiums? 24
Am I eligible for the health insurance premium benefit? 24
Monthly Pension Deductions & Taxes 25
Is my retirement benefit subject to federal and state taxes? 25
How do I report my taxes? 25
What other deductions may be taken out of my
retirement benefit? 26
In the Event of a Divorce 26
Is my account or retirement benefit subject to assignment
if I divorce? 26
Leaving Employment Before Retirement 26
What are my options if I leave my current employment? 26
What does the ASRS consider “separated”? 26
What happens if I leave my contributions on account with
the ASRS? 27
Can I continue contributing to my account after I leave
employment? 27
How do I apply for a refund? 27
Have I met eligibility for a refund of my employer
contributions? 27
How is the refund of my employer contributions determined? 27
Are federal and state taxes withheld from my refund of
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contributions? 27
Are there any other tax consequences for obtaining
a refund? 27
When will I receive the refund? 28
What if I want to rollover my account to another
qualified plan? 28
Do I lose my rights under the ASRS if I receive a refund
or rollover? 28
Are There Other Services Available to Me Through the ASRS? 28
Can I borrow from my retirement account for emergency
purposes? 28
Appeal Rights 29
If my claim for a benefit is denied, how do I file an appeal? 29
General 29
Can I lose any of my benefits from the ASRS? 29
Can I get back any benefits if I lose them? 29
How can I obtain information about the financial
condition of the ASRS? 29
How can I get information about my future retirement
benefits? 29
Is my account subject to assignment, attachment or
garnishment? 30
How do I change my address? 30
How do I change my name? 30
How do I change my beneficiary? 30
Where should I send changes to my information? 30
How do I change or correct my Social Security number? 30
The ASRS Supplemental Retirement Savings Plan 30
Modified Deferred Retirement Option Plan (DROP) 31
Appendix A-Recommended Retirement Planning Checklist 32
Appendix B-Credited Service Cost Calculation 33
Appendix C-Average Monthly Compensation Formula 34
Appendix D-Normal Retirement Benefit Formula 35
Appendix E-Early Retirement Benefit Formula & Percentage Chart 36
Appendix F-Level Income Alternative 37
Appendix G-Internal Revenue Service Safe Harbor Rule 38
Appendix H-Health Insurance Premium Benefit Supplement Chart 39
Glossary 40
www.asrs.state.az.us
www.asrs.state.az.us
FREQUENTLY DIALED NUMBERS
Phoenix ASRS Office 602-240-2000
Tucson ASRS Office 520-239-3100
Toll -Free outside Phoenix & Tucson 800-621-3778
VPA, Inc. (LTD Administrator) 800-495-9301
Medicare 800-633-4227
Social Security 800-772-1213
Health Insurance Carriers
PacifiCare 800-245-4347
Fortis Dental Indemnity 800-866-5020
Fortis Dental Pre-Paid 800-443-2995
ASRS Americans with Disabilities Act (ADA) Coordinator
Phoenix 602-240-2072
Tucson 520-239-3100 ext. 2072
Toll-Free outside Phoenix & Tucson 800-621-3778 ext. 2072
Helpful Web sites
ASRS Web site www.asrs.state.az.us
State of Arizona www.az.gov
Arizona Legislature www.azleg.state.az.us
Social Security Online www.ssa.gov
Internal Revenue Service www.irs.gov
TIAA-CREF www.tiaa-cref.com
Medicare www.medicare.gov
BRIEF HISTORY
In 1912, Arizona’s first year of statehood, the first teacher retired with an Arizona State teacher’s pension.
From 1912 until 1943, Arizona teachers were granted pensions by the State Legislature if they had at least 30
years of service in Arizona schools and were 65 years of age or older. All teachers’ pensions were $50 per
month; there were no member deposits or survivor benefits.
The legislature created the Teachers’ Retirement System, effective July 1, 1943. All certified, full-time teachers
were members, contributing to the retirement plan with a fixed benefit formula.
In 1953, the ASRS was created to provide retirement and other benefits for state employees, including univer-sity
faculty and employees of the state’s political subdivisions that signed a membership contract. Active
teachers voted to join the ASRS in 1954, and transferred to the ASRS on January 1, 1955. The Teachers’
Retirement System continued to pay retirement benefits to retired teacher members who were ineligible to join
the ASRS.
In 1970, the legislature agreed to enact the current Arizona State Retirement System Fixed Benefit Plan if 70
percent or more of state employees and teachers voted to transfer to the new plan. More than 80 percent of
eligible members voted for the new plan, which became effective July 1, 1971. Most political subdivisions
subsequently voted to join. The ASRS now encompasses the state, including the 3 state universities, all 10
community colleges, 14 out of 15 counties (all except La Paz), most cities and towns, most school districts
and other political subdivisions.
PURPOSE OF THE ASRS
Employers participate in the ASRS to attract and retain qualified employees. The retirement plan contributes
toward providing a total compensation package that is comparable to employment in other public and private
organizations in the state.
INTRODUCTION
This Member Handbook is a plan description to provide you with information about the Arizona State Retire-ment
System benefit program. The material contained in this handbook is based on 2002 rules and statutes.
New legislation and interpretive changes may modify it. We recommend you read over the table of contents in
order to familiarize yourself with the handbook’s layout and contents.
The law governing ASRS operations is contained in Title 38, Chapter 5, Articles 2 and 2.1 of the Arizona
Revised Statutes. The ASRS is also controlled in many technical respects by rules adopted by the ASRS
Board. These rules are published by the Secretary of State in the official compilation of administrative rules.
Information in this publication is only a guide. If a conflict arises between this handbook and the law, THE LAW
TAKES PRECEDENCE.
This handbook is available in an alternate format upon request. Contact the Human Resources/ADA Coordina-tor,
at (602) 240-2072 in metro Phoenix, (520) 239-3100 extension 2072 in metro Tucson or 1 (800) 621-3778
extension 2072 outside metro Phoenix and Tucson.
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What does the ASRS mean to me?
Your membership in the ASRS will provide you with a life-long pension upon retirement. However, the
benefit provided is not intended to fully meet your income needs after retirement. Although you also may
receive Social Security, you are encouraged to supplement your retirement benefit with personal savings, the
ASRS defined contribution plan, deferred compensation or a tax-sheltered annuity provided through your em-ployer.
What kind of retirement plan is the ASRS?
q Cost sharing - Both the employee and the employer contribute to the member’s retirement at an equal
percentage of pay.
q Public employee - Only employees of the state and its political subdivisions, including public schools,
may be members. Employees of private employers are not eligible for ASRS membership.
q Multiple employer - More than 600 employers are members of the ASRS, including the state, most
Arizona counties and local governments, public school districts, state universities and colleges, and other
political subdivisions.
q Tax qualified - The ASRS is tax qualified under section 401(a) of the Internal Revenue Code. Member
contributions to the ASRS are exempt from federal income tax withholding under section 401(h) of the
Code. Tax on benefits and contributions is deferred until payment is made to the member as a benefit or
refund.
q A defined benefit plan - The ASRS provides a fixed monthly benefit upon retirement, determined by a
formula. The benefit formula is the employee’s length of service (credited service) under the ASRS multi-plied
by a percentage of the average monthly amount of earnings (compensation).
Defined Benefit = Total Credited Service X Multiplier* X Average Monthly Compensation
ASRS ADMINISTRATION
How is the ASRS Administered?
The ASRS is administered in accordance with Title 38, Chapter 5 of the Arizona Revised Statutes. A nine-member
board, appointed for three-year terms by the Governor and confirmed by the Senate, administers the
ASRS. The ASRS Board is made up of one educator, one political subdivision member, one state employee
member, one retired member, one member-at-large and four non-ASRS members to represent the public.
Board members must have five or more years of administrative management experience.
Four of the board members shall have a least ten years substantial experience as any one or a combination of
the following:
q A portfolio manager acting in a fiduciary capacity
q A securities analyst
q An employee or principal of a trust institution, investment organization or endowment fund acting either in
a management or an investment related capacity
q A chartered financial analyst in good standing
q A professor at the university level teaching economics or investment related subjects
q An economist
q Any other professional engaged in the field of public or private finances
Who currently administers the ASRS?
ASRS Retirement Board
Mr. Jim Bruner, Public
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MEMBERSHIP AND CONTRIBUTIONS
Am I required to be a member of the ASRS?
Yes, if you meet the membership criteria, membership is mandatory.
What are the criteria that need to be met to become a member?
You become a member and start making contributions to the ASRS if:
q You work for an ASRS employer for 20 or more hours per week for 20 or more weeks in a fiscal year, and
q You contribute to Social Security.
When would I not be required to contribute to the ASRS, even though I am working
for an ASRS employer?
You do not become a member and cannot make contributions to the ASRS under the following conditions:
q You work for an ASRS employer for 20 or more hours per week for less than 20 weeks in a fiscal year.
q You work for an ASRS employer for less than 20 hours per week for the entire fiscal year.
q You work for an ASRS employer for 20 or more hours per week for up to 19 weeks and less than 20 hours
per week for the remainder of the fiscal year.
q You work for a maximum of six months at the legislature.
q You do not contribute to Social Security.
q If you have been a covered member and then your work schedule is reduced to less than 20 hours a week,
you no longer can contribute to the ASRS. However, you cannot receive a refund of your account balance
until you leave employment.
How do I enroll in the ASRS?
All new employees who qualify for ASRS membership must complete an Enrollment Form, which is obtained
from your employer. If you leave one ASRS employer and go to another, you must complete a new Enrollment
Form.
What is vesting?
Vesting is the right to receive a retirement benefit.
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Mr. Norman Miller, Public
Ms. Charlotte Borcher, Retirees
Dr. Chuck Essigs, Educators
Mr. Alan Maguire, Member-At-Large
Ms. Bonnie Gonzalez, State Employees
Mr. Karl Polen, Public
Mr. Ray Rottas, Public
Mr. N. Carl Tenney, Political Subdivisions
Administration
Mr. LeRoy “Gil” Gilbertson, Director
Mr. Anthony Guarino, Chief Operations Officer, Deputy Director Internal Operations
Mr. Paul Matson, Chief Investment Officer
Mr. Richard Stephenson, Deputy Director External Operations
A list of current ASRS Board members and administrators is also provided in each issue of Financial Horizons,
the quarterly member newsletter.
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When do I become vested in the benefits of the ASRS?
You become vested in the ASRS on the day you start contributing. When and how much you receive for your
benefits depend on the policies of the ASRS.
Can I contribute additional amounts to my retirement account?
No. ASRS rules do not permit voluntary contributions except for credited service purchases. Additional contri-butions
would not affect your retirement benefit because the ASRS is a defined benefit plan; your benefit is
based on your credited service and salary history, not the amount of contributions. The dollar amount in your
account does not affect your retirement benefit.
Who pays for my benefits?
Employee and employer contributions fund your future benefits. The contribution rate is determined each year
by a study of the fund conducted by the ASRS actuary to assure that the ASRS receives enough contributions
to pay future benefits. Your personal contributions fund only a relatively small part of your benefit. When you
retire, you will recover your own contributions within approximately 3-1/2 years of the start of your benefit
payments. Employer contributions and earnings on the investment of ASRS Assets fund the remainder of your
retirement benefit payments. Separate contributions fund the long-term disability (LTD) program, discussed
later in this handbook.
CAN I WORK FOR AN ASRS EMPLOYER AFTER RETIREMENT?
Under federal and state law, employment after retirement by a retired ASRS member is subject to the same 20
week/20 hour membership qualification test that applies to any new employee. The result of returning to work
in a status that meets ASRS membership qualification is the loss of retirement benefits while the retired
member remains in active membership status. Employment that does not meet the 20 week/20 hour test does
not affect entitlement to ASRS retirement benefits.
When May a Retired Member Return to Employment?
Arizona statutes and federal age discrimination laws require the ASRS to treat rehired annuitants under the
same membership rules as any new employee. The membership status of a retired member returning to work
with an ASRS employer shall be determined according to the same criteria applied to any employee of the
employer. There are several definitions that are important in applying the correct standards to members who
return to work after retirement.
Rehired Annuitants: A retired ASRS member who continues or returns to covered employment with any
ASRS employer.
Normal Retirement: Member retires at age 65, at age 62 with at least 10 years of service credit or at 80
points.
Early Retirement: Retiring before eligibility for normal retirement and receiving a reduced benefit.
Rehired annuitants who begin to receive retirement benefits at normal retirement or later, may continue
employment or return to employment with an ASRS employer under the following circumstances:
1. The member may work less than 20 hours per week for any length of time and remain eligible to continue to
receive pension benefits.
2. The member may work 20 hours or more per week for 19 weeks in any fiscal year, and, starting the 20th
week, may work no more than 19.5 hours per week for the remainder of that fiscal year and remain eligible to
continue to receive pension benefits.
If the member continues working 20 hours or more per week, the member will resume active membership, the
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ASRS will suspend the member’s pension benefit and the member’s employer will withhold retirement contri-butions
from the member’s pay. The member will have to repay the ASRS for any pension payments and health
insurance premium benefit payments they received while working 20 or more hours per week starting with the
20th week.
3. A member who has been retired for 12 months (not meeting conditions for ASRS active membership) may
return to work or continue to work any amount of time and continue to receive pension benefits. Such members
must acknowledge the conditions of their work and notify the ASRS and their employer in writing of their intent
to work and not have retirement contributions withheld from their pay and not to accrue additional credited
service or LTD benefits.
4. At any time, rehired annuitants can suspend their retirement benefit and resume active member status.
While the member remains in active status, the member will earn additional credited service and can re-retire
with a higher benefit.
Rehired annuitants who have elected to receive retirement benefits before normal retirement (with a reduced
benefit at early retirement) must have terminated employment and may return to employment with an ASRS
employer no earlier than 60 calendar days after the date of termination of employment. The termination
must have been a severance of any employment relationship with all ASRS employers. A member retired at
early retirement who returns to work with any ASRS employer before the expiration of 60 days following the
date of termination shall be deemed not to have terminated employment and not eligible to receive pension
benefits. Such members shall be required to repay any pension benefit received, regardless of the number of
hours and length of the new employment.
Early retirement members may return to work under the following circumstances:
1. The member may work less than 20 hours per week for any length of time and remain eligible to continue to
receive pension benefits.
2. The member may work 20 hours or more per week for 19 weeks in any fiscal year, and, starting the 20th
week, may work no more than 19.5 hours per week for the remainder of that fiscal year and remain eligible to
continue to receive pension benefits.
If the member continues working 20 hours or more per week, the member will resume active membership, the
ASRS will suspend the member’s pension benefit and the member’s employer will withhold retirement contri-butions
from the member’s pay. The member will have to repay the ASRS for any pension payments and health
insurance premium benefit payments they received while working 20 or more hours per week starting with the
20th week.
3. A member who has been retired for 12 months (not meeting conditions for ASRS active membership), upon
reaching normal retirement, may return to work any amount of time and continue to receive pension benefits.
Such a member must acknowledge the conditions of their work and notify the ASRS and their employer in
writing of their intent to work and not have retirement contributions withheld from their pay and not to accrue
additional credited service or LTD benefits.
4. At any time, rehired annuitants can suspend their retirement benefit and resume active member status.
While the member remains in active status, the member will earn additional credited service and can re-retire
with a higher benefit.
Invalid Retirement
Early retirement age: If the ASRS identifies that a rehired annuitant who retired before attaining normal retire-ment
age has returned to any employment with any ASRS employer within 60 calendar days of the “termina-tion”
of employment, the ASRS will immediately void the member’s pension status and take action to collect
any benefits paid to the member during the invalid period of retirement.
Valid Retirement
Active member status:
1. If a rehired annuitant is engaged to work 20 or more hours per week for at least 20 weeks in a fiscal
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year, the rehired annuitant resumes active membership.
2. The rehired annuitant must advise the ASRS that he/she has returned to active membership.
3. Upon identification of resumption of active member status, the ASRS immediately will suspend the
rehired annuitant’s benefit effective the month following the last month the rehired annuitant is entitled
to ASRS pension benefits. The ASRS will act to collect any benefits paid to the rehired annuitant after
the loss of benefit entitlement.
4. The rehired annuitant resumes retirement when the member again ends employment and provides
notice to the ASRS, effective the day following termination of employment.
5. The benefit of the former retired member who resumes retirement status is recalculated:
r The new benefit will be in the same payment option form as the original benefit, with the exception that a
retired member who originally had chosen a joint and survivor benefit option may elect to rescind that option
reverting to a straight life annuity or name a new beneficiary. If the member chooses a new beneficiary, the new
benefit will be computed based on the age of the new contingent annuitant.
r The recomputed benefit will be adjusted to include:
a. The additional service credited from the post-retirement covered service
b. A recomputation of the final average compensation, taking into consideration compensation paid
during the post retirement service
c. Determination of normal retirement status or an early retirement reduction based on the member’s
attained age on the date resuming active status
r If the retired member’s original retirement occurred during a window period providing an increased retirement
benefit, the new benefit shall be computed according to the existing provisions of law, without regard to the
provisions of the window period.
Rehired Annuitant Status
1. If a rehired annuitant returns to work with any ASRS employer after retirement, and is engaged to work for a
period that does not meet ASRS active membership criteria, the rehired annuitant is entitled to continue to
receive ASRS pension benefits.
2. A rehired annuitant does not resume active member status and avoids suspension of benefits when returning
to work under the following circumstances:
a. Under 20 hours per week
b. Up to 19 weeks at 20 or more hours a week
c. Up to 19 weeks at 20 or more hours a week and under 20 hours for the remainder of the year.
If the circumstances of the employment are changed to an extent that the employment meets the ASRS
membership criteria, the rehired annuitant resumes active membership and the rehired annuitant’s benefit
must be suspended as provided in the active member status from the previous page. If a rehired annuitant did
not intend to resume active membership but unknowingly engages in activities that result in resumption of
active membership, the member may be allowed a one time option to give up the service credit, receive their
contributions back and keep their pension payments OR retain the service credit and have the pension recal-culated
upon resumption of retirement by reimbursing the ASRS for the pension paid while in active status.
a. receive credit for service for the first 6 months of employment and establish membership in the
ASRS as of the beginning of the current term of employment if both the employer and the employee
contribute to the ASRS, within 45 days after the first 6 months of employment, the amount that would
have been required to be contributed to the ASRS during the first 6 months of employment as if the
employee had been a member of the ASRS during those 6 months.
b. establish membership in the ASRS as of the day following the completion of six months of employ
ment.
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4. A.R.S. § 38-764(J) authorizes a member who attains a normal retirement date to retire at any time without
terminating employment if the member is employed for less than the hours required for active membership in
the ASRS.
Chapter 327 does not authorize an active participant in a Board of Regents optional retirement program to retire
under the ASRS while continuing to work and actively participate in an optional retirement program.
A.R.S. § 38-764(J) does not authorize a member of the ASRS who has attained a normal retirement date to
receive retirement benefits from the ASRS while continuing to work the number of hours that require active
membership in the ASRS.
A member’s election to participate in an optional retirement program in a position that, in the absence of the
member’s election to participate in the optional program, is covered by the ASRS does not obviate the require-ments
of the ASRS respecting eligibility to receive ASRS benefits. The fact that a member may have elected
to participate in an optional retirement program rather than to continue to accrue credited service in the ASRS
is not relevant to the member’s eligibility to receive retirement benefits from the ASRS. The relevant inquiry is
whether the member meets the requirements of the ASRS to receive retirement benefits. IF the member is
continuing to work full-time, he/she is not eligible to receive ASRS retirement benefits.
WHAT ARE MY RESPONSIBILITIES AS A MEMBER?
You should carefully review your annual benefit statement. The statement is distributed in the fall of each year.
Take special care to verify your credited service and your beneficiary designation.
It is crucial that you keep the ASRS informed of any changes to your name, address or beneficiary.
How do I change my address?
You may obtain a “Change of Address” form from your employer’s personnel office. If you have Internet access,
you may download this form from the “Electronic Library” on the ASRS Web site (www.asrs.state.az.us) or
request the form via e-mail at our Web site. Complete the form and return it to the Phoenix office. You are also
responsible for informing your employer of any changes.
How do I change my name?
You may obtain an ASRS “Change of Name” form from your employer’s personnel office. If you have Internet
access, you may download this form from the “Electronic Library” on the ASRS Web site (www.asrs.state.az.us)
or request the form via e-mail at our Web site. Complete the form and return it to the Phoenix office. You are
also responsible for informing your employer of any changes.
How do I change my beneficiary?
You may obtain an ASRS “Change of Beneficiary” form from your employer’s personnel office. If you have
Internet access, you may download this form from the “Electronic Library” on the ASRS Web site
(www.asrs.state.az.us) or request the form via e-mail at our Web site. Complete the form and return it to the
Phoenix office.
Where should I send changes to my information?
All changes to my information should be forwarded to the ASRS Phoenix office at:
Arizona State Retirement System
Attn: Records Management
PO Box 33910
Phoenix, AZ 85067-3910
Reviewing your annual statement
Advising the ASRS of personal changes
How do I notify the ASRS of a change or correction to my Social Security number?
You must contact the ASRS in writing, providing documentation of your new or correct Social Security number
(SSN). Acceptable documentation includes a copy of your Social Security card or correspondence from the
Social Security Administration, showing your correct SSN. You also should verify that your employer is
reporting your contributions by the correct SSN. Forward this documentation to the ASRS Membership Ac-counting
Division at the above address.
WHAT BENEFITS ARE OFFERED TO ME BY THE ASRS?
Long-term disability (LTD) program provides benefits to you as an active ASRS member in case you
become disabled before retirement. There is a six-month waiting period, and the LTD administrator must
approve the disability claim before you receive disability compensation.
Survivor Benefits are payable upon your death whether you are an active or retired member. As a retired
member, the benefits paid to your survivor are determined by the retirement option chosen. As an active
member, your beneficiary is entitled to your account balance TIMES two. Your survivor is also entitled to health
insurance benefits whether you are an active or retired member.
Retirement benefits are available to you in a reduced amount as early as age 50 with five or more years of
credited service. You may retire before age 50 if you have at least 80 points (age plus credited service).
Group health insurance coverage is available to you as a retired or disabled ASRS member if you do not
select your former ASRS employer’s group health insurance plan.
Health insurance premium benefits help you cover the cost of health insurance premiums as a retired or
disabled ASRS member if you have five or more years of credited service. You must be insured through the
ASRS or an ASRS employer’s group health insurance program.
DISABILITY
What if I become disabled?
The ASRS administers a long-term disability (LTD) program funded by separate employee and employer con-tributions
to the LTD trust fund. The LTD program is designed to partially replace your income lost during
periods of total disability resulting from injury or sickness. Our contract administrator makes all decisions
concerning your LTD claim. There is an appeal process available to you should you disagree with a decision
made by the LTD administration.
When would I be considered totally disabled?
You are considered totally disabled if you are under the care of a licensed physician and are unable to perform
some of the essential duties of the job you held when you became disabled. This definition applies to you
during the first 24 months of a disability after the six-month waiting period.
After receiving disability benefits for 24 continuous months, you are considered totally disabled if you are
unable to perform any work for compensation for which you are reasonably qualified by education, training or
experience.
Who is eligible for a benefit under the LTD program?
All active members of the ASRS are covered by the LTD program and are eligible to apply for the benefit.
However, members who were disabled before July 1, 1988, are not eligible for a benefit under the long-term
disability program.
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NOTE: If you receive a refund, you waive any future rights to ASRS membership benefits, including eligibility for
long-term disability. If you are receiving LTD benefits and request a refund, the ASRS will stop your LTD
payments. A cancellation letter of LTD benefits must be on file with the ASRS before your refund application will
be processed.
How much will I receive from my LTD benefit?
Your LTD benefit will pay 66-2/3 percent of your monthly earnings as of the date the disability begins. Monthly
earnings are determined under the definition of “compensation” in statute. Compensation means the gross
amount paid to a member by an employer for services rendered.
If you work for an ASRS employer and are paid on a less than 12-month schedule, (for example, a school
teacher), your monthly earnings will be one-twelfth (1/12) of the annual compensation on the date disability
begins.
Your LTD benefit may be reduced if you are receiving other payments such as Social Security Disability,
Workers Compensation or other payments, while disabled.
Is there a minimum to my LTD benefit?
If your LTD application is approved, you will receive a minimum monthly payment of $50, no matter how much
income you receive from other sources.
When do my LTD payments begin?
You must have been totally disabled for six consecutive months before payments begin. After you have
submitted all properly completed forms and the application, and after the LTD administrator approves your LTD
claim, you will be issued a check which will pay you up-to-current on your LTD benefits. Thereafter, LTD
benefits will be paid to you monthly on a schedule based on your date of disability.
If you have been disabled for longer than six months, but have not completed the necessary paperwork within
this time, you still may file for long-term disability. Payments may be retroactive depending on the date you
became disabled.
When do my LTD payments end?
Long-term disability payments end at the earliest of the following:
q The date you are no longer totally disabled.
q The date you are no longer under the direct care of a licensed physician or refuse to undergo any medical
exam requested by the LTD administrator.
q The date you withdraw contributions (refund) and are no longer a member of the ASRS.
q Upon your earliest normal retirement date, however, payments will continue through a specified number of
payments, depending on your age when you became disabled.
You cannot receive LTD benefits and retirement benefits at the same time. In most cases, once you
become eligible for benefits at normal retirement, the LTD benefits will stop. Also, you cannot apply for
disability benefits if you already are receiving retirement benefits.
How is my date of disability determined?
Your date of disability is determined by your physician and is usually the last day that you worked.
Do I receive credited service during the long-term disability period?
When receiving LTD benefits, you will continue to accrue credited service during the disability period until you
reach a total of 30 years of credited service or until the LTD benefits end, whichever occurs first.
Example: Susan Doe is 40 years old with 20 years of credited service when she becomes disabled. She is
eligible to receive LTD benefits until she reaches her first normal retirement date. Because Susan already has
20 years of credited service, she can earn only 10 more years of credit under ASRS rules while receiving LTD
benefits. (The maximum allowable for LTD is 30 years of credited service.) Under the points system, a
member with 30 years of credited service reaches normal retirement at age 50 (30 + 50 = 80). Therefore if she
www.asrs.state.az.us
SURVIVOR BENEFITS
The death of a member should be reported to the ASRS and the death certificate provided as soon as possible
after your death. The ASRS will forward information regarding payment options to your beneficiary (ies) on file
with the ASRS. If your beneficiary is a minor or benefits are payable to an estate or trust, legal documentation
appointing the guardian, representative or conservator must be provided to the ASRS. Benefits will be paid
under the name and Social Security number of the beneficiary (ies).
What if I die before I retire?
If you die before becoming eligible for a retirement benefit, your beneficiary will receive a survivor benefit that is
two times your account balance and accumulated interest plus payments made for service purchase. The
benefit may be paid as follows:
q If the survivor benefit is less than $5,000, the ASRS will pay the benefit in a lump sum.
q If the survivor benefit is $5,000 or more, the beneficiary may elect a one-time lump-sum payment or a
monthly annuity.
q If you are eligible for retirement or have 15 years of service when you die, your spouse or minor or handi-capped
child is eligible for a monthly annuity.
What if my beneficiary dies while I am an active member?
If you are an active member and your beneficiary dies, you may name a new beneficiary on a form provided by
the ASRS.
What if I die after I retire (after my benefit begins)?
If you die after you retire, any benefit remaining will be distributed according to the retirement option you chose.
Payments cannot continue under the deceased member’s name and Social Security number. If payment
continues, it will be paid to your named beneficiary.
What if my beneficiary dies after I retire?
You may name a new beneficiary. If you elect a Joint & Survivor option and your beneficiary dies before you,
please contact our office as soon as possible so we may either recalculate your benefits with a newly named
beneficiary or change your retirement option to the Life Annuity option.
What if I die without naming a beneficiary?
Your survivor benefit will be paid according to the laws of the state. This may not be what you would want. Be
sure to advise the ASRS of any changes to your beneficiary designation.
remains disabled, Susan will continue to receive LTD benefits for 10 years to age 50, her earliest normal
retirement date.
Is there a short-term disability program?
No, the ASRS does not have a short-time disability program. However, many ASRS employers do offer this
benefit to their employees. Private insurance companies also have short-term disability programs. You may
receive short-term disability payments during the six-month LTD waiting period. If you receive short-term
disability from an ASRS employer at the same time you receive LTD benefits from the ASRS, the LTD payment
is reduced by the amount of the short-term disability benefit.
Contact your employer for a copy of the Long-Term Disability Income Plan booklet.
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HOW CAN I GET INFORMATION ABOUT MY FUTURE RETIREMENT
BENEFITS?
Each year, the ASRS will mail you an annual statement of your personal retirement benefits. Your statement
contains important information about your retirement account, including an estimate of your future benefits at
different retirement dates.
The ASRS conducts pre-retirement seminars for members who are one to five years from retiring in various
locations around the state. As you approach retirement you will want to attend one of these seminars. These
seminars cover the essentials for planning your retirement, including service purchase, details on health insur-ance
coverage and other retirement benefits. In addition, the Member Services Division offers group meetings
for members who are one year away from retiring. These group meetings provide an estimate of your potential
monthly benefits, review of your retirement options and information on completing your retirement packet.
Contact the ASRS offices for an appointment.
Though the annual statement provides benefit estimates at your various normal retirement dates, you should
request a detailed estimate about one year before your planned retirement.
Financial Horizons, the ASRS quarterly newsletter, is sent to all active, inactive and retired members to inform
them of ASRS issues, such as legislative changes, health insurance open enrollment and other items of
interest. Employer Update is the newsletter sent periodically to ASRS employers to keep them aware of
issues that affect both the employees and the employers.
To receive any of the above publications, call the ASRS at 602-240-2048 in metro Phoenix, 520-239-3109 in
metro Tucson or 1-800-621-3778 extension 2048 outside metro Phoenix and Tucson.
RETIREMENT BENEFIT CALCULATION
How is my benefit determined?
As a defined benefit retirement plan, the ASRS pays your retirement based on a set formula:
Defined Benefit = Total Credited Service X Multiplier* X Average Monthly Compensation
*The graded multiplier factor is a percentage set by statute. It is based on your total years of service at
retirement. The following is the current effective schedule will provide you with your factor.
0.00 to 19.99 years of service 2.10% .0210
20.0 to 24.99 years of service 2.15% .0215
25.0 to 29.99 years of service 2.20% .0220
30.0 or more years of service 2.30% .0230
Total credited service is the period of your employment during which you are a member making the required
contributions to the ASRS plus any service purchase credited to your account.
Your average compensation is determined by dividing the 36 consecutive months of your highest earnings
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How do I change my beneficiary?
You may obtain a “Change of Beneficiary” form from your employer’s personnel or benefits office. Complete the
form and return it to the ASRS Phoenix office.
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within the last 10 years of service by 36. (For members on a contract for at least 9 months, the contract period
counts as 12 months for averaging compensation.) Lump-sum payments for vacation or sick leave, compensa-tory
time or any other pay that you receive when you leave employment are NOT considered compensation.
For members who began contributing before January 1, 1984
If your membership began before January 1, 1984, you may choose to have your compensation for the highest
60-months earnings during the last 120 months of contributing membership service. Members who began
contributing before January 1, 1984, automatically receive the 36-month or the 60-month calculation, whichever
provides the larger benefit amount.
Payments for work-related expenses, such as automobile and clothing allowances, are not considered com-pensation
for retirement purposes under either method.
Is the 60-month average to my advantage?
The advantage of the 60-month method is that lump-sum payments when you leave your job are included in
your compensation for retirement. These payments must be a part of the 60-consecutive month period. Lump-sum
payments include payoffs of accrued vacation and sick leave. The 60-month average, with the lump-sum
termination payments included, provides a better benefit only when the lump-sum payments are large enough
to overcome the use of two additional years (24 months) of lower salaries in determining your average compen-sation.
State and county employees may not use sick leave in the 60-month calculation.
Sample Amounts Your Amounts
Total Credited Service 24.5 years ___________
X Multiplier .0215 ___________
X Average Monthly Compensation = $3000.00 ___________
Monthly Pension Benefit $1580.25 ___________
Is there a minimum retirement benefit?
Yes. Though your benefit is determined by the above formula, retired ASRS members who are age 75 or older
and who have 20 or more years of credited service are entitled to a minimum benefit of $600 per month.
Beneficiaries at least 75 years old who receive a benefit for a deceased retired ASRS member who had 20 or
more years of service are entitled to a minimum of $600, reduced according to the option chosen at
retirement.
Are there limits on the amount of compensation used for retirement?
Yes. The Internal Revenue Code (IRC) and Arizona Revised Statutes limit the total amount of annual compen-sation
that may count for your retirement. If you became a member on or after July 1, 1996, the maximum
reportable compensation is $200,000. If you became an ASRS member before July 1, 1996, you are subject to
a maximum of $235,840 a year. The IRC limit is indexed, that is, the limit will increase based on changes in the
Consumer Price Index (CPI). The ASRS will advise you and your employer when the maximum amount is
increased. Your employer should not withhold contributions on amounts paid over the maximums.
Is there a limit to how much I can receive in pension benefits?
Yes. If your original enrollment in the ASRS is on or after August 9, 2001, then your pension benefits cannot
exceed 80% of the average monthly salary used to calculate your pension benefits.
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WHAT IS CREDITED SERVICE?
Credited service is the amount of credit toward retirement that you earn by contributing to the ASRS. You earn
credited service for each pay period for which you make the required contributions. You may earn only one
year of credited service in any one year. If two or more ASRS employers employ you at the same time, you
earn service from the longest standing employment, not both. The amount of credited service affects the
amount of the member’s retirement-the more years of service, the greater the benefit.
HOW CAN I MAXIMIZE MY RETIREMENT BENEFIT?
You can maximize your retirement benefit by considering each component of the benefit formula. The following
ideas may help:
q The most common and easiest way to increase your benefit is to work a longer period of time. The more
credited service accrued to your account, the larger your benefit.
q If you forfeited ASRS credited service for previous employment by getting a refund of your contributions,
you may want to “buy back” your credited service. You must weigh the cost of purchasing credited service
against the benefits of the additional service.
q If you had service in another public retirement plan or in the active-duty military, it may be to your advantage
to purchase ASRS credited service for this time. To purchase service, you must not be receiving or be
eligible to receive a retirement benefit for the service in any other retirement plan (except for military
retirement). As with buying forfeited credited service, you must carefully consider the cost of the purchase
against the added benefit that you would receive. You also should consider what other uses you would
have for the money or the earnings you could make on the money, if you invested it somewhere else.
q If you have service on account with another public retirement plan in Arizona, such as the Public Safety
Personnel Retirement System, the Correctional Officer Retirement Plan, the Elected Officials’ Retirement
Plan, City of Phoenix Employees Retirement System or the Tucson Supplemental Retirement System
you may want to transfer your credit from the other plan to your ASRS account.
q As your compensation increases, so does your final average compensation. Promotions and other salary
increases could result in a higher benefit amount. This is especially important for your highest, consecu-tive
3 years during your last 10 years of service.
q If you qualify for the 60-month averaging, lump-sum payments when you leave work may increase your
average, and as a result, your monthly benefit. These payments include accrued annual and sick leave
compensatory time when you leave employment. Be sure to include the anticipated amounts of such
payments when you request your benefit estimate. State and county employees may not use sick leave
in the 60-month calculation.
Are there post-retirement increases to my retirement benefit?
Yes, if the ASRS investments perform with excess earnings, a Permanent Benefit Increase (PBI) can be paid
on July 1 of each fiscal year. To be eligible, you or your beneficiary must be receiving benefits on or before July
31 of the previous calendar year. If you are a Long-term disability (LTD) participant, who was receiving LTD
benefits before July 1, 1995, you are also eligible for this benefit increase. The increase is based on the
earnings of the ASRS and is limited by the annual percentage change in the Consumer Price Index or four
percent of the total benefits of the eligible group, whichever is less.
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Do I receive credited service on a contract basis?
If you work under one or more consecutive contracts for a period of nine or more months per year you will
receive one year of credited service, provided that the full term(s) of the contract is paid. If you work for less
than the total term(s), you will receive credited service equal to the percentage of time worked within the
contract period.
I am a temporary legislative employee, do I get credited service?
If you are a temporary employee of the legislature, membership begins when you complete six months of
employment. You may elect to earn credited service for the first six months by paying to the ASRS the
employee contributions due. This election must be made within 45 days after the six-month period ends. You
may choose instead to start service at the beginning of the seventh month without having to purchase service
for the first six months.
Is my account subject to assignment, attachment and garnishment?
No, your account cannot be subject to assignment, attachment or garnishment while working as an active
employee. Court orders regarding divorce settlements and child support may be enforceable when you start
receiving your benefit or obtain a refund. Your account also may be subject to a levy by the IRS.
Do I receive service credit for an Active Duty Military Call-up?
Yes, if you are an active member you are eligible for ASRS credited service for an active duty military call-up.
You must be a member of the Arizona National Guard or the reserves and volunteer or be ordered into active
military service as part of a presidential call-up. The employer pays both the employer and employee contribu-tions
when you return to covered employment.
Do I receive credited service for overtime?
No, overtime is not used to calculate credited service. However, contributions are based on your gross com-pensation,
including any overtime payments received. These contributions may result in a higher retirement
benefit by increasing your average monthly compensation.
Can I obtain credited service for leave of absence with pay?
If you take an approved leave of absence, administrative, annual or sick leave and are paid by an ASRS
employer, you will receive credited service for that period of time as long as you are paid for 20 hours or more
per week for 20 or more weeks in a fiscal year, and the required contributions are paid to the ASRS. You can
also earn credited service for sabbatical leaves, paid on full or partial basis. Contributions at the appropriate
rate are required on amounts paid for the sabbatical leave.
Can I obtain credited service for unpaid leave of absence?
If you take an approved unpaid leave of absence, you do not receive credited service from the ASRS for that
period of time. However, you may buy up to one year of credited service for a leave of absence without pay as
long as:
q You return to work with the same employer, unless you could not return to work because you became
disabled or a position was no longer available,
q You have not withdrawn your contributions (refund) from the ASRS, and
q The employer certifies that the leave of absence was in its best interest.
You may buy the service at any time after returning to work with your ASRS employer. The cost to purchase
this type of service is equal to the amount of the employer and employee’s contributions for the period of the
absence up to one year, plus interest to the date of payment. The amount of contributions is based on the
annual salary received when the leave of absence began. For members hired after July 1, 1999, this
purchase may be limited under section 415 of the Internal Revenue Code.
Can I buy credited service for time I spent in the military?
Yes, you may buy ASRS credited service for any amount of active military duty if you were honorably dis-charged.
The cost per year of credited service is your current annual salary multiplied by the current ASRS
“normal cost” rate for employee and employer contributions. The normal cost is the total employee and
employer contribution rate, as determined by the ASRS actuary.
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How can I make payment for my service purchase?
Lump-Sum Payment - The full cost of the purchase may be made in one payment, subject to IRC section
415(c) limits. The portion of the cost that cannot be paid for in one year because of the limits may be
carried over to subsequent years.
Payroll deduction agreement - The purchase cost may be paid in installments over a period of years in
any amount.
www.asrs.state.az.us
You must provide a copy of the military service record (DD-214) or its equivalent to document your service. If
eligible, you may request the purchase of credit for military duty in writing, by calling the ASRS or by complet-ing
a service purchase request on our Web site (www.asrs.state.az.us). Include a copy of your military service
record.
Can I buy credited service for other public employment?
Yes. You may purchase credited service for any amount of service worked under another public employer in the
United States but you must not be receiving or be eligible to receive a benefit from any other retirement plan
based on the service to be purchased. The cost per year of credited service is your current annual salary
multiplied by the current ASRS “normal cost” rate for employee and employer contributions at the time you buy
the service. The normal cost is the total employee and employer contribution rate, as determined by the ASRS
actuary.
If you have “current” service in the other retirement plan, you must forfeit your retirement eligibility under that
plan (obtain a refund) before you can purchase ASRS credited service for the same employment. If you have
already received a pension distribution from the previous retirement system, you are not eligible to purchase
that service.
You must be an actively contributing ASRS member at the time you buy the service. If eligible, you may
request the service purchase on a form provided by the ASRS. You will be sent an affidavit to verify the time of
employment and to indicate if you participated in a retirement plan.
Can I buy previously forfeited ASRS credited service?
Yes. If you resume employment with an ASRS employer and currently are contributing to the ASRS, you may
reinstate previously forfeited ASRS credited service by paying an amount equal to the gross amount of the
refund (including the amount of any taxes withheld) plus interest to the date of repayment. You may make this
purchase at any time prior to retirement and may reinstate all or any portion of the forfeited credited service.
Because interest accrues on the contributions, the longer you wait the greater the cost. The cost to reinstate
credited service is not subject to Internal Revenue Code section 415(c) limits.
System members may add up to $40,000 or 100% of their annual compensation whichever is less.
Can I transfer service between state retirement systems?
Yes. If you work under one of the state retirement plans listed below, and then move to a new position under
one of the other state retirement plans, you may transfer your credited service to the new retirement plan. This
process may occur before or at the time of retirement. You must be an actively contributing member of
the plan at the time of transfer. You may transfer credited service to or from the ASRS and the following
systems:
q The Elected Officials Retirement Plan (EORP)
q The Public Safety Personnel Retirement System (PSPRS)
q The Correctional Officer Retirement Plan (CORP)
q The City of Phoenix Employees Retirement System (COPERS)
q The City of Tucson Supplemental Retirement System (TSRS)
You may be required to pay an additional amount to transfer the full amount of credited service earned, or you
may transfer a pro-rated amount of the service with no additional cost. For more information, contact the
system to which service is being transferred.
www.asrs.state.az.us
RETIREMENT
When may I retire?
When you retire is up to you. The longer you work and contribute to the ASRS, the larger your retirement
benefit will be. You may take an “early retirement” with a reduced benefit. Or, you can increase your benefit by
working past your normal retirement date, also referred to as “late retirement.” These concepts are explained
below:
Normal Retirement
Normal retirement is the earliest you may retire with a full benefit as calculated by the ASRS benefit formula. A
normal retirement date occurs under the earliest of the following situations:
q At age 65,
q At age 62 with 10 or more years of credited service,
q At any combination of years of credited service and age, totaling 80 points.
Example: If you have 31 years of credited service and you are 49 years of age, you will be eligible for a normal
retirement because you have 80 points (49 + 31 = 80).
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Rollovers - Certain funds may be transferred from another qualified retirement plan, a tax deferred annuity, a
deferred compensation plan or an IRA.
Funds that can currently be rolled over:
q a qualified retirement plan 401[a] or 401[k]
q a tax deferred annuity 403(b)
q a deferred compensation plan (457)
q a qualified annuity plan 403(a)
q an IRA
q a simple IRA that has been established for at least two years.
The ASRS cannot accept a rollover from a Roth IRA, a Coverdell Education Savings Account or a simple IRA
that has not been established for at least two years.
How is paying for my service purchase through a payroll deduction agreement
beneficial to me?
By setting up a payroll deduction agreement you can spread the purchase of the credited service over many
years. You will lock in a lower purchase cost, before your salary increases. By using a payroll deduction
agreement to pay for your service purchase, you will also be able to use pre-tax dollars. This may result in
significant cost savings.
How is a rollover beneficial to me?
A rollover can be beneficial to you for two reasons. First, you will keep the tax-deferred status of your retire-ment
funds. This may result in significant cost savings. You will be taxed on these funds after retirement when
you receive your monthly retirement benefit. Second, the portion of a credited service purchase made through
a rollover is not subject to IRC section 415(c) limits. This will allow you to complete the full purchase sooner.
What type of information do I need to provide to the ASRS?
You must provide information to the ASRS to demonstrate that your rollover contribution is a valid rollover
contribution. Please call the ASRS Member Services Division for forms required for all rollovers. In order to
complete your rollover contribution you must respond to all items to the satisfaction of the ASRS.
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www.asrs.state.az.us
Early Retirement
If you are at least age 50 with 5 or more years of credited service, you may retire before you reach normal
retirement. However, a reduction is applied to your benefit depending upon your age and your credited service.
Your benefit stays at the reduced amount as long as you are receiving retirement benefits. The reduced
amount is not increased except for permanent premium benefit increases or other supplements authorized by
the state legislature.
How does the ASRS calculate early retirement?
q If you are under age 65 when you retire and have at least 5 years of credited service, but less than 10 years,
the ASRS will reduce your benefit for each year your age at retirement is under age 65-by 5 percent from
ages 50 to 60, and by 3 percent from ages 60 to 62. (See examples that follow this section.)
q If you are under age 62 when you retire and have at least 10 or more years of service, the ASRS will reduce
your benefit for each year your age at retirement is under age 62-by 5 percent from ages 50 to 60, and by
3 percent from ages 60 to 62. (See examples that follow this section).
q You also may take an early retirement if you have at least 77 points. Your benefit will be reduced by 3
percent for each point or fraction of a point under 80, down to a minimum of 77 points. If you have fewer
than 77 points when you retire, you must follow the applicable reduction formula based on age, as shown
above. If you are working, you earn two points each year-one for age and one for credited service (See the
reduction chart on page 35).
The ASRS determines age and credited service to two decimal places. For example, age 60 and 3 months is
60.25 years: 60.25 years of age plus 19.50 years of service is 79.75 points, counted as 79 points for retirement.
However, you would need .25 points to reach 80 points. You may gain the additional .25 points by age or
service or both.
Late Retirement
If you continue to work beyond your normal retirement date, otherwise known as late retirement, you accrue
additional retirement benefits based on the appropriate multiplier applied to your average monthly salary for
each additional year of work.
Am I required to collect my retirement benefit?
If you no longer are actively contributing to the ASRS, you must begin collecting your benefit no later than April
1 of the year following the year when you reach age 70-1/2.
Retirement Examples
q Member A is age 62 at retirement with 12 years of credited service. Member A is entitled to a normal
retirement benefit based on age 62 with at least 10 years of service.
q Member B is age 55 at retirement with 25 years of credited service. Member B has 80 points (55 + 25)
and qualifies for normal retirement based on points, even though the member is under age 62 and 65.
q Member C is age 63 with 4 years of credited service. Member C is not eligible to retire until Member C
earns one additional year of credited service or until age 65. A member must have at least 5 years of
credited service to retire before age 65.
q Member D is age 51 with 5 years of credited service. Member D may take early retirement with a benefit
reduced by 60 percent from the normal (full) benefit (5 years at 3 percent [ages 60 to 65] and 9 years at 5
percent [ages 51 to 60]: [5 x 3] + [9 x 5] = 60%).
q Member E is age 58 at retirement with 18.5 years of credited service. Because this is only 76.5 points, if
Member E retires at this time, early retirement will be based on age, not points. Member E will receive a
benefit reduced from normal by 16 percent (2 years at 3 percent [ages 60 to 62] and 2 years at 5 percent
[ages 58 to 60]).
www.asrs.state.az.us
q Member F is age 60 at retirement with 18.5 years of credited service. Member F has 78.5 points and
receives a benefit reduced by 6 percent (2 points or fractions of points below 80 at 3 percent each). Again,
points are rounded down to the nearest whole number.
How do I apply for my retirement benefit?
You should request a benefit estimate one year prior to your planned retirement date. Members requesting an
estimate within a year of retirement will receive a retirement package along with their completed estimates.
The figures provided are ONLY estimates; the actual benefit at retirement may be different. However, an
estimate within six months of retirement should be close to the actual amount.
IMPORTANT—Your retirement benefit cannot be paid UNTIL the ASRS receives your application.
You should submit your application to the ASRS approximately three months prior to the planned
retirement date. On the application, you will enter your mailing address, your retirement date, the benefit
option you have chosen, the name of your beneficiary or “contingent annuitant,” and the date completed. If
married, your spouse should co-sign the application to acknowledge the retirement option chosen.
Retirement Timeline
A timeline and some general items to consider before you retire.
One to Five Years Before Retirement
q Attend a pre-retirement seminar
q Re-examine your financial goals and adjust your savings and other investments to meet these goals
Also, use this time to reduce your debt load and increase your financial nest egg
q Obtain the financial and legal advice you may need to plan your estate
q Use the ASRS retirement benefit estimate calculator on the ASRS Web site to estimate your retirement
benefit
q Consider your health insurance and other insurance needs
q Consider where you want to live and the availability of health insurance
q Start verifying previous public employment for possible purchase of service credit and consider reinstat-ing
any forfeited ASRS service
Two to Four Years Before Retirement
q Request a benefit estimate from Social Security
q Explore any other retirement benefits for which you may be eligible
One Year Before Retirement
q Attend a group meeting and receive a benefit estimate
q Decide on the date you wish to retire
q Check with your employer’s Human Resources office about their retirement procedures
q Study options for health care insurance coverage after retirement-consider costs needs and availability
q Determine if there is additional service credit to purchase
q Determine what to do with the money in your voluntary tax-deferred retirement investment plans (if any)
Three Months Before Retirement
q Decide on the retirement option best suited to the needs of you and your family
q Submit Retirement Application and related forms to the ASRS
q Plan to pay off service purchase contracts
After Your Retirement Application is Approved
q Enroll in your former employer’s or the ASRS health insurance program within 31 days after your
effective date of retirement, if you want coverage
q Receive and review your first benefit payment
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When does my retirement benefit start?
You are entitled to start receiving a benefit on the day after you leave employment with an ASRS employer.
You must terminate at least one day before the date you want to retire. If your retirement application is
received after your desired retirement date, your benefit will be payable from the date of receipt of the applica-tion.
You also have the option of choosing a later retirement date. In this case, your benefit would start the day
you choose, as long as the ASRS has received your application. You will receive your first retirement check
within approximately 45 to 60 days after your retirement date, retroactive to your retirement date. All subse-quent
checks are issued on the first day of each month.
What are the different ways my retirement benefit may be paid?
When you retire, you may choose one of the following seven forms of payment:
Life Annuity
The ASRS will pay you a monthly benefit for the rest of your life. Payments will stop when you die. If you die
prior to receiving all of the contributions in your account balance, the ASRS will pay the remaining balance to
your designated beneficiary. This option is sometimes called the “straight life annuity.”
Life Annuity. Five Years Certain.
The ASRS will pay you a reduced monthly benefit for the rest of your life. If you die before getting a total of 60
monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 60 monthly pay-ments
have been made. Payments stop at your death if you die after you have received 60 monthly payments.
Members under the age of 103 at the time of retirement are eligible for this option.
Life Annuity. Ten Years Certain.
The ASRS will pay you a reduced monthly benefit for the rest of your life. If you die before getting a total of 120
monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 120 monthly pay-ments
have been made. Payments stop at your death if you die after you have received 120 monthly pay-ments.
Members under age 91 at the time of retirement are eligible for this option.
Life Annuity. Fifteen Years Certain.
The ASRS will pay you a reduced monthly benefit for the rest of your life. If you die before getting a total of 180
monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 180 monthly pay-ments
have been made. Payments will stop at your death if you die after you have received 180 monthly
payments. Members under age 84 at the time of retirement are eligible for this option.
Joint and Survivor-100 Percent
The ASRS will pay you a reduced monthly benefit for the rest of your life. The ASRS also will pay a benefit for
the rest of your beneficiary’s life after your death, if you die before your beneficiary. The payment to your
beneficiary will be equal to 100 percent of your monthly benefit. You may choose this option if your beneficiary
is your spouse. If your beneficiary is not your spouse, you may choose this option only if you are NOT more
than 10 years older than your beneficiary.
Joint and Survivor-66-2/3 Percent
The ASRS will pay you a reduced monthly benefit for the rest of your life. The ASRS also will pay a benefit for
the rest of your beneficiary’s life after your death, if you die before your beneficiary. The payment to your
beneficiary will be equal to 66-2/3 percent of your monthly benefit. You may choose this option if your benefi-ciary
is your spouse. If your beneficiary is not your spouse, you may choose this option only if you are NOT
more than 24 years older than your beneficiary.
Joint and Survivor-50 Percent
The ASRS will pay you a monthly benefit for the rest of your life. The ASRS also will pay a benefit for the rest
of your beneficiary’s life after death, if you die before your beneficiary. The payment to your beneficiary will be
equal to 50 percent of your monthly benefit. All members may choose this option.
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What retirement option is best for me?
As you can see, there are three different types of options: Life Annuity, Life Annuity with a Period Certain, and
Joint and Survivor Annuity. Each of the types has positive and negative points depending on your situation. The
following descriptions will help you decide which option is best for you:
Life Annuity
This is a basic form of payment. The benefit is calculated by the ASRS benefit formula and will be reduced if
you retire before reaching a normal retirement date. The Life Annuity option pays the highest monthly amount
of all the options, but may provide no protection for your beneficiary after your death. You may name one or
more persons as your beneficiary. You also may name an organization, trust, or your estate as your benefi-ciary.
Refund Provision: If the total of the payments made to you before your death is less than your account
balance at retirement, the ASRS will pay (refund) the difference to your beneficiary. Your account balance is
the total of your contributions and interest in your retirement account. (This does not include your employer
contributions.) The payment can be made in a lump sum, or your beneficiary may choose instead to receive
monthly payments until the account balance has been paid out.
You may want to choose this option if you want the highest possible monthly benefit amount or do not need to
support someone after your death. This option also may be best for you if your beneficiary has a separate
pension or other sources of income and will not need your benefit after your death.
NOTE: You cannot change this option after you start receiving benefit payments.
Life Annuity with a Period Certain
The Period Certain options also pay you a lifetime benefit, but guarantees a minimum number of payments.
The options are called “period certain” because you choose the minimum number of payments to be made-5,
10 or 15 years. You may name one or more persons as your beneficiary. You also may name an organization,
trust, or your estate as your beneficiary.
If you die before the guaranteed number of payments have been made, the ASRS will continue payments at the
same amount to your beneficiary until all the guaranteed payments have been made. Payments stop after the
guaranteed number of payments have been made.
If you retire on or after August 9, 2001, and elect a 5, 10 or 15 year period certain annuity, you are allowed to
rescind that election of the period certain annuity and thereafter receive a straight life annuity, calculated as
provided in A.R.S. § 38-760(B)(2).
This statute also authorizes you, if you retired on or after August 9, 2001, to revert from a term certain annuity
to a straight life annuity to elect again, at any time during the period certain annuity to revert to the original term
certain annuity.
If you elect to rescind a period certain annuity during the original term and, while receiving a straight life annuity,
again elect to receive a period certain annuity for the remainder of the original term of the certain annuity, the
ASRS should restore your retirement benefit amount to the amount that you were receiving under the original
term certain annuity at the time of the rescission, plus any increases that you would have accrued during the
time that you were receiving a straight life annuity. You will receive the amount until you again elect to rescind
the term certain annuity, in which case, you will again revert to straight life annuity, calculated as provided in
A.R.S. § 38-760(B)(2).
Because the ASRS provides a minimum number of payments that may continue after you die, the ASRS must
reduce the benefit payment from the amount payable for the Life Annuity option. The 5-year certain option will
pay a larger monthly amount than the 10-year certain option. The 10-year certain option will pay a larger
amount than the 15-year certain option.
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Refund Provision: If the total of the guaranteed payments made to you before your death and to your benefi-ciary
after your death is less than your account balance at retirement, the ASRS will pay (refund) the difference
to your beneficiary. Your account balance is the total of your contributions and interest in your retirement
account. (This does not include your employer contributions.) The payment will be made in a lump sum. Your
beneficiary may choose instead to receive monthly payments until the account balance has been paid out.
Joint and Survivor Annuity Options
There are three Joint and Survivor options. They pay a benefit to your beneficiary equal to 100 percent, 66-2/3
percent or 50 percent of the benefit paid to you in your lifetime. If you choose a Joint and Survivor option, the
ASRS will pay you a monthly benefit for the rest of your life. When you die, the ASRS will continue payment
to your beneficiary at the chosen percentage of your benefit amount. The beneficiary of a Joint and Survivor
option is called a contingent, or joint annuitant. You can name only one person as your contingent annuitant;
you cannot name an organization or your estate. If you choose a Joint and Survivor option, you must submit
proof of your contingent annuitant’s date of birth.
Because the ASRS pays a benefit for the rest of your life and also your contingent annuitant’s life after your
death, the ASRS must reduce the benefit amount from the amount payable for the Life Annuity option. The
higher the percentage of your benefit to be paid to your contingent annuitant after your death, the lower the
dollar amount of your benefit. The 50-percent Joint and Survivor option pays you a larger monthly pension
amount than the 66-2/3-percent option. The 66-2/3-percent option pays you more than the 100-percent option.
Refund Provision: If the total of the payments made to you before your death and to your contingent annuitant
after your death is less than your account balance at retirement, the ASRS will pay (refund) the difference by
the laws of the state. Your account balance is the total of your contributions and interest in your account. (This
does not include your employer contributions.) The payment will be made in a lump sum. Or, your estate may
receive monthly payments until the account balance has been paid out.
At any time after your Joint and Survivor benefits have started, you may name a new contingent annuitant
or change your benefit option to the Life Annuity option. If you name a new contingent annuitant, the ASRS
will change the benefit amount based on the age of the new contingent annuitant. You must provide proof of the
new contingent annuitant’s date of birth. If you want to change your benefit option, the ASRS will increase your
benefit to the Life Annuity option amount. If you want to name a new contingent annuitant or to change to the
Life Annuity option, you must request the change in writing.
Partial Lump Sum distribution
New legislation allows a member to take a portion of their retirement income in a lump sum. A member may
elect a partial lump sum payment at retirement equal to up to 36 months of the member’s calculated straight
life annuity benefit. The dollar amount of the lump sum is not affected by the retirement option that is chosen.
The life annuity amount will be actuarially adjusted to a reduced amount to offset the lump sum payment. This
payment is subject to federal and state tax unless the money is rolled to another qualified retirement plan. If
the member retires prior to age 59.5 and elects a partial lump sum option but does not roll the distribution to
another qualified plan, the distribution may be subject to a federal excise tax for early withdrawal of a retirement
account.
What else should I consider before making my decision?
Choosing a retirement option is a personal decision. The following questions should be considered before
making a decision. As you gather the information to help answer these questions, do not overlook any other
benefits you or your survivor will receive from other employment or Social Security.
q Will your survivors need the continuation of your benefit if you die? Do you have enough life insurance or
income-producing assets to provide your survivors with financial security? Does your spouse have a
separate retirement income?
q If additional income is needed, can you provide it in a different way? For example, can you find other
employment with a non-ASRS employer?
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LEVEL INCOME PROVISION
Level Income provision for members under Age 62 at retirement
This provision is for members who retire through age 61, and who wish to receive a higher benefit in the early
years of retirement in exchange for a reduced benefit when they become eligible for Social Security at age 62.
The Level Income provision is not a separate option for disbursement of the retirement benefit, but it can be
used in conjunction with any of the seven-retirement benefit options. (See Appendix F for Level Income
example.)
Under the Level Income provision, the ASRS pays an amount in addition to the member’s regular retirement
benefit until age 62. The additional amount is equal to a portion of the member’s estimated Social Security
benefit. Once the member reaches age 62 and is eligible to receive Social Security benefits, whether or not the
member actually starts receiving Social Security benefits, the ASRS reduces the member’s combined benefit
q Have you considered your health status and that of your designated beneficiary? What about the longevity
of your family members versus your designated beneficiary’s family?
Alternatives to consider may include re-evaluating the amount of life insurance needed or establishing a de-ferred
compensation account or a tax-sheltered annuity. Many members overlook the impact of health-insur-ance
premiums in their budget. Your employer pays the major portion of the total health insurance premiums
while you are an employee. After retirement, you normally will be required to pay the entire premium yourself,
with the assistance of the ASRS health insurance premium benefit. Any savings and/or investments also
should be considered as additional sources of retirement income.
q All employees who are members of the ASRS also are covered under the federal Old Age and Survivors
Insurance system (Social Security) under section 218 of the Social Security Act. The federal government
provides the Social Security benefits, which are separate from ASRS benefits.
q Monthly Social Security benefits may be paid to you or your dependents when you retire, become disabled
or die. For information about the benefits, visit the Social Security Web site at www.ssa.gov or call toll-free
1 (800) 772-1213.
When will I receive payment of my benefit?
You will receive your first pension payment within the first 10 working days of the month after your first full
month of retirement. This check will be a retroactive payment to the effective date of retirement. Subsequent
monthly pension checks are mailed at the beginning of each month. Please remember you must keep the
ASRS informed of any address changes in writing.
Example: A member retires on June 15. The first full month of retirement is July. The member will receive the
first pension check during the first 10 days of August. This check will be for the period from June 15 through
August 31. The next check will be issued the first of September for the September payment.
If your monthly benefit is less than $20 per month, you will receive a one-time lump sum payment that is based
on the present value of the benefit if paid over your expected lifetime. No additional payment will be made.
Can I have my monthly benefit sent directly to my bank?
Yes. At retirement or anytime after, you may choose to have the ASRS deposit your payment directly into your
bank account. It is a convenient and worry-free process. Through direct deposit, your monthly benefit check
is deposited electronically into your account with any bank, savings and loan, or any credit union in the
continental United States. To receive this service, you must fill out a Direct Deposit Form, available through the
ASRS. Members with direct deposit receive a payment within the first three-(3) working days of the month.
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SOCIAL SECURITY BENEFITS
All employees who are members of the ASRS also are covered under the federal Old Age and Survivors
Insurance system (Social Security) under section 218 of the Social Security Act. The federal government
provides the Social Security benefits, which are separate from the ASRS benefits.
Monthly Social Security benefits may be paid to you or your dependents when you retire, become disabled or
die. For information about the benefits, visit the Social Security Web site at www.ssa.gov or call 1 (800) 772-
1213.
by an amount equal to the total estimated Social Security benefit. The reduction in the member’s com-bined
benefit begins at age 62 and stays at the reduced amount for the remainder of the member’s lifetime.
The Level Income provision is neither a special formula nor a bonus of any kind. The total of what is added to the
benefit in the monthly payments before age 62 will be collected back through the reduction in the benefit over
the rest of the member’s lifetime. This can be a costly decision for members with a long life expectancy.
You are ineligible for this option if your combined benefit, regular retirement benefit plus the Level
Income amount, is less than the amount of the total Social Security benefit estimate. The Level Income
provision is for members only and will not continue if the member dies. Instead, the member’s benefit will either
stop or be recalculated, depending on the original option chosen.
Requesting the Level Income provision
You must provide the ASRS with a current Social Security benefit estimate, assuming you will not work after
retirement. (Be sure to enter $0.00 wages as future average yearly earnings on your Social Security estimate
requests.) If an estimate is based on continued employment, the estimate will be higher, and the reduction in
your combined benefit at age 62 will be greater. To receive a Social Security estimate request form, contact the
Social Security office toll-free at 1-800-772-1213 or go to the Social Security Web site (www.ssa.gov).
HEALTH INSURANCE
The ASRS administers a group health insurance program for retired and disabled members who do not partici-pate
in their former employer’s group health insurance plan. The ASRS provides members with health care
options with private insurance companies on an annual basis. The insurance companies may change from
year to year.
If I have a pre-existing condition, am I eligible for health insurance?
Yes. You are eligible to enroll in the ASRS group health insurance program with pre-existing conditions as long
as:
q You enroll at the time of retirement, receipt of LTD benefits or at termination of your ASRS employer’s
coverage, and there is no lapse in coverage, or
q You enroll during the annual open enrollment period and there is no lapse in coverage, or
q You are eligible for Medicare parts A and B.
If you are not Medicare eligible and you have a lapse in health insurance coverage when you enroll in the ASRS
health insurance program, your pre-existing condition(s) will not be covered for a period of 12 months from the
effective date of coverage.
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What is open enrollment?
Open enrollment is an annual period when retired and disabled members of the ASRS have the opportunity to
change their chosen medical and dental carriers or to add dependents to their coverage. Open enrollment also
allows those members who have not enrolled previously in one of the group medical or dental plans to join the
ASRS program. Dependents may be enrolled at birth, adoption, marriage or other specific situations through-out
the year (See “Qualifying Events” below.)
What is a qualifying event?
A “qualifying event” permits members to make certain mid-year changes to their benefits coverage that are
consistent with the qualifying event. If you have a qualifying event and want to enroll or are required to make a
change in your coverage (i.e. add or delete dependents or are required to change your benefit plan), you must
notify the ASRS Member Services Division, in writing, within 31 days of the event to request a change. The
following is a list of eligible qualifying events:
Ø Change in member’s marital status-marriage, divorce, legal separation, annulment, death of spouse
Ø Change in dependent status-birth, adoption, placement for adoption, death, or dependent eligibility due to
age, marriage, student status
Ø Change in member’s primary residence causing a change in benefit plan availability
Ø Eligibility for Medicare-member, spouse, dependent child
Ø Significant change in spouse’s group benefits plan cost or coverage
Ø Significant change in participating employer’s group benefits plan cost or coverage
Ø Termination of COBRA coverage-member, spouse, dependent child
When should I apply for coverage?
Qualified members should apply at least 90 days prior to the last day of coverage under their current health
insurance program. This helps ensure that there is no lapse in coverage during the transfer.
My current coverage will continue to be provided by my participating employer and
I do not want to change. What do I need to do?
Review with your participating employer your continuing eligibility for their health care plans. While some
employers do not permit retirees to continue to be covered by their plans, other employers allow retirees to be
covered, but only for a specific period of time. It is important that you understand how long you may continue
with your employer so that you know when you will be eligible to enroll with the ASRS. If you will be continuing
your health care plans with your employer, you will complete a health insurance application with them
What will happen if I don’t submit my Enrollment Form when I retire?
If you wish to enroll for health care coverage with the ASRS and you fail to submit your completed Enrollment
Form within the 31-day grace period, you will not have health care coverage with the ASRS.
Consequently, you will not be eligible to enroll in the retiree health insurance program until the next open
enrollment, which takes place in the fall. However, should you experience a “qualifying event,” as defined by
law, during the course of the year, you may enroll in a retiree medical and/or dental plan at that time.
Does the ASRS provide assistance with health insurance premiums?
Yes. The ASRS offers a Health Insurance Premium Benefit program to assist eligible ASRS retired and
disabled members with health insurance premium costs. Members must be covered by their former employer’s
group health insurance plan or the ASRS group health insurance plan. The premium benefit is applied to the
member’s health insurance cost, and the member is responsible for the remaining balance, if any.
Am I eligible for the health insurance premium benefit?
If you are retired or disabled with at least 10 years of credited service, you are eligible to receive the full health
insurance premium benefit only with coverage through the ASRS or an ASRS employer. Members who have
private coverage are not eligible to receive a premium benefit. The premium benefit is only applicable to retired
and disabled members and not a survivng spouse or surviving designated beneficiaries.
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MONTHLY PENSION DEDUCTIONS & TAXES
Is my retirement benefit subject to federal and state taxes?
Federal Income Taxes
All or part of your benefit is subject to federal income tax withholding. Retirement benefits based on “after-tax”
dollars are not taxed at retirement. “After-tax” dollars include member contributions before July 1, 1986, and
amounts paid to buy credited service. Retirement benefits based on “pre-tax” dollars are taxable at retirement.
“Pre-tax” dollars are member contributions toward retirement benefits.
State Income Taxes
Your retirement benefit also will be taxable income for Arizona State income tax purposes if you reside in
Arizona after your retirement. Retired members living in a state other than Arizona do not have to pay Arizona
State taxes, but may pay taxes in the state where they live.
All members have a $2,500 per year exclusion from state taxable income. Retirees whose taxable income
exceeds $2,500 per year will pay taxes on the amount above $2,500.
How do I report my taxes?
All ASRS retirees are required to report their retirement benefits on both the federal and state income tax
returns. There are two ways you can report federal income taxes on your retirement:
q You may claim federal and state exemptions or have a set amount withheld from each pension check. (A
tax withholding form will be sent to you along with the retirement applications.)
q If you do not elect to have income tax withheld from your retirement payment, you must make other
arrangements with the IRS and the Arizona Department of Revenue.
q According to Internal Revenue Service requirements, members who fail to complete a withholding form will
automatically have federal taxes withheld as married with three exemptions.
By January 31 of each year, the ASRS will send you a Form 1099-R, “Distributions from Pensions.” This form
is similar to the Form W-2, “Wage and Tax Statement,” that your employer provides to report your taxable
income from earnings. The 1099-R statement gives the following information:
q The total gross amount of retirement benefit paid to you during the previous year.
q Amount of taxable income for the year, whenever possible. In most cases, the ASRS determines any
amount to be excluded from total payments for the year according to the “Safe Harbor” exclusion rules of
the Internal Revenue Code. You may find it to your advantage to use a different method called the “General
Exclusion Rule” when reporting your taxes. Consult your tax advisor.
If you have fewer than 10 years of credited service, the premium benefit payment is reduced by 10 percent for
each year of credited service under 10, until reaching 5 years of service. If you have fewer than 5 years of
credited service, you are not entitled to a health insurance premium benefit. (See Appendix H for more on
premium benefits.)
Examples: Jim Jones retires at age 66 with 6 years of credited service. His full premium benefit is $100; it will
be reduced to 60 percent (10 percent for each year of service); therefore, he will get $60.
Jane Johnson has 3 years of credited service at retirement. She is not entitled to a health insurance premium
benefit because she has less than 5 years of service.
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IN THE EVENT OF A DIVORCE
Is my account or retirement benefit subject to assignment if I divorce?
Yes. Your account is subject to assignment to your ex-spouse in the event of a divorce because your retire-ment
benefit is considered marital property. Arizona is a community property state. This means that property
acquired during a marriage belongs to the “community” of the marriage, not to an individual as that person’s
separate property. All or a portion of your ASRS account or benefits may be a community property asset.
If you are married during any time that you are an actively contributing member of the ASRS, your spouse may
be entitled to a portion of your account or retirement benefit if you divorce.
If you were married the entire time of your covered service, the entire account or benefit is community property.
If you were married for only a part of the period of membership, the account and benefit accumulated only
during that period is a community property asset. The account or benefit accumulated during a period that
you were not married is your separate property.
You should provide a Qualified Domestic Relations Order (QDRO), a court document that explains exactly how
your account or benefit will be divided. Any division must meet ASRS plan provisions.
LEAVING EMPLOYMENT BEFORE RETIREMENT
What are my options if I leave my current employment?
When you leave employment before retirement, you may choose to do one of the following:
q Leave your account on deposit with the ASRS
q Request a refund of your employee contributions plus interest
q Rollover your account to another qualified retirement program
What does the ASRS consider “separated”?
There must be 21 days between the last day of employment and the beginning of new employment with an
ASRS employer before the ASRS considers you to be “separated” for refund or rollover purposes. If you are
hired with another ASRS employer within 21 days of leaving employment, the ASRS will not refund your
contributions.
q Deductions taken out of your pension checks for federal and state income tax withholdings.
IMPORTANT-Members having tax withheld from their benefit payments may see a change in
their check at the beginning of each calendar year as new tax tables may be used to deter-mine
the amount of withholdings. The amount of tax withheld and your net benefit check
usually change each year.
What other deductions may be taken out of my retirement benefit?
Your retirement benefit also may be subject to other specific monthly deductions, such as medical and dental
insurance premiums and voluntary association dues.
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What happens if I leave my contributions on account with the ASRS?
If you leave employment, you may leave your contributions and credited service on account with the ASRS.
You become an “inactive,” non-contributing member of the ASRS with the following provisions:
q Your account will continue to be tax deferred.
q Your account will continue to earn interest, currently at eight percent (8%) compounded annually.
q You may obtain a refund at a later date.
q In the event of your death, your beneficiary will be entitled to a survivor’s benefit. The benefit is equal to
twice your contributions, including service purchase payments, and accrued interest.
q If you return to work with an ASRS employer, the ASRS will reopen your account with the addition of the
new contributions and service.
q You may retire at a later date when retirement eligibility is met.
q You must take a distribution no later than April 1 of the year following the year you reach age 70 ½, unless
you return to employment with an ASRS employer and are making contributions.
Can I continue contributing to my account after I leave employment?
No. You can leave your account on deposit, but you cannot pay additional contributions.
How do I apply for a refund?
To receive a refund, you must complete an “Application for Return or Transfer of Contributions” from the ASRS.
Your employer must verify the form if you request the refund within six months after termination. Then, send the
form to the ASRS to be processed. Members who receive a refund of contributions waive any present or future
rights to ASRS benefits, including all credited service accrued up to this point.
Have I met eligibility for a refund of my employer contributions?
If you have at least five years of ASRS credited service, you are eligible for a percentage of your employer
contributions plus interest depending on the years of credited service you have upon termination.
How is the refund of my employer contributions determined?
0.00 to 4.99 years of ASRS credited service 0% of employer contributions
5.00 to 5.99 years of ASRS credited service 25% of employer contributions
6.00 to 6.99 years of ASRS credited service 40% of employer contributions
7.00 to 7.99 years of ASRS credited service 55% of employer contributions
8.00 to 8.99 years of ASRS credited service 70% of employer contributions
9.00 to 9.99 years of ASRS credited service 85% of employer contributions
10.00 or more years of ASRS credited service 100% of employer contributions
Are federal and state taxes withheld from my refund of contributions?
Yes. The ASRS is required to withhold 20 percent of the taxable portion of your refund for federal income taxes.
The taxable portion includes your retirement contributions made on or after July 1, 1986, and all the interest
posted to your retirement account. Your contributions since July 1, 1986 have been tax deferred and are called
“pre-tax.” These contributions are not included in taxable income while you are working, and therefore, are
subject to tax withholding when you receive a refund or retirement benefit. Member contributions paid before
July 1, 1986, and amounts paid to buy additional ASRS credited service were included in taxable income and
are not taxable again when you receive a payment. These amounts are said to be paid from “after-tax” dollars.
The ASRS also withholds five percent of the entire refund for state income taxes, including the amounts before
July 1, 1986. Though the pre-1986 contributions were included in taxable state income, members were entitled
to take an income tax deduction for the contributions on their state tax return. Taxes are not withheld on
amounts rolled over by a direct transfer to another qualified retirement plan or IRA.
Are there any other tax consequences for obtaining a refund?
In addition to the federal tax withholding, if you are under age 59-1/2, you also may be subject to a 10 percent
early withdrawal penalty on your federal tax return.
ARE THERE OTHER SERVICES AVAILABLE TO ME THROUGH THE
ASRS?
Can I borrow from my retirement account for emergency purposes?
No. The Arizona Revised Statutes and Internal Revenue Code do not allow the ASRS to lend you money from
your account. Funds can be paid out (refunded) only when you leave work with your ASRS employer. Trans-ferring
from one employer to another does not entitle you to a refund unless there is a 21-day gap between
leaving one employer and starting employment with the new ASRS employer.
When will I receive the refund?
You will receive a refund check approximately 60-90 days after a properly completed application is received in
the ASRS office. This check will have all of your contributions and interest on deposit at that time, minus
necessary tax withholding amounts. Normally, a second check is paid for contributions posted to your ac-count
after the refund date. If you are planning to move within 90 days of your termination date, note the new
address and the effective date of the move on the application.
Included with the refund application is a notice required by the Internal Revenue Service. The notice fully
informs you of the consequences of refunding and your right to roll over the taxable portion of the refund to
another tax-qualified retirement plan. The IRS rules require a 30-day waiting period for you to consider your
rollover options. This accounts for the time required for the first check to be sent. You may waive the 30-day
waiting period on a form obtained from the ASRS. If you request a waiver, your check normally will be issued
30-60 days after receipt of the application and waiver.
What if I want to rollover my account to another qualified plan?
You may apply to “rollover” your account by direct transfer to another qualified retirement system upon leaving
ASRS-covered employment by filling out an Application for Return or Transfer of Contributions. The advantage
of a rollover is that you continue to defer tax on the retirement funds, and the ASRS does not withhold state and
federal income taxes. A section is provided on the refund form for those who would like to obtain information
from the other retirement program to receive the rollover. Send the application to your employer if your request
is within six months after leaving employment. On approval, the ASRS will transfer your taxable account
balance directly to your new retirement plan or IRA. This includes contributions and interest made on or after
July 1, 1986, and any service time paid with pre-tax dollars. Contributions made prior to July 1, 1986, and any
service time paid with after-tax dollars can also be accepted. Contact the ASRS Member Services Division for
more information regarding eligible rollover plans and IRS limitations.
If you receive a refund payment, you still can rollover the taxable portion of the refund on your own within IRS
limitations. Consult your tax advisor or financial institution.
Do I lose my rights under the ASRS if I receive a refund or rollover?
Yes. If you leave employment and receive a refund or rollover, you waive any rights to ASRS membership
benefits.
www.asrs.state.az.us Page 28
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GENERAL INFORMATION
Can I lose any of my benefits from the ASRS?
Yes. If you leave employment and receive a refund or rollover, you waive any present or future rights to ASRS
membership benefits, including all credited service accrued up to the point of departure. You can keep your
rights if you leave your contributions on account with the ASRS when you leave employment.
Can I get back any benefits if I lose them?
Yes. If you resume employment with an ASRS employer, you may reinstate (recover) previously forfeited
credited service by paying an amount equal to the amount of withdrawn contributions plus interest.
How can I obtain information about the financial condition of the ASRS?
An annual audited financial report of the fiscal year’s operations is available for review at the Phoenix and
Tucson offices. The ASRS distributes a copy to each ASRS employer. Financial information is summarized in
the winter issue of Financial Horizons, the quarterly member newsletter.
How can I get information about my future retirement benefits?
Each year, the ASRS mails an annual statement of your personal retirement benefits to all non-retired mem-bers.
Your statement contains important information about your retirement account, including an estimate of
your future benefits at different retirement dates. You can also utilize one of the retirement estimators available
on the ASRS Web site (www.asrs.state.az.us).
For members who are three to five years from retirement, the ASRS conducts pre-retirement seminars in
various locations around the state. These seminars cover the essentials for planning your retirement, including
service purchase, details on health insurance coverage and other retirement benefits. In addition, the Member
Services Division offers group meetings for members who are one to two years from retiring. These group
meetings provide an estimate of your potential monthly benefits, review of your retirement options and informa-tion
on completing your retirement packet. Contact the ASRS offices for an appointment. You also can receive
this service on a “walk-in” basis without an appointment, but you may have to wait an extended period of time,
depending on the number of members waiting to see Member Services staff.
Though the annual statement provides benefit estimates at your various normal retirement dates, you should
request a detailed estimate about six months to one year before your planned retirement.
Financial Horizons, our quarterly newsletter, is sent to all active, inactive and retired members to inform them
of ASRS issues, such as legislative changes, health insurance open enrollment and other items of interest to
our members. Employer Update is the newsletter sent periodically to ASRS employers to keep them aware of
issues that affect both the employees and the employers.
APPEAL RIGHTS
If my claim for a benefit is denied, how do I file an appeal?
If your claim regarding a retirement benefit is denied, you may appeal the decision to the ASRS Director. Your
claim may involve your eligibility for a benefit, the amount of the benefit or any other matter regarding the
application of ASRS rules. If you disagree with the decision of the Director, you may appeal to the ASRS
Board. You also may request a re-hearing of an unfavorable decision by the Board. If you remain dissatisfied,
you then may seek resolution through the courts. Specific appeals procedures may be obtained from the
Member Services Division or the Director’s office.
www.asrs.state.az.us
To receive any of the above publications, call the ASRS at 602-240-2000 in metro Phoenix, 520-239-3100 in
metro Tucson or 1-800-621-3778 outside metro Phoenix and Tucson.
Is my account subject to assignment, attachment and garnishment?
No, your account cannot be subject to assignment, attachment or garnishment while working as an active
employee. Court orders regarding divorce settlements and child support may be enforceable when you start
receiving your benefit or obtain a refund. Your account also may be subject to a levy by the IRS.
How do I change my address?
You may obtain a “Change of Address” form from your employer’s personnel office. If you have Internet access,
you may download this form from the “Electronic Library” on the ASRS Web site (www.asrs.state.az.us) or
request the form via e-mail at our Web site. Complete the form and return it to the Phoenix office. You also are
responsible for informing your employer of any changes.
How do I change my name?
You may obtain an ASRS “Change of Name” form from your employer’s personnel office. If you have Internet
access, you may download this form from the “Electronic Library” on the ASRS Web site (www.asrs.state.az.us)
or request the form via e-mail at our Web site. Complete the form and return it to the Phoenix office. You also
are responsible for informing your employer of any changes.
How do I change my beneficiary?
You may obtain an ASRS “Change of Beneficiary” form from your employer’s personnel office. If you have
Internet access, you may download this form from the “Electronic Library” on the ASRS Web site
(www.asrs.state.az.us) or request the form via e-mail at our Web site. Complete the form and return it to the
Phoenix office.
Where should I send changes to my information?
All change information should be forwarded to the ASRS Phoenix office at:
Arizona State Retirement System
Attn: Records Management
PO Box 33910
Phoenix, AZ 85067-3910
How do I change or correct my Social Security number?
You must contact the ASRS in writing, providing documentation of your new or correct Social Security number
(SSN). Acceptable documentation includes a copy of your Social Security card or correspondence from the
Social Security Administration, showing your correct SSN. You also should verify that your employer is
reporting your contributions by the correct SSN. Forward to the ASRS Membership Accounting Division at the
above address.
www.asrs.state.az.us
THE ASRS SUPPLEMENTAL RETIREMENT SAVINGS PLAN
Beginning in fiscal year 2003, the ASRS will offer members an additional opportunity to save for retirement and
build financial security. The plan is called the ASRS Supplemental Retirement Savings Plan. It is a 401(a)
defined contribution plan and will complement current 403(b) and 457 deferred compensation programs. Key
features of the plan include:
q Contributions up to 40% of salary
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q Optional Employer Match Available
q Vesting is 20% per year on employer contributions
q Annual election of contribution amounts
q Loans are an optional feature of the plan
Enrollment in the program allows employees to participate in the Modified Deferred Retirement Option Program
(DROP)
Employers must adopt the plan before their employees may participate. Offering this program will
provide employers and employees the option of one stop shopping in planning for their future retirement.
Please contact the ASRS Member Services Division for more information on the plan, the current investment
options and information on adopting the program. You can also visit the ASRS Web site (www.asrs.state.az.us).
MODIFIED DEFERRED RETIREMENT OPTION PROGRAM
Beginning in fiscal year 2003, the ASRS will offer a new program to employers and employees called the
Modified Deferred Retirement Option Plan or DROP.
Here’s how it works:
Employers may offer employees who have attained normal retirement age the option to continue working up to
36 months without contributing to the ASRS defined benefit plan. Instead, they make contributions to a
supplemental retirement savings plan approved by the ASRS. At the end of the time period agreed upon in the
contract, the member must retire. They will then be required to purchase the time worked in order to receive an
equal amount of credited service at no cost to the member. The cost to purchase the time will be the same as
the normal cost for a service purchase.
The member will use the contributions made to the supplemental retirement savings plan to pay for the service
at the time of retirement. If there is not enough money in the plan account to purchase the full amount of
service, the member may pay the balance using monies rolled over from another qualified retirement plan or by
a lump sum purchase. Members may utilize the DROP to retire with more service than they would normally
accrue and thereby attain a larger benefit.
Members and employers wishing to obtain more information on this program may contact the ASRS Member
Services Division or visit the ASRS Web site (www.asrs.state.az.us).
APPENDIX A-Recommended Retirement Planning Checklist
Review your annual benefit statement for the latest
year of service to verify that all of the information is correct
(Three to five years before retirement)
Call the ASRS to request a benefit estimate
(One to five years before retirement)
Attend an ASRS-sponsored retirement planning seminar
(One to five years before retirement)
Determine your monthly living expenses. Does your benefit
estimate and other sources of income cover your projected
expenses at retirement?
(One to three years before retirement)
Evaluate the cost of health insurance coverage. What health
programs are available through your employer? the ASRS?
Can you afford coverage?
(One year before retirement)
Attend a group meeting to determine your retirement
benefit and options
(One to two years before retirement)
Request a final benefit estimate and retirement application
packet
(Six months to one year before retirement)
Review the materials provided in the retirement application packet:
3 Retirement Application
3Direct Deposit Request
3 Federal/State Tax Withholding Preference Form
3Health Insurance Application (You will only receive this form if you request it. You need this application if you want health
insurance coverage through the ASRS.)
3Partial Lump Sum Election Form
Ask yourself the following questions:
(Six months before retirement)
3 Do I have other service that I can purchase for ASRS retirement?
3 What are my health insurance options?
3 How will federal and state income tax affect my retirement benefit?
Contact your local Social Security office for an estimate to determine when you will be eligible for Social Secu-rity
benefits.
(Three months before retirement)
Complete and return your retirement application forms. Don’t forget to choose your retirement option.
(One to six months before retirement)
www.asrs.state.az.us
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APPENDIX B-Credited Service Cost Calculation
You may buy ASRS credited service for any amount of service you worked for another public retirement plan in
the United States and for active duty military. The cost per year of credited service for each is the same-your
current annual compensation multiplied by the current normal cost rate at the time you buy the service. The
normal cost is the total employee and employer contribution rate, as determined by the ASRS actuary-not the
rate withheld from your pay.
CURRENT ANNUAL COMPENSATION X NORMAL COST RATE =
COST PER YEAR OF CREDITED SERVICE
To find your total purchase cost, multiply your cost per year of credited service by your total years of
credited service. (See example below.)
YOUR
EXAMPLE CALCULATION
CURRENT ANNUAL COMPENSATION-Enter your
current yearly salary on Line 1. 1. $27,000 1.
NORMAL COST RATE-Multiply Line 1 by the current
normal cost rate. The normal cost rate for the 2003-04
year is 10.72%. This number will vary from year to year.
(See sbove for definition of normal cost.) 2. $27,000 X .1072 2.
COST PER YEAR OF CREDITED SERVICE-Enter
the result from Line 1 X Line 2 on Line 3. This is the
cost per year of credited service. 3. $2,894 3.
TOTAL YEARS OF CREDITED SERVICE-Enter your
total years available to be purchased. 4. 5 years 4.
COST-Multiply Line 4 by Line 3 to determine your
total cost for the credited service purchase. Enter on
Line 5. 5. $2,894 X 5 5.
TOTAL PURCHASE COST-Enter the result from Line 5.
This is the total cost you will have to pay for the
additional ASRS credited service. 6. $14, 470 6.
NOTE: For any member who first participated in the ASRS before July 1, 1999, there are essentially no limits
on after-tax contributions to purchase permissive service credits.
For any member who first participated in the ASRS on or after July 1, 1999, the limits on after-tax contributions
to the ASRS to purchase permissive service credits is limited to $40,000 during a fiscal year.
www.asrs.state.az.us
APPENDIX C-Average Monthly Compensation Formula
Your average monthly compensation is the average of your highest earnings for 36 consecutive months within
the last 10 years. You may calculate your average monthly compensation by using the example below.
Member who began contributing to the ASRS before January 1, 1984, may choose to determine their compen-sation
by using the 36-month and 60-month average, whichever provides the larger benefit amount.
36-MONTH CALCULATION-ALL MEMBERS EXAMPLE YOUR CALCULATION
CURRENT ANNUAL SALARIES-Enter your
highest 3 consecutive annual salaries within
the last 10 years. 1. $25,000 1.
$24,000
$23,000
SUM-Add the three years together. Enter the
result on Line 2. 2. $72,000 2.
36-MONTHS-Divide the result on Line 2 by 36. 3. $72,000 ¸ 36 3.
AVERAGE MONTHLY COMPENSATION-Enter
the result from Line 3. This is your average
amount of monthly compensation. 4. $2,000 4.
60-MONTH CALCULATION-FOR
MEMBERS BEFORE JANUARY 1, 1984 EXAMPLE YOUR CALCULATION
CURRENT ANNUAL SALARIES-Enter your highest
5 consecutive annual salaries within the last 10 years. 1. $27,000 1.
     $26,000
$25,000
     $24,000
$23,000
LUMP-SUM PAYMENTS-Enter the total payoff for
your accrued leave hours and other special payments
when you retire on Line 2. 2. $10,000 2.
SUM-Add together the 5 years and the lump-sum
payments. Enter the result on Line 3. 3. $135,000 3.
60 MONTHS-Divide the result on Line 3 by 60. 4. $135,000 ¸ 60 4.
AVERAGE MONTHLY COMPENSATION- Enter
the result from Line 4. This is your average amount
of monthly compensation. 5. $2,250 5.
www.asrs.state.az.us Page 34
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APPENDIX D-Normal Retirement Benefit Formula
The following formula is used to compute a retirement benefit for members who retire at a normal retirement
date. Normal retirement is the earliest you may retire with a full benefit as calculated by the ASRS benefit
formula.
TOTAL CREDITED SERVICE X APPROPRIATE MULTIPLIER X AVERAGE MONTHLY COMPENSATION =
RETIREMENT BENEFIT
EXAMPLE YOUR
CALCULATION
TOTAL CREDITED SERVICE- Enter the
total number of years that you will have
when you retire. (Your current service can
be found on your latest member statement.) 1. 20 years 1.
APPROPRIATE MULTIPLER-Multiply the multiplier
factor by your total credited service on Line 1.
(See chart below) 2. 20 X .0215 2.
0-19.99 years of credited service 2.1%
20-24.99 years of credited service 2.15%
25-29.99 years of credited service 2.20%
30 or more years of credited service 2.30%
TOTAL- Enter the result from Line 1 X Line 2
on Line 3. 3. .43 3.
AVERAGE MONTHLY COMPENSATION-Enter
your average monthly compensation on Line 4.
To find this number, use the average monthly
compensation formula in Appendix C. (If you
were eligible to use both calculations, enter
the larger amount of the 36-month or 60-month
averaging. The 60-month calculation was used
in the example.) 4. $2,250 4.
RETIREMENT BENEFIT-Multiply Line 4 by Line 3
to determine your benefit. 5. $2,250 X .43 5.
NORMAL RETIREMENT BENEFIT-Enter the result
from Line 5. This is the appropriate benefit you will
receive at retirement. 6. $967.50 6.
www.asrs.state.az.us
APPENDIX E-Early Retirement Benefit Formula and Percentage Chart
If you are at least age 50 with 5 or more years of credited service, you may retire before your normal retirement date. However, a reduction
is applied to your benefit depending upon your age and credited service. Use the chart below to find what percent of the full retirement
benefit you will receive if you retire early. You then will be able to determine your early retirement benefit.
EXAMPLE YOUR CALCULATION
NORMAL RETIREMENT BENEFIT- Enter the benefit
amount you will receive at normal retirement. To find this
number, use the normal retirement benefit formula in
Appendix D. 1. $900 1.
PERCENTAGE OF RETIREMENT BENEFIT- Use the chart
below to find the percentage of retirement benefit
received. Start with your age and move across the grid
until you find the column for your total years of service.
Enter the percentage on Line 2. 2. 50% (age 50 with 20 years of svc) 2.
RETIREMENT BENEFIT- Multiply Line 1 by Line 2 to
determine your benefit. (Note: Enter the percentage
as a decimal figure,i.e. 50% will be .50) 3. $900 X .50 3.
EARLY RETIREMENT BENEFIT- Enter the result
from Line 3. This is the appropriate benefit you
will receive at early retirement. 4. $450 4.
PERCENTAGE OF RETIREMENT BENEFIT
Age Years of Credited Service
5 mos.-4.9 yrs 5-9.9 yrs 10-17 yrs 18 19 20 21 22 23 24 25 26 27 28 29 30 31
48 Not Eligible N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E
49 Not Eligible N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E N/E
50 Not Eligible 35% 44% 44% 44% 50% 50% 50% 50% 50% 50% 50% 91% 94% 97%
51 Not Eligible 40% 49% 49% 49% 55% 55% 55% 55% 55% 55% 91% 94% 97%
52 Not Eligible 45% 54% 54% 54% 60% 60% 60% 60% 60% 91% 94% 97%
53 Not Eligible 50% 59% 59% 59% 65% 65% 65% 65% 91% 94% 97%
54 Not Eligible 55% 64% 64% 64% 70% 70% 70% 91% 94% 97%
55 Not Eligible 60% 69% 69% 69% 75% 75% 91% 94% 97%
56 Not Eligible 65% 74% 74% 74% 80% 91% 94% 97%
57 Not Eligible 70% 79% 79% 79% 91% 94% 97%
58 Not Eligible 75% 84% 84% 91% 94% 97%
59 Not Eligible 80% 89% 91% 94% 97%
60 Not Eligible 85% 94% 94% 97%
61 Not Eligible 88% 97% 97%
62 Not Eligible 91%
63 Not Eligible 94%
64 Not Eligible 97%
65
32+
100% of Retirement Benefit
www.asrs.state.az.us Page 36
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APPENDIX F-Level Income Alternative
This provision is for members who retire between the ages of 50 through 61, and who wish to receive a higher
benefit in the early years of retirement in exchange for a reduced ASRS benefit when they become eligible for
Social Security at age 62. The Level Income Alternative (LIA) provision is not a separate option for disburse-ment
of the retirement benefit; it is an alternative that may be chosen with any of the seven retirement benefit
options.
Under the Level Income provision, the ASRS pays an amount in addition to the member’s regular retirement
benefit until age 62. The additional amount is equal to a portion of the member’s estimated Social Security
benefit. Once the member reached age 62 and is eligible to receive Social Security benefits, whether or not the
member actually starts receiving Social Security benefits, the ASRS reduces the members’ combined benefit
by an amount equal to the total estimated Social Security benefit.
The reduction in the member’s combined benefit begins at age 62 and stays at the reduced amount for the
remainder of the member’s lifetime.
You are ineligible for this option if your combined benefit, regular retirement benefit plus the Level Income
amount, is less than the amount of the total Social Security benefit estimate.
The Level Income provision is for members only and will not continue if the member dies. Instead, the member’s
benefit will either stop or be recalculated, depending on the original option chosen.
You must provide the ASRS with a current Social Security benefit estimate assuming you will not work after
retirement. (Be sure to enter $0.00 wages as future average yearly earnings on your Social Security estimate
requests.) If an estimate is based on continued employment, the estimate will be higher and the reduction in
your combined benefit at age 62 will be greater.
Example: Mary Jones retired at age 57. She would like to receive a higher benefit until she is eligible for Social
Security benefits at age 62. Below is a sample if Mary took advantage of the Level Income provision, her
ASRS retirement benefit would be as follows:
If a member retires and chooses the Level Income Option, they may rescind this option within the first six
months of retirement. The retiree would be required to repay, in a lump sum, any increased amounts received
under the Level Income. Otherwise the reduction in the member’s combined benefit begins at age 62 and stays
at the reduced amount for the remainder of the member’s lifetime.
WITHOUT LEVEL INCOME-AGE 55
ASRS Annuity $1, 290
SSA + 0
TOTAL at age 55 $1, 290
At age 62 SSA + 900
TOTAL at age 62
WITHOUT LIA $2, 190