Clarification on the CARES Act and the ASRS

Due to the current COVID-19 pandemic, the Arizona State Retirement System (ASRS) has seen a slight increase in members asking, “Can I refund or get a loan from my account?” 

We understand, members may be anxious about many things during these trying times, including finances. With the recent passage of the federal Coronavirus Aid, Relief and Economic Security Act (CARES Act), there can be confusion as to whether or not members have the ability to refund or take a loan against their ASRS account. Specifically, the CARES Act includes provisions that allow for greater access to a member's funds in certain savings plans, including the two Supplemental Savings Plans offered through the ASRS.

This, however, does not apply to members’ primary ASRS defined benefit pension account, as State law does not allow borrowing from the  ASRS. Not only is it not allowed by state law, but doing so would likely result in higher contribution rates in the future.

Only once members end employment with an ASRS employer may they request a refund of their ASRS contributions. Doing so, however, terminates ASRS membership and rights to future benefits, including a pension. Members may of course also leave their funds at the ASRS to withdraw at a later time, or leave the funds at the ASRS until they are eligible to retire.  

Members participating through their employer in either the ASRS Supplemental Retirement Savings Plan (SRSP) or the ASRS Supplemental Salary Deferral Plan (SSDP) may wish to explore the new CARES act provisions, which allow for increased access to loans and in-service withdrawals, in response participants’ need for cash in this time of economic uncertainty created by the COVID-19 pandemic.

Note that ASRS members are eligible to participate in the ASRS SSDP plan only if their employer signs up. State law does not allow the ASRS SSDP to be available to employees of the State of Arizona or the state universities, which have access to similar programs through the Deferred Compensation Committee and as administered by Nationwide Retirement Solutions, who can be contacted at AzSSDP.com

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