New Alternate Contribution Rule

By Jessica Ross, ASRS Rules Writer

The ASRS has established a new rule in the Arizona Administrative Code to address payments of the Alternate Contribution Rate (ACR).  Arizona Revised Statute § 38-766.02 requires the employer to remit the ACR contribution for retirees the employer hires and the new rule, R2-8-116, explains how the employer may determine which retirees they must remit the ACR contribution for and how to remit the payment. 

The rule indicates that an employer that hires a retiree must remit an ACR payment for the retiree whether the retiree is a direct hire, an independent contractor, or leased to the employer by a third party (unless the employer leases an entire class of positions).  Employers cannot avoid paying an ACR to the ASRS merely by claiming that a worker is leased; rather, the employer must show that the entire class of positions has been properly leased as well.  If the employer is unable to show that the entire class of positions performing substantially similar functions as the retiree has been properly leased, then the employer must pay an ACR to the ASRS for all retirees employed in those positions whether the individual retiree is leased or not. 

This rule was approved by the Governor’s Regulatory Review Council and was published in the Arizona Administrative Register at 22 A.A.R. 1341.  The rule will be effective as of July 4, 2016 and the rule language can be viewed on the Arizona Secretary of State or the ASRS websites.  

This article first appeared in "Employer Update" (Q2-2016), a digital publication of the ASRS.

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