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Notice of Substantive Policy Statement on Compensation Rules

The Arizona State Retirement System has published a Substantive Policy Statement relating to Compensation for ASRS Purposes.

The Arizona State Retirement System (ASRS) rules in the Arizona Administrative Code, Title 2, Chapter 8, Article 9, entitled Compensation and effective January 1, 2018 identify what payment types are compensation for ASRS purposes. The following payment types were ASRS compensation prior to January 1, 2018, but are not compensation as of January 1, 2018:

• Non-accountable allowances, which means payments made to the member for costs incurred by the member incidental to the member’s job and for which the member is not required to provide proof of actual expenditures; and

• Mandatory amounts paid under an Employer policy to reduce the member's accrued annual, sick or general leave balance to a prescribed maximum (if not paid because of a member’s pending termination or retirement).

The ASRS intends to apply the new Compensation rule as it pertains to non-accountable allowances and mandatory leave payments prospectively only for employees whose ASRS membership began on or after January 1, 2018. Employee members and employers who remitted contributions on non-accountable allowances and mandatory leave payments that were properly identified as compensation prior to January 1, 2018 should continue to remit contributions in the same manner for employees who became ASRS members prior to January 1, 2018 and receive payments for non-accountable allowances and mandatory leave.

See additional information on the Employer News blog as well as the ASRS Rules page on the website..

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