Vesting is a term used often when discussing a retirement account. However, the ASRS benefit programs do not have a “vesting” schedule. Members must meet certain requirements before being eligible to receive: retirement benefits, health insurance, premium benefit subsidy, long term disability, or participate in the ASRS service purchase program.
Refund/Forfeiture
When one of your employees asks about “vesting” with the ASRS, often these members may be referring to the percentage of employer funds they might receive if they decide to refund their account.
One of the biggest factors in whether or not a member is eligible to receive employer contributions is their membership date. Those who became contributing members on or after July 1, 2011 are only eligible to receive a portion or employer contributions if there is a reduction in force or layoff by the employer. Otherwise, their refund amount will be based only on their own contributions.
Members who began making contributions before July 1, 2011 may be eligible to receive some or all of their employer contributions, the percentage of which is determined by their years of service:
No matter their membership date, if a member choses a cash payout, taxes will be automatically withheld at 20% federal and 5% state tax. There may also be applicable early withdrawal fees imposed by the IRS, based on the member’s age.
More information for members thinking or refunding can be found on our Refunding Your Account web page, or they can log into their secure myASRS account for a personalized refund estimate.
Retirement
When it comes to retirement, ASRS members are “vested” from the date their first contribution is received. Members may keep their funds on account with ASRS until they meet their normal retirement criteria, at which point they can retire, even with only 1 month of service. By retiring with the ASRS, members will be eligible for ASRS health insurance and will receive either a monthly pension or a one-time lump sum retirement payout.
If your employees or former employees have retirement questions, please direct them to the ASRS Member Advisory Center at 602-240-2000 or to their secure myASRS accounts at AzASRS.gov.
