Legislation that passed in 2011 under Senate Bill 1609 authorized the Arizona State Retirement System (ASRS) to implement an Alternate Contribution Rate (ACR) for employers that hire ASRS retirees who return to work.
Beginning July 1, 2012, Arizona Revised Statute § 38-766.02 requires employers to pay ACR for members who return to work in any capacity and in a position ordinarily filled by an employee of the employer. There has been a misconception that the retiree can elect to pay their own ACR, however, the employer is the entity required, per statute, to remit the ACR payment.
Arizona Administrative Code, Title 2, Article 1, R2-8-116, states that employers shall remit alternate contributions directly from employer funds, and prohibits employers from deducting the amount of alternate contributions due from the employee’s compensation. Employers are required to pay the ACR on behalf of any retiree that it employs, regardless of their 20/20 status or how many hours are worked.
The ACR also applies to all ASRS retirees who return to work as a direct-hire, an independent contractor, or as an employee of a leasing company and regardless of early or normal retirement status. The ACR rate for Fiscal Year 2023/2024, effective July 2023, is 9.99%.
For more information or to download our ACR guide please visit: https://www.azasrs.gov/content/alternate-contribution-rate
Written by Nichole Fuller, Employer Relations
Published August 2023
