Employers: Wrap-Up of the 2014 Legislative Session

The 51st Legislature-Second Regular Session adjourned on April 24, 2014. The effective date of legislation is July 24, 2014, unless otherwise noted.

Below is a summary of legislation passed that impacts the ASRS and our employer partners.

HB 2050 – Social Security Section 218 Requirements – Now Chapter 44, Laws 2014

This bill eliminates the requirement that members must be covered by an employer’s Social Security 218 Agreement to be eligible for membership in the Arizona State Retirement System.

While the vast majority of ASRS members do participate in and contribute to the federal Social Security program, there are some individuals who are contributing to the ASRS but not to Social Security, due to the unique nature of their employment position. This bill eliminates the requirement that members must be covered under a 218 Agreement and allows them to remain in the ASRS but with credited service commencing July 24, 2014.

This bill does not allow those already contributing to Social Security to opt out of Social Security.

This bill also allows for the sunset/closure of the A.R.S. § 38-955 defined contribution plan, established by HB 2562 in 2013. This is because all individuals who would have been eligible for this DC plan will now be required to contribute to the ASRS defined benefit plan and thus the DC plan is unnecessary. Members who were placed in the DC plan between Sept. 9, 2013 and July 24, 2014 will now be required to contribute to the ASRS. Members currently contributing to or with a balance in the DC plan will have 180 days to withdraw or transfer their funds; if neither is done by January 20, 2015 their balance will be transferred to an individual retirement account (IRA) in their name managed by Nationwide Retirement Solutions.

Employer Relations will provide additional details on this bill in a future communication to employers.

HB 2039 – Charter Schools; Higher Education Sponsors – Now Chapter 42, Laws 2014

This bill allows a charter school that is sponsored by a state university to be eligible for membership in the ASRS. Retroactive to July 1, 2011.

HB 2122 – ASRS; Election; EORP Defined Contribution – Now Chapter 131, Laws 2014

This bill mandates that any ASRS member who becomes an elected official must continue membership in the ASRS and cannot join the EORP defined contribution plan. Retroactive to Jan. 1, 2014.

Detailed legislation information is also available on our ASRS Bill Tracker.

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