Defined contribution plan contribution reporting and rates
Arizona employers who offer retirement benefits to first responders, corrections officers, elected officials, and members of the judiciary through PSPRS are obligated to make financial contributions to PSPRS-managed retirement plans and towards other benefits, such as the disability program and the health insurance subsidy (upon member election).
Contributions made by employers and plan members are crucial to help members build retirement savings through defined contribution (DC) plans. State law requires employers to report and make timely contributions every pay period.
Below is a table of contents to assist employers in understanding, reporting and making contributions to PSPRS-managed defined contribution plans
TABLE OF CONTENTS
Member compensation and employer matching contributions
State law applies certain restrictions to the type of member compensation that an employer must use to calculate both the member contribution and employer matching contribution to PSPRS-managed defined contribution plans per pay period.
Generally speaking, salary for services rendered to the employer and paid on a regular payroll basis and used holiday/sick pay are intended compensation for pension calculations, while allowances for cars, phones, and uniforms, along with unused sick/vacation time payouts and one-time awards cannot be considered pensionable compensation.
These restrictions vary depending on whether the participating member is a first responder or corrections officer using the PSPDCRP or an elected official or member of the judiciary participating in EODCRS.
Please consult the table below for guidance on matchable compensation:
Matchable Compensation | |||
| PSPRS | CORP | EORP |
Base Salary (definitions for PS and CORP are the same.) | ✔ | ✔ | — |
Gross Salary | — | — | ✔ |
Shift differential pay | ✔ | ✔ | — |
Military differential pay | ✔ | ✔ | — |
Holiday pay | ✔ | ✔ | — |
Overtime pay | ✔ | ✖ | — |
Sick time used | ✔ | ✔ | — |
Vacation time used | ✔ | ✔ | — |
Compensation time used | ✔ | ✔ | — |
Pay earned by third party contracts between public agencies | ✔ | — | — |
Longevity payments, as long as it is paid at least every 6-months | ✔ | — | — |
Lump sum payments of accrued unused vacation time | ✖ | ✖ | ✖ |
Lump sum payments of accrued unused sick time | ✖ | ✖ | ✖ |
Lump sum payments of accrued unused compensatory time | ✖ | ✖ | ✖ |
Uniform allowances, car allowances or other fringe type benefit payments | ✖ | ✖ | ✖ |
(Included)
(Not Included)
— (Not applicable)
Member and employer contribution limits
Federal and state law provide contribution limits for defined contribution plan participants. These limits are applied when members reach maximum compensation thresholds that can be used to calculate member and employer matching contributions.
These limits vary according to member retirement plan and tier and are periodically adjusted by the Internal Revenue Service and the PSPRS Board of Trustees. Please note that Tier 1 and 2 limits are based on IRS guidance and applied on a fiscal year basis while Tier 3 limits are based on state law applied on a calendar year basis.
Employers reporting contributions to PSPRS will receive automatic notice when reported member compensation approaches federal or statutory limits. When limits have been reached employers will not be able to submit reporting files without first using the demographic tool in the employer portal to change impacted members’ status to “Compensation Limit Reached.” Similarly, employers will receive automatic notice when it is time to resume member and employer contributions.
Please consult the table below for guidance on matchable compensation:
| Tier 1 and 2 | Tier 3* |
Public Safety | $345,000 (IRS limit per fiscal year) | $140,952 (A.R.S. §38-843.04 per calendar year) |
Corrections | $345,000 (IRS limit per fiscal year) | $72,947 (A.R.S. §38-895.01 per calendar year) |
Elected Officials & Judiciary | $345,000 (IRS limit per calendar year) | |
*Tier 3 limits are adjusted every three years based on the average change in a specific wage index and monitored, based on pay period ending dates that fall within that calendar year.
DC contribution reporting and payment
Employers must submit payroll reporting files detailing defined contribution plan contributions to PSPRS through the employer payroll portal. The portal’s employer demographics manual page is also used by employers to notify PSPRS of member demographic updates, including new member hires, terminations, periods of leave and returns to service. Please consult the following documents for submitting contribution and demographic information. For more information on contribution reporting please contact our Active Members Department.
- Submitting Fixed Width Contribution Files
- Submitting Excel Contribution Files
- Contribution Invoice and Payment Process
- Creating Contribution Files
- Contribution Code Matrix
Unlike pension, disability program and health insurance subsidy contributions, which are made through the preferred option of Wells Fargo’s E-Bill Express, employer and member defined contribution payments are remitted to Nationwide Retirement Solutions.
By statute, contribution payments are to be made no later than 10 working days after the end of each employer’s payroll date. Failure to remit payments on a timely basis will result in assessment of penalties and interest as provided by state law.
Please contact Nationwide Retirement Solutions for contribution payment support through the following options:
- Phone: 1(877) 496-1630, select option 3.
- Email: [email protected]
DC plan member and employer contribution rates
Member and employer contribution rates for PSPRS-managed defined contribution plans vary according to member plan, tier and benefit options selected by members.
The PSPDCRP provides retirement benefits for public safety and corrections officers. Participants include Tier 2 and 3 public safety members who do not contribute to Social Security through their employer and receive “hybrid” benefits consisting of a pension and 401(a) plan. New Tier 3 public safety members and probation/surveillance officers hired by the courts can also choose defined contribution benefits instead of a pension, while plan participation is automatic for new corrections and detention officers. Officials and members of the judiciary elected or appointed after January 1, 2014, receive benefits through the Elected Officials Defined Contribution Retirement System.
Please note that new DC plan participants, with the exception of Tier 2 public safety hybrid and EODCRS members, may make a one-time and irrevocable decision to adjust their member contribution rate while with their current employer. Member contribution rate adjustments do not impact employer contributions.
|
DC Member Plan & Tier |
Benefit Type |
Member Rate |
Employer Rate |
Member Vesting |
|
Public Safety |
||||
|
Tier 3 (July 1, 2017 – present) |
Hybrid (DB & DC) |
3%* |
3% |
10% per year |
|
DC-only |
9%* |
9% |
||
|
Tier 2 (Jan. 1, 2012 – June 30, 2017) |
Hybrid (DB & DC) |
3% |
3% |
|
|
Corrections |
||||
|
Tier 3 (July 1, 2018 – present) |
DC-only Corrections & Detentions |
7% |
5% |
Year 1 – 25% Year 2 – 50% Year 3 – 100% |
|
DC-only (if elected) AOC Probation & Surveillence |
||||
|
Elected officials and Judiciary |
||||
|
EODCRS (Jan. 1, 2014 – present) |
DC |
8% |
6% |
Immediately |
Disability program and health insurance subsidy contributions
Both employers and members who only participate in PSPRS-managed defined contribution plans make separate contributions for disability program coverage. These contributions help provide members an actuarially calculated retirement benefit in the event that a DC-only member becomes disabled in the line of duty.
Employers and members pay the same rates, listed below, and rates are updated each fiscal year in annual employer actuarial valuations and are set for the public safety, corrections and elected officials plans. Member contributions are made with post-tax income.
Fiscal Year 2025 | |||
Contribution Rates | Public Safety Tier 3 (DC-only) | Corrections Tier 3 (DC-only) | Elected Officials & Judiciary |
Disability program | 1.50% | 0.44% | 0.14% |
Health insurance subsidies
Health insurance subsidies upon retirement are available for public safety and corrections members who only participate in PSPRS-managed defined contribution plans. These members (EODCRS members cannot receive this benefit) can elect to contribute towards and receive health insurance subsidies to offset health and dental insurance costs.
Health insurance subsidies are an optional and irrevocable decision for Tier 3 DC-only participants and premiums are non-refundable. The rates below are paid by member income and employers and are included in annual employer valuations. Member contributions are made with pre-tax income.
Fiscal Year 2025 | |||
Contribution Rates | Public Safety Tier 3 (DC-only) | Corrections Tier 3 (DC-only) | Elected Officials & Judiciary |
Health insurance subsidy | 0.23% | 0.23% | N/A |
Note: Health insurance subsidies are made available at no charge to all public safety and corrections members participating in the PSPRS and CORP pension plans and require actuarially determined employer contributions