Public Safety Personnel Defined Contribution Retirement Plan

PSPRS Tier 2 members who work for an employer that does not contribute to Social Security on their behalf, and who did not opt out of the PSPDCRP prior to June 30, 2017, are members of the PSPDCRP.  They are also members of the PSPRS defined benefit plan.  Because they belong to both the defined benefit plan and the PSPDCRP, they are referred to as hybrid plan members.

PSPRS Tier 3 members who elect to belong to the defined benefit plan but who work for employers that do not contribute to Social Security on their behalf are automatically hybrid plan members, belonging to both the defined benefit plan and the PSPDCRP.

PSPRS Tier 3 members who elect to belong to the PSPDCRP rather than the defined benefit plan are solely PSPDCRP members and pay higher contribution rates into the PSPDCRP than those who also belong to the defined benefit plan.

CORP Tier 3 members are automatically enrolled in the PSPDCRP.  Probation and Surveillance Officers who work for the Administrative Office of the Courts may elect to join either the PSPDCRP or the defined benefit plan.

PSPRS Tier 2 hybrid plan members pay 3% of their pensionable wages to the PSPDCRP.  The employer contribution rate is based on when the member was hired.  For members hired in 2017, employers contribute 3%.  For members hired in 2016, employers contribute 4% through June 30, 2020 and then 3% thereafter.  For members hired in 2015, employers contribute 4% through June 30, 2021 and 3% thereafter.  For members hired in 2014, employers contribute 4% through June 30, 2022 and 3% thereafter.  For members hired in 2013, employers contribute 4% through June 30, 2023 and 3% thereafter.  For members hired in 2012, employers contribute 4% through June 30, 2024 and 3% thereafter.

PSPRS Tier 3 hybrid members pay 3% of their first $110,000 in pensionable wages to the PSPDCRP.  Employers also pay 3% into the plan.

PSPRS Tier 3 members who elect to join the PSPDCRP as their sole retirement plan contribute at least 9% of their first $110,000 in pensionable wages to the PSPDCRP.  The default rate is 9%, but when they join the plan those members may elect a higher contribution rate.  That rate is locked in for the rest of their PSPRS career.  Employers contribute 9% into the plan.

CORP Tier 3 members who elect to join the PSPDCRP contribute at least 5% of their pensionable wages to the PSPDCRP.  The default rate is 7%, but when they join the plan those members may elect a rate as low as 5% or as high as the IRS limit allows.  That decision is irrevocable, locked in for the rest of their CORP career.

The IRS contribution limit for 2019 to 401(a) defined contribution plans is $56,000.

Member contributions and earnings on those contributions are immediately vested.

PSPRS members are fully vested after 10 years of service, with employer contributions vesting at a rate of 10% per year.  If a member dies before completing 10 years of service, the employer contributions are immediately fully vested.

CORP members are fully vested after 3 years of service, with employer contributions vesting at a rate of 25% after the first year of service, 50% after the second year of service, and 100% after the third year of service.  If a member dies before completing 3 years of service, the employer contributions are immediately fully vested.

DROP money rolled into the PSPDCRP is immediately vested.

Members who terminate employment with any employer in the plan have several options for accessing their account balance, which consists of their contributions, any earnings on those contributions, and any vested employer contributions (plus earnings) they have earned, based on the vesting schedule for their plan.

Members may leave their money in the plan and take advantage of the low fees offered by the PSPDCRP.  Members may invest in any of the 24 different funds in the PSPDCRP or invest in thousands of other investment vehicles available through the Schwab self-directed option.  Investment earnings are not taxed until they are withdrawn.

Members may rollover their account balance to another qualified retirement plan, including an IRA, without any immediate tax consequences.

Members may take a refund of their account balance.  The refund will be taxable.  An additional 10% early withdrawal penalty will be assessed by the IRS if the member terminates prior to the minimum retirement age (50 for PSPRS members, 55 for CORP members).

Members may purchase an annuity.  Security Benefit Life Insurance Company is the plan’s annuity provider.

For more information about these options, please contact Nationwide at 1-855-297-8228.  Representatives are available Monday through Friday, 8 a.m. – 11 p.m. and Saturday, 9 a.m. – 6 p.m. ET.

A participant in the PSPDCRP may not take loans on any portion of the accumulated assets in the participant’s account.

When a PSPRS DROP member exits the DROP program, assets in the DROP account, including interest, are automatically rolled over into the PSPDCRP in accordance with A.R.S. 38-867.01.  They are automatically rolled into the Nationwide Fixed Fund, a stable value account that pays 2.75% interest annually.  The assets may be left in the Fixed Fund or transferred to other funds within the PSPDCRP.  Members may also withdraw a portion or all of the assets, or roll them over to another qualified retirement plan.