§ 24-7-406 - Retirement fund assets accounts -- Members' deposit account -- Contributions.
24-7-406. Retirement fund assets accounts -- Members' deposit account -- Contributions.
(a) (1) The members' deposit account is the account:
(A) In which member contributions are accumulated with regular interest;
(B) From which member refunds of contributions are paid; and
(C) From which transfers are made as provided in this act.
(2) Employer contributions that are paid by an employee instead of an employer shall be:
(A) Credited to the members' deposit account; and
(B) Subject to refund under the same conditions that regular member contributions are refunded.
(3) In the event survivor benefits become payable on account of the death of a member, his or her accumulated contributions standing to his or her credit in the members' deposit account shall be transferred to the survivor benefit account.
(b) (1) Except as provided otherwise in this section, the contributions of a member to the system shall be the amounts set forth in this subsection.
(2) Each member who first became a member July 1, 1971, or later shall contribute to the system six percent (6%) of his or her salary.
(3) Member contributions before July 1, 1969, shall be in accordance with provisions in force before July 1, 1969.
(4) (A) For each member who first became a member before July 1, 1971, member contributions for the period after June 30, 1969, shall be six percent (6%) of the first seven thousand eight hundred dollars ($7,800) of his or her annual salary unless he or she shall have elected, in accordance with rules and regulations established by the Board of Trustees of the Arkansas Teacher Retirement System, to contribute six percent (6%) of his or her full salary for the period after June 30, 1969.
(B) If the election is made before July 1, 1984, the member must contribute to the system the difference between full salary member contributions and member contributions based on seven thousand eight hundred dollars ($7,800) annual covered salary retroactive to July 1, 1969, or to the actual date of employment, whichever is later, plus interest from the dates the added contributions would normally have been received by the system to the date of the actual added contributions.
(C) If the election is made July 1, 1984, or later, the member must contribute to the system both the added member contributions and the added employer contributions that would have been paid to the system had the member's full salary always been covered, plus interest from the dates the added contributions would normally have been received by the system to the date of the actual added contributions.
(D) The interest and added employer contributions shall be considered member contributions for purposes of the system. However, any former active member who returns to covered employment on or after July 1, 1995, and who elects to make contributions to the system, shall contribute on his or her full salary.
(5) Members who left covered employment before July 1, 1985, and who had annual compensation of seven thousand eight hundred dollars ($7,800) or less shall have, upon their return to covered employment, full salary considered for purposes of the system.
(6) Contributions shall be required on all salary earned in covered employment during the fiscal year in which membership begins.
(c) (1) (A) Each employer shall deduct the member contributions provided for in this section from the salary of each member on every payroll, for every payroll period, from the date of his or her entrance into the system until the member retires or terminates, and the employer shall remit the contributions to the system.
(B) (i) Should the employer fail at any time to report the salary of a member and remit the contributions to the system, the system shall have the right to collect from the employee and the employer the contributions due, if any, from each, together with interest beginning with the subsequent fiscal year.
(ii) A member shall not be given credit for service rendered until all contributions and interest due from each are paid in full.
(2) The member's contributions provided for in this section shall be made notwithstanding that the minimum salary provided by law for any member shall be thereby changed.
(3) (A) Each member shall be deemed to consent and agree to the deductions made and provided for in this section.
(B) Payment of his or her salary less the deductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by the member during the period covered by the payment, except as to benefits provided by the system.
(4) The members' contributions, so deducted from their salaries, shall be remitted to the system in such manner and form and into such frequency and shall be accompanied by such supporting data as the board shall prescribe from time to time.
(d) (1) In addition to the contributions deducted from the salaries of a member, as provided in this section, a member may deposit into the system, by a single contribution or by an increased rate of contributions as approved by the board, the amounts the member received in a refund of contributions and not repaid, together with interest from the date of withdrawal to the date of repayment to reestablish credit for refunded service.
(2) A member shall not be given credit for service rendered before the date the member received a refund of contributions until the member returns to the system all amounts due from the member.
(e) (1) (A) Active members as of July 1, 1999, shall elect by written election filed with the system in accordance with rules and regulations adopted by the board to eliminate future member contributions or to make member contributions, otherwise provided for in this section.
(B) (i) The election shall be irrevocable and shall be made on or before July 1, 2000.
(ii) If no election is made, then the member's status on June 30, 2000, shall be in effect and shall be irrevocable.
(2) (A) For an inactive member who enters the system after June 30, 1999, the election shall be made within one (1) year of the effective date the member is considered an active member.
(B) (i) The election shall be effective the earlier of:
(a) The preparation of the payroll containing the first salary payment upon reentry; or
(b) The July 1 next following the date the election is filed with the system.
(ii) If no election is made within one (1) year, then the member's status prior to reentry will remain in effect. (3) (A) (i) If the election is to eliminate member contributions, then the election shall apply only to future member salaries and shall not change the status of any member contributions made before the election.
(ii) Beginning July 1, 1999, an active member who has previously elected to eliminate member contributions may change credited service on which no member contributions have been paid to member contributions credited service by paying the additional member contributions due plus interest from the dates the contributions would have been received by the system to the date of the payment in full.
(B) (i) If the effect of the election is to require member contributions, then the election shall apply only to future member salaries and shall not change any member contribution requirements existing before the election.
(ii) If a member has previously contributed on only the first seven thousand eight hundred dollars ($7,800) of his or her annual salary, then he or she cannot contribute on full future salaries until he or she has made added contributions on past full salaries as provided in subsection (b) of this section.
(4) (A) (i) After July 1, 1999, all new members shall make the member contributions otherwise provided for in this section. From July 1, 1999, through June 30, 2007, new members who are under contract with a covered employer for one hundred eighty (180) days or less shall have one (1) year to make an irrevocable election to make member contributions.
(ii) Effective July 1, 2005, any active member whose status later changes from nonteacher status to teacher status under contract for one hundred eighty-one (181) days or more shall make the member contributions otherwise provided for in this section regardless of an earlier election to be noncontributory.
(B) Through June 30, 2007, new members who are not under contract with a covered employer shall not make member contributions.
(5) (A) From July 1, 2005, and each July 1 thereafter through June 30, 2007, active members who have previously elected to eliminate member contributions may make an irrevocable election to make future contributions to the system.
(B) If the election is made:
(i) Before the preparation of the first salary payment to the member in the fiscal year, the election shall become effective immediately; and
(ii) After the preparation of the first payroll containing the first salary payment to the member in the fiscal year, the election shall become effective July 1 of the next fiscal year.
(6) (A) (i) Effective July 1, 2007, new members who are under contract with a covered employer for one hundred eighty-one (181) days or more shall make member contributions under this section.
(ii) Effective July 1, 2007, persons reentering the system who left as contributory members shall reenter as contributory members and shall make member contributions under this section.
(B) (i) Effective July 1, 2007, new members who are under contract with a covered employer for one hundred eighty (180) days or less and new members who are not under contract with a covered employer may make an irrevocable election to make future member contributions under this section.
(ii) Effective July 1, 2007, and each July 1 thereafter, active members who have previously been noncontributory, whether by election or otherwise, may make an irrevocable election to make future member contributions under this section.
(iii) Effective July 1, 2007, inactive members or rescinding retirees reentering the system may make an irrevocable election to make future member contributions under this section at the time of reemployment regardless of previous noncontributory status.
(iv) If the election is made:
(a) Before the preparation of the first salary payment to the member in the fiscal year, the election shall become effective immediately; and
(b) After the preparation of the first payroll containing the first salary payment to the member in the fiscal year, the election shall become effective July 1 of the next fiscal year.
(C) If the board determines that a member's contributions may not be treated as employer contributions under the Internal Revenue Code or the Income Tax Act of 1929, 26-51-101 et seq., the board may exclude the member's participation under this subsection.
(f) (1) Employees who are eligible for membership in the system under 24-7-202, who are or have been erroneously enrolled in the Arkansas Public Employees' Retirement System, whose membership in that system is cancelled, and whose employee or employer contributions are refunded by that system under 24-2-301 -- 24-2-305, shall make member contributions to the system as provided in subdivision (b)(2) of this section.
(2) If such an employee becomes an active member of the contributory plan of this system, he or she may establish contributory credit for all or part of his or her service that is cancelled by the system by paying both the employee and employer contributions required by this system plus interest.
(g) (1) (A) Each employer shall pay the member contributions under this section from the salary earned by a member after June 30, 1997, and those contributions shall then be treated as employer contributions in determining tax treatment under the provisions of the Internal Revenue Code and the Income Tax Act of 1929, 26-51-101 et seq.
(B) If a member elects to purchase past service credits under the system's purchase of service credit provisions through payroll deductions, the employer shall pay the amount required to purchase such past service credits from the employee's salary earned after the employee signs an irrevocable payroll authorization prescribed by the board, and those purchases shall then be treated as employer contributions in determining tax treatment under the Internal Revenue Code and the Income Tax Act of 1929, 26-51-101 et seq.
(2) Each employer shall continue to withhold federal and state income taxes based upon those contributions as income of the member until the Internal Revenue Service or the federal courts rule that, pursuant to section 414(h) of the Internal Revenue Code, the contributions shall not be included as gross income of the member until they are distributed or made available to the member.
(3) The employer shall pay these member contributions from the same source of funds used in paying the salary to the member. The employer may pay these contributions by a reduction in the cash salary of the member, by a setoff against future salary increases, or by a combination of a reduction in salary and a setoff against future salary increases.
(4) If member contributions are paid by the employer as provided under this subsection, they shall be treated for all purposes of the system in the same manner and to the same extent possible as member contributions made prior to the date the employer began payment of the member's contributions hereunder.
(5) Whenever member contributions are required to be paid by the employer under this subsection, the employee shall not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer.