Arkansas Administrative Code
Agency 088 - Arkansas Teacher Retirement System
Rule 088.00.19-002 - Rule 7 Reporting and Eligibility
Universal Citation: AR Admin Rules 088.00.19-002
Current through Register Vol. 49, No. 2, February 2024
I. Calculation of Final Average Salary
A. Definitions
1. "Participating Employer" means an employer
who participates in the Arkansas Teacher Retirement System whose employees are
eligible for membership under A.C.A. §
24-7-501 or
other applicable law.
2. "Partial
Year Service Year" means service in a fiscal year that constitutes less than a
full year of service due to less than the required service days at an ATRS
employer due to a reduction in service credit caused by an adjustment in ATRS
service credit because reciprocal service credit occurs in the same fiscal
year, due to a member retiring prior to the end of a fiscal year, or due to any
other law or policy that provides a member less than a full year of service in
a fiscal year.
B. Rules
1. For purposes of calculating a member's
final average salary, ATRS will include salary received from all participating
employers during a fiscal year.
2.
For purposes of determining if a salary year constitutes a full service year,
the following shall be excluded from the limits under A.C.A §
24-7-736:
a. Any salary year which constitutes member
service during two (2) or fewer quarters in a fiscal year; or
b. Any salary year that constitutes less than
one (1) year of service credit under the schedule set forth in ATRS Rule 7.II.
Proof of Service Credit.
3. Regardless of any provision in a State
statute, rule, or regulation to the contrary, salary or other compensation paid
which exceeds the limitations set forth in Section 401(a)(17) of the Internal
Revenue Code shall be disregarded. The limitation on compensation for "eligible
employees" shall not be less than the amount allowed under ATRS in effect on
July 1, 1993. For this purpose, an "eligible employee" is an individual who was
a member of ATRS before the first plan year beginning after December 31,
1995.
4. Certain remuneration paid
by an ATRS employer to ATRS members shall not be treated as salary in the
calculation of ATRS benefits although it would otherwise meet the definition of
salary prior to the adoption of this Rule by the ATRS Board.
a. Any remuneration or salary paid as an
incentive payment, bonus, separation payment, additional salary or a special
payment made in return for or in consideration of an ATRS member's agreement to
separate from the ATRS employer, retire, or not renew the member's contract
with the ATRS employer shall not be treated as salary by ATRS.
i. This salary limitation applies if:
1. The offering by the ATRS employer applies
to two (2) or more ATRS members;
2.
The offering is proposed as an early retirement incentive plan, staff reduction
plan, buyout plan that is offered to ATRS members to either directly retire or
separate employment from the ATRS employer;
3. The offering is made in return for the
voluntary decision of the ATRS member to participate in the program in return
for the additional remuneration or salary.
ii. This salary limitation does not apply if:
1. It is an offering to one (1) ATRS member
by the ATRS employer;
2. It is part
of a standing offer to all ATRS members at the time of retirement for the
payment of annual time, sick time, or related retirement payment;
3. It is a payment or bonus made to all
members or specific categories of members that is not dependent or conditioned
upon the member's separation from or retirement from the employer;
4. It is a payment made in the settlement of
litigation or paid to avoid threat of litigation.
b. ATRS employers shall not
withhold member contributions or pay employer contributions from the
remuneration paid that is subject to the salary limitation established by this
Rule.
c. Any ATRS employer offering
of an early retirement plan, separation plan, or contract non-renewal plan,
that would result in remuneration being paid by the employer that would be
limited from treatment of salary by this Rule shall notify ATRS of the plan
prior to payment of any remuneration that is subject to this salary
limitation.
d. Upon request of an
ATRS employer, the ATRS staff shall review any potential plan or payment that
could be subject to this salary limitation in order to provide guidance as to
whether the salary limitation would apply to the remuneration paid by the
proposed plan or payment.
e. Any
decision by ATRS staff on a particular plan or payment may be appealed to the
ATRS Board using the ATRS appeal procedure as set forth in Rule 13.
5. If a conflict exists between
the statute or policy governing the treatment of a member's salary between the
participating employer's laws or policies relating to compensation and the
calculating of a member's final average salary for benefits, ATRS's laws and
rules shall control.
6. Effective
July 1, 2018, when calculating a member's final average salary, ATRS shall
calculate final average salary using the five (5) years in which the member
received the highest salary from a participating employer subject to the
foregoing limitations.
7. A
one-time benchmark final average salary will be computed on service attained as
of June 30, 2018. The benchmark final average salary is not provided to
inactive ATRS members unless proof is provided to ATRS indicating the member
was active in a reciprocal or alternative system in fiscal year 2018. The
benchmark final average salary will be calculated using the three (3) years in
which the member received the highest salary from a participating employer.
This benchmark final average salary will be used at the time of retirement if
it is higher than the five (5) year final average salary calculated
above.
8. The final average salary
used for members with reciprocal service shall be the highest salary years
credited by either the ATRS participating employer or the reciprocal system
under A.C.A. §
24-2-402.
9. For members who are retiring and who are
employed in agencies or other institutions that use the state 26-week payroll,
employers should report to ATRS the salary, contributions, and actual days
worked through the current year payroll period. Contributions should not be
withheld on any salary earned after the close of the current year's payroll,
nor should any salary or days of service be reported for that period.
10. For members who are retiring and who are
employed by employers using a fiscal year ending June 30, employers should
report to ATRS the salary contributions, and actual days worked through the
current fiscal years ending June 30. Contributions should not be withheld on
any salary earned after the end of the current fiscal year, nor should any
salary or days of service be reported for that period.
11. For retiring members, employee
contributions remitted on salary paid after the end of the current fiscal year
or current year payroll period, whichever applied, will be refunded as promptly
as possible.
II. Proof of Service Credit
A. The Board shall determine the number of
years and fractions thereof for paid service credited to members of ATRS. No
fewer than one hundred sixty (160) days of employee service in a fiscal year
(ending June 30) shall be credited as a full year of service.
B. Members employed less than one-fourth
(1/4) of a fiscal year are not eligible for credit or benefits in ATRS that
fiscal year provided however, a contributory member's service days beginning in
the 2011-2012 fiscal year, are carried forward from previous fiscal years until
at least one quarter year of service is obtained by the member. If a
contributory member obtains at least a quarter year of service in a fiscal
year, whether using regular service days or accumulated service days, or both,
the member begins the next fiscal year with no days of service carried
forward.
C. FOR MEMBERS WITH
SERVICE AFTER JULY 1, 1971
1. Actual service
credited to a member's account shall be determined in accordance with the
following table:
Number of Days Worked in a Fiscal Service Credit Earned Year |
|
1 -39 |
None |
40-79 |
0.25 year |
80-119 |
0.50 year |
120-159 |
0.75 year |
160 days or over |
1.00 year |
2. All
contracts between an ATRS employer and member that specify the number of days
worked by the member shall be used by ATRS to establish the number of days of
service worked. If a member is employed in a position that a regular and
typical work day includes eight (8) hours or more of work time (full-day
position), then four (4) hours of work in a day shall be required for a "day"
of service. For "full-day" members who do not work four (4) hours or more a
day, the total number of hours worked in a fiscal quarter divided by four (4)
will determine the number of days to be credited. ATRS employers have
specialized support positions that include bus drivers, custodial workers,
cafeteria workers, and similar positions for which a typical day of service by
the member will be less than eight (8) hours of work a day. Effective for the
2011-2012 fiscal year, a member employed, without a contract specifying the
number of days of service to be worked, in a specialized support position shall
receive a full day of service credit, even if the member works less than four
(4) hours in a service day, if the ATRS employer reasonably determines that the
member performed the regular and usual service expected of a member in that
position during the service day.
3.
For purposes of days counted toward service credit, absences shall be counted
as service if for paid leave including paid sick leave. However, for
administrative leave, the member must be on call by the employer for the
service to be counted.
4. ATRS
shall not give service credit to a member until all required contributions and
interest, if any, are remitted to ATRS.
5. The participating employers shall certify
proof of service on such forms with any documentation required by
ATRS.
6. If a member is retiring
with an effective date other than October 1, January 1, April 1, or July 1,
service credited for the year in which a member retires shall not exceed
one-forth (1/4) year for each full calendar quarter worked during the fiscal
year.
7. In any case of question as
to service credit of a member, the Board of Trustees has the final authority to
decide the amount of service creditable to a member.
III. Employee (Member) Contributions
A. After June 30, 1997,
each employer will remit the member contributions by employer "pick up" from
the salary earned by contributory members, and those contributions will then be
treated as employer contributions in determining tax treatment under the
provision of the federal Internal Revenue Code and the Arkansas Income Tax Act.
The employer may pay these contributions by a reduction in the cash salary of
the member, or by a setoff against future salary increases, or by a combination
of a reduction in salary and a setoff against future salary
increases.
B. Member contributions
shall be set by the Board by resolution.
C. Overpayments or underpayments of member
contributions shall be pursuant to the following:
1. If an underpayment of member contributions
of less than $25 occurs, ATRS shall not collect the difference of this
underpayment and no adjustment to member service credit will be made.
2. If an overpayment of member contributions
of less than $25 occurs, a refund will not be issued unless requested by the
member.
3. Should an underpayment
of contributions occur as a result of a member's changing status from
noncontributory to contributory, the member must remit to ATRS the
contributions due based on gross salary earned retroactive to the beginning of
that fiscal year. Service credit will not be credited until the total amounts
due are paid in full.
4. Should an
overpayment of member contributions occur as a result of erroneous reporting,
ATRS will refund the overpayment of member contributions to the
employer.
D. If ATRS is
owed member contributions and interest by a member, the interest owed by the
member may be waived by the Board or its designee under ATRS Rules.
IV. Employer Contribution Rate
A. The employer contribution rate
shall be the rate established by the Board of Trustees of the Arkansas Teacher
Retirement System prospectively for each year.
B. ATRS shall annually notify participating
employers of the employer contribution rate established by the Board for the
upcoming fiscal year.
C.
Participating employers shall pay ATRS employer contributions for eligible
employees in accordance with these rules.
V. Employee and Employer Remittances and Reports
A. Remittances of employee
and employer contributions are due monthly.
B. Employer reports required by ATRS are due
on a monthly and quarterly basis.
C. The employer reports required by ATRS must
be on forms or electronic media either furnished by ATRS or approved by ATRS,
and shall be accompanied by supporting documentation as determined by
ATRS.
D. An employer report or
remittance by an employer shall not be delinquent if received by ATRS on the
15th day of the month in which it is due or postmarked by the 14th day of the
month. If the 14th falls on Saturday, Sunday, or a holiday, the postmarked date
is extended to the next business day.
E. A $150 late report penalty will be
assessed on any required employer report not received by its due
date.
F. If an employer fails to
remit employee or employer contributions by the date due above, an interest
penalty of 8% shall be assessed with daily interest accrual until
paid.
G. The Board or its designee
may, but is not required, to waive penalties and interest due from an employer
if in its discretion it finds:
1. The
delinquency was not the result of the employer's nondisclosure, fraud, or other
misrepresentation; and
2. Based on
the facts and circumstances, the required payment of the penalties and/or
interest would be unduly penal, burdensome, or manifestly unjust.
H. The Board designates the
Executive Director to waive penalties and interest from an employer in an
amount not to exceed $1,000 per fiscal year. The Executive Director shall
report to the Board any amounts excused under this section. Any request to
waive employer penalties and interest exceeding $1,000 per fiscal year shall be
submitted to the ATRS Board for consideration.
I. Annual billings for underpayments of
employee or employer contributions that result in a balance of $25 or less may
be written off by ATRS.
VI. Reporting Employer Contributions
A. The employer
contributions to be paid each fiscal year by participating employers shall be
the current employer contribution rate multiplied by the employees' total
salaries.
B. The Department of
Education shall pay from the Public School Fund, in accordance with rules
established by the Board, the ATRS employer contributions due for eligible
employees of Cooperative Education Services Areas, Vocational Centers, Arkansas
Easter Seals, and the school operated by the Department of Correction. ATRS
shall certify to the Department of Education at the close of each quarterly
report the amount of employer contributions due. The amount will be based on
the employers' reported salaries.
C. ATRS may certify to the state's Chief
Fiscal Officer the names of participating employers who are delinquent in
reporting and remitting contributions under this rule. Upon notification, the
Chief Fiscal Officer may direct a transfer of funds on deposit in the State
Treasurer's Office for any delinquent employer payments plus the eight percent
(8%) interest penalty to ATRS. (A.C.A. §
19-5-106
)
D. Supplemental salary payment
reports for previous years will be accompanied by the employer contributions
due.
E. The Arkansas Teacher
Retirement System shall return to participating employers overpaid contribution
amounts due to erroneous submission of payments or incorrect reporting of
Salary Option 2 (first $7,800) member salaries. If an overpayment of a
contribution amount is less than $25, the refund will not be issued to the
employer unless requested in writing by the employer.
F. The Arkansas Teacher Retirement System
shall not collect from participating employers an underpayment of employer
contribution amount if less than $25.
G. For members retiring and who are employed
by agencies or other institutions that use the state's 26-week payroll
schedule, employers should adhere to and report the salary, contributions, and
actual days worked through the state's fiscal year payroll schedule and for the
termination date of employment. Contributions should not be withheld on any
salary earned after the close of the current year's payroll, nor should any
salary or days of service be reported for that period of time.
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