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SB1270 - 572R - H Ver
House Engrossed
Senate Bill
correctional
officers; supplemental contributions
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SENATE BILL 1270
AN
ACT
Amending section 38-867, Arizona
Revised Statutes; relating to the Public safety personnel defined contribution
retirement plan.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it
enacted by the Legislature of the State of Arizona:
Section
1.
1. Section
38-867, Arizona Revised Statutes, is amended to read:
START_STATUTE
38-867.
Contributions; member; employer; pickup
A. Each participant in the defined contribution plan
shall contribute the following percentage of the participant's gross
pensionable compensation by salary reduction that shall be deposited in the
participant's annuity account:
1. For a participant as defined in section 38-865,
paragraph 7, subdivision (a), item (ii), three percent.
2. For a participant as defined in section 38-865,
paragraph 7, subdivision (a), item (i), nine percent.
3. For a participant as defined in section 38-865,
paragraph 7, subdivision (b), seven percent.
B. A participant as defined in section 38-865
may make a onetime irrevocable election, before the participant is eligible to
participate in any qualified plan of the employer, to contribute more than the
percentage of the participant's gross pensionable compensation specified in
this section, up to the amount allowable under section 415(c) of the internal
revenue code. A participant as defined in section 38-865, paragraph 7,
subdivision (b) may make a onetime irrevocable election, before the participant
is eligible to participate in any qualified plan of the employer, to contribute
less than the percentage of the participant's gross pensionable compensation
specified in this section but may not elect to contribute less than five
percent of the participant's gross pensionable compensation. The election made
pursuant to this subsection shall be the participant's contribution rate for
the remainder of the participant's employment.
C. Although designated as employee contributions,
all participant contributions made to the defined contribution plan shall be
picked up and paid by the employer in lieu of contributions by the
employee. The contributions picked up by an employer may be made
through a reduction in the participant's compensation. A participant in the
defined contribution plan may not choose to receive the contributed amounts
directly instead of the employer paying the amounts to the defined contribution
plan. All participant contributions that are picked up by the
employer as provided in this subsection shall be treated as employer
contributions under section 414(h) of the internal revenue code, shall be
excluded from the participant's gross income for federal and state income tax
purposes and are includable in the gross income of the participant or the
participant's beneficiaries only in the taxable year in which they are
distributed.
D. Each employer shall annually make a contribution
equal to the following percentages of each participant's gross pensionable
compensation:
1. For a participant as defined in section 38-865,
paragraph 7, subdivision (a), item (ii), three percent.
2. For a participant as defined in section 38-865,
paragraph 7, subdivision (a), item (i), nine percent.
3. For a participant as defined in section 38-865,
paragraph 7, subdivision (b), five and one-half percent.
E. The pro rata share of the amount paid in
subsection D of this section shall be paid on each date that a participant
contribution is made and shall be credited to the participant's annuity
account.
F. Each participant as defined in section 38-865,
paragraph 7, subdivision (a), item (i) and subdivision (b) and each employer
shall contribute:
1. To the public safety personnel defined
contribution retirement plan disability program established by article 4.2 of
this chapter.
2. For participants who make an election pursuant to
section 38-869, an equal amount for the group health benefits plan
payments as specified in section 38-869 as determined by actuarial
valuations reported by the board to the employer and local board, which shall
be deposited in a separate account established pursuant to section 38-869.
G. A participant's contributions and earnings on
those contributions are immediately vested.
H. A participant as defined in section 38-865,
paragraph 7, subdivision (a) or section 38-865.01 is fully vested in the
defined contribution plan after ten years of service, with employer
contributions vesting at a rate of ten percent per year. If a
participant described in this subsection dies or is determined to be eligible
for an accidental or catastrophic disability pension pursuant to section 38-844
before completing ten years of service, the employer contributions are
immediately fully vested.
I. A participant as defined in section 38-865,
paragraph 7, subdivision (b) is fully vested in the defined contribution plan
after three years of service, with the employer contributions vesting at the
following rates:
1. Twenty-five percent after the first year of
service.
2. Fifty percent after the second year of service.
3. One hundred percent after the third year of
service.
J. If a participant as defined in section 38-865,
paragraph 7, subdivision (b) dies or is determined to be eligible for an
accidental or total and permanent disability pension pursuant to section 38-886
before completing three years of service, the employer contributions are
immediately fully vested.
K. In addition to any employer
contribution required pursuant to this section, an employer of a participant as
defined in section 38-865, paragraph 7, subdivision (
b
) may make a supplemental contribution incentive payment to the
participant's defined contribution plan account if the supplemental
contribution meets all of the following:
1. Does not
exceed $5,000 per participant
per employment or
service interval as described in this subsection
with a
five-year graded vesting schedule.
2. Is made only on a specified
years of employment or years of service interval.
3. Is made equally
AS AN AMOUNT OR AS A RATE OF PENSIONABLE compensation AT EACH INTERVAL
AS SPECIFIED IN THIS SUBSECTION to all participants of the employer as
described in this subsection who meet the
employment or service
requirement
AND REQUIREMENTS OUTLINED BY THE EMPLOYER'S
POLICY ADOPTED PURSUANT TO SUBSECTION M of this section.
4. Does not require the participant
as described in this subsection to make any additional monetary contribution to
receive the employer's supplemental contribution.
L. A supplemental contribution made
pursuant to subsection K of this section does not affect any other employer or
any other participant who is employed by the employer that made the
supplemental contribution. An employer who makes a supplemental contribution
pursuant to subsection K of this section is not obligated to make additional
supplemental contributions to a participant as described in subsection K of
this section who has received a previous supplemental
contribution. An employer may discontinue supplemental contribution
incentive payments pursuant to subsection K of this section at any time.
M. Before IMPLEMENTING a supplemental
contribution incentive payment UNDER subsection K of this section, Each
eMPLOYER SHALL ADOPT A POLICY THAT DETAILS THE REQUIREMENTS AND AMOUNTS OF THE
supplemental contribution incentive payments OUTLINED IN SUBSECTION K of this
section.
END_STATUTE