088.00.21 Ark. Code R. § 002 - ATRS Rule 7 Reporting and Eligibility
ATRS RULE 7
SERVICE CREDIT, CONTRIBUTIONS, REPORTING, AND FINAL AVERAGE SALARY
Arkansas Code §§ 24-2-701, 24-7-103, 24-7-202, 24-7-401, 24-7-406, 24-7-411, 24-7-601 - 24-7-611, 24-7-705, 24-7-708, 24-7-736, and 24-7-1303
I.
Definitions
a. "Actual service" means service rendered in
a position covered by the Arkansas Teacher Retirement System (ATRS), not
including purchased service credit, free service credit, or reciprocal
service;
b. "Credited service"
means service that is creditable as service by ATRS;
c. "Covered employer" as it relates to
outsourcing means a public school, public educational agency, or other eligible
employer participating in ATRS;
d.
"Eligible employee" for the purpose of salary or compensation limitations
concerning the calculation of a final average salary means a person who was a
member of ATRS before the first plan year beginning after December 31,
1995;
e. "Embedded Employee" means
a person who:
1. Provides an outsourced
service on the premises of a covered employer; and
2. Is employed and paid by an outsource
contractor;
3. Is not employed by:
A. A covered employer listed under Arkansas
Code §
24-7-202;
or
B. An employer that offers ATRS
as optional retirement plan as of the date of outsourcing;
f. "Full service year" means
employment with a covered employer for one hundred sixty (160) days or more in
a fiscal year;
g. "Partial service
year" means employment with a covered employer for less than one hundred sixty
(160) days in a fiscal year;
h.
"Participating employer" means a covered employer that outsources and opts for
the embedded employees of all of the covered employer's outsource contractors
to become members of ATRS;
i.
"Service" means employment rendered as an employee;
j. "Specialized support position" means a
position requiring less than eight (8) working hours per day, including without
limitation the positions of bus driver, custodial worker, and cafeteria
worker;
k. "Surcharge employer"
means a covered employer that outsources and pays a surcharge to ATRS in lieu
of opting for the embedded employees of outsource contractors to accrue
credited service in ATRS; and
l.
"Youth participant" means an individual:
1.
Who is:
A. Enrolled in a secondary public
school as a student; and
B.
Employed through his or her participation in a summer work program for a period
between the first day of June and the last day of August; and
2. Whose compensation is disbursed
by a covered employer as part of an agreement between the covered employer and
an administrator of the summer work program that designates the covered
employer as a passthrough fiscal agent.
II.
Service Credit
a. Generally
1. The Board of the Arkansas Teacher
Retirement System (Board) shall determine the:
A. Number of years and corresponding
fractions for service that may be credited to a member; and
B. Amount of service to be credited to a
member.
2. A member
shall earn one (1) year of credited service if the member completes a full
service year.
3. A member shall not
earn more than one (1) year of credited service in a fiscal year.
4. ATRS shall certify proof of a member's
service on forms and with documentation required by ATRS.
b. Unused Leave
1. Unless otherwise provided by law, paid or
unpaid accrued, unused sick leave shall not be credited as service in
ATRS.
2. If a member dies during
active service on or after July 1, 2013, the member's unused catastrophic leave
and unused donated leave shall not be credited as service.
c. Contract Buyouts, Settlements, Claims,
Awards, and Court-Ordered Payments
1. A member
shall not accumulate service credit in ATRS during the time that payments under
a contract buyout agreement, settlement, claim, judgment, arbitration award,
decree, or court-ordered payment are paid to the member by a covered employer
unless the member continues to work on-site for the covered employer.
2. A member shall not receive service credit
or additional salary from ATRS under a settlement agreement or court order
unless purchased at actuarial cost.
d. Service Provided After July 1, 1971
1. Actual service credited to a member with
service after July 1, 1971, shall be as follows:
Number of Days Worked in a Fiscal Year |
Service Credit Earned |
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 |
e.
Members Employed for Less Than Forty (40) Days
1. Unless otherwise provided by the law
applicable to ATRS or the ATRS Rules, a member who is employed for less than
forty (40) days during a fiscal year is ineligible for credited service or
retirement benefits for that fiscal year.
f. Rollover Service Days
1. Beginning in the 2011-2012 fiscal year, a
contributory member's service days shall be carried forward from previous
fiscal years until at least forty (40) days of service are earned by the
member.
2. Service days shall not
be carried forward for a contributory member if the member earns at least forty
(40) days of service in a fiscal year by using regular service days,
accumulated service days, or both regular service and accumulated service
days.
g. Full-Time
Employees
1. A member who is employed
full-time or employed in a position for which a regular or typical work day
includes at least eight (8) working hours shall earn one (1) day of credited
service if the member works for at least four (4) hours of the eight-hour
working day.
h.
Employees in Specialized Support Positions
1.
Employment with Less Than Eight-Hour Working Days
A. Beginning July 1, 2011, a member employed
in a specialized support position shall earn one (1) day of credited service if
the:
i. Specialized support position is
certified as a specialized support position to ATRS; and
ii. Covered employer reasonably determines
that the member performed the regular and usual service expected of an employee
in that position during the work day.
2. Employment with Unspecified Contractual
Work Days
A. A member who is employed in a
specialized support position and does not have a contractual obligation to work
a specified number of days shall earn one (1) day of credited service for each
day of service provided by the member.
B. A member described in this ATRS Rule 7
II.h.2.A shall earn one (1) day of credited service for each day of service
provided by the member regardless of whether the member works for less than
four (4) hours on a work day.
i. Employees in Non-Specialized Support
Positions
1. The credited service earned by a
member who is employed in a nonspecialized support position and does not work
for at least four (4) hours each working day shall be calculated by dividing
the total number of hours worked by the member in a fiscal quarter by four
(4).
III.
Member and Employer Contributions
a. Contributions - Generally
1. The Board shall annually set member and
employer contribution rates for the following fiscal year.
2. ATRS shall notify annually each covered
employer of the contribution rates set by the Board.
3. A member's and covered employer's
contributions are due monthly, regardless of the member's concurrent membership
status.
b. Member
Contributions
1. Authority of the Board
A. The Board shall not set the member
contribution rate at less than six percent (6%).
B. The Board may increase the member
contribution rate to maintain actuarial soundness.
2. Contribution Rate
A. A contributory member shall contribute the
percentage of his or her salary that is set by the Board.
B. A member's contribution is due monthly,
regardless of the member's concurrent membership status.
3. Remittance of Member Contributions by
Covered Employer
A. A covered employer shall
remit member contributions by pick-up from the salary earned by each
member.
B. Member contributions
shall be treated as employer contributions under the applicable provisions of
the Internal Revenue Code and the Income Tax Act of 1929, Arkansas Code §
26-51-101 et
seq.
C. A covered employer may
remit a member's contributions by implementing a:
i. Reduction in the cash salary of the
member;
ii. Setoff against the
member's future salary increases; or
iii. Both a reduction in the cash salary of
the member and a setoff against the member's future salary increases.
c. Employer
Contributions - Public School Employers and Covered Employers
1. Covered Employers and Public School
Employers
A. A covered employer's employer
contributions shall be the sum of the current employer contribution rate set by
the Board for the fiscal year multiplied by the total gross salaries of all the
covered employer's employees.
B. A
public school employer shall pay up to fourteen percent (14%) of the employer
contribution rate.
C. Up to fifteen
percent (15%) of any additional employer contributions required from a public
school employer shall be paid from additional funds appropriated by the state
for the purpose of paying employer contributions to ATRS.
2. Employer Contributions Not Paid by the
Department of Education
A. A covered employer
shall pay annually, for its employees, employer contributions that are not
required to be paid by the Department of Education.
B. The employer contribution rate shall be
the current state contribution percent multiplied by the total covered salaries
of the covered employer's employees in the fiscal year.
3. Employer Contributions Paid by the
Department of Education
A. In accordance with
rules established by the Board and the Department of Education's appropriations
act, the Department of Education shall pay employer contributions due for
eligible employees of covered employers, including without limitation the
following:
i. State agencies as allowed under
the Transformation and Efficiencies Act, Acts 2019, No. 910;
ii. Cooperative Education Services
Areas;
iii. Vocational
Centers;
iv. Arkansas Easter Seals;
and
v. A school operated by the
Corrections School System.
B. The Department of Education shall pay the
employer contributions for eligible employees of covered employers from the
Public School Fund.
C. At the close
of each quarterly report, ATRS shall report the amount of employer
contributions due from the Department of Education.
D. The employer contributions due from the
Department of Education shall be based on the salaries of the eligible
employees reported to ATRS by each covered employer.
d. Employer Contributions -
Participating Employers
1. The Board shall
annually notify each participating employer of the employer contribution rate
established by the Board for the upcoming fiscal year.
e. Employer Contributions - Surcharge
Employers
1. A surcharge employer's employer
contributions shall be a monthly surcharge on the total salaries paid to all
the surcharge employer's embedded employees on an aggregate basis as provided
under Arkansas Code §
24-7-506(c).
IV.
Employer
Reports
a. Generally
1. A covered employer shall submit:
A. Reports and supporting documentation
required by ATRS on a monthly and quarterly basis; and
B. Reports and supporting documentation
electronically to ATRS on forms approved by ATRS.
b. Covered Employers
1. Youth Participant - Summer Work Programs
A. At the request of ATRS, a covered employer
shall provide ATRS with a memorandum of understanding, partnership agreement,
or another similar document related to the covered employer's actions as a
passthrough fiscal agent for a youth participant in a summer work
program.
B. A covered employer
shall provide ATRS with all documents related to the agreement designating the
covered employer as a pass-through fiscal agent before disbursing compensation
to a youth participant.
C. A
covered employer that acts as a pass-through fiscal agent shall not report a
youth participant as an employee for ATRS purposes.
2. Twenty-Six (26) Week Payroll
A. A covered employer that uses a
twenty-six-week payroll system shall report an employee's salary,
contributions, and actual working days through the current fiscal year ending
June 30 if the employee is a member of ATRS and retiring.
B. If an employee is a member of ATRS and
retiring effective July 1, a covered employer shall not:
i. Withhold contributions on a salary earned
by the member after the close of payroll for the current fiscal year;
and
ii. Report any salary paid to
the member or actual working days performed by the member after the close of
payroll for the current fiscal year.
C. ATRS shall refund employee contributions
and employer contributions remitted to ATRS from a salary paid to the employee
after the end of the current fiscal year or payroll period for the current
fiscal year.
c. Surcharge Employers and Participating
Employers
1. Generally
A. A covered employer may submit a request to
ATRS for a determination on whether a service or position is subject to the
provisions of Arkansas Code §
24-7-506.
2. Surcharge Employers
A. A surcharge employer shall submit a
surcharge report monthly to ATRS with all other reports required by
ATRS.
3. Participating
Employers
A. A participating employer shall
submit a contribution report monthly to ATRS with all other reports required by
ATRS.
d.
Employer Submission of Reports
1. Electronic
Submission of Reports
A. Beginning on July 1,
2022, a covered employer shall:
i.
Electronically report employee contributions and employer contributions made by
the covered employer through the ATRS portal; and
ii. Pay employee contributions and employer
contributions through electronic transfer.
2. Electronic Submission of Reports - Waiver
A. A covered employer shall submit a written
request for a temporary waiver to the Board by July 1, 2022, if the covered
employer is unable to:
i. Electronically
report employee contributions or employer contributions; or
ii. Pay employee contributions or employer
contributions through electronic transfer.
B. A request for a temporary waiver shall
include a timeline for when the employer will be able to comply with submitting
reports electronically and paying employee contributions or employer
contributions through electronic transfer.
3. Deadline for Submission of Reports
A. A report and supporting documentation
submitted by a covered employer shall not be considered untimely if:
i. The report and supporting documentation
are received by ATRS on the tenth (10th) day of the
month in which the report and supporting documentation are due; or
ii. In the case of a covered employer that
obtains a waiver as provided under this ATRS Rule 7 IV.d.2. or is unable to
electronically submit a report and supporting documentation, the report and
supporting documentation are mailed and postmarked by the fourteenth
(14th) day of the month.
a. If the fourteenth
(14th) day of the month falls on a Saturday, Sunday,
or holiday, the postmarked date shall be the next business day.
4. Failure
to Submit Report or Remit Contributions and Penalties
A. Late Fee for Untimely Reports
i. A one hundred fifty dollar ($150) late fee
shall be assessed on a covered employer for each occurrence in which a report
and supporting documentation is untimely submitted to ATRS.
B. Interest Penalty
i. If a covered employer does not remit
member or employer contributions, including surcharge contributions, by the
monthly due date, ATRS shall assess an interest penalty equal to ATRS'
actuarially assumed rate of return on investments and daily interest accrual
against the covered employer until the member or employer contributions,
whichever is applicable, are paid.
ii. The Board or its designee, in its
discretionary authority, may waive an interest penalty assessed against a
covered employer if:
a. The delinquency is not
a result of the covered employer's nondisclosure, fraud, or other
misrepresentation; and
b. Based on
the facts and circumstances, payment of the penalty interest would be unduly
penal, burdensome, or manifestly unjust.
iii. The Board shall not instruct the
Executive Director of ATRS (executive director) to waive one (1) or more
interest penalties assessed against a covered employer if the amount will
exceed one thousand dollars ($1,000) for the fiscal year.
iv. A covered employer may submit an interest
penalty waiver request for one (1) or more interest penalties exceeding one
thousand dollars ($1,000) for the fiscal year to the Board.
v. The executive director shall report each
interest penalty waived under this ATRS Rule 7 IV.d.4.B to the Board.
5. Report to Chief
Fiscal Officer of the State
A. ATRS may
certify the names of each covered employer that fails to timely report and
remit member or employer contributions, including surcharge contributions, to
the Chief Fiscal Officer of the State.
B. After receiving the certification from
ATRS, the Chief Fiscal Officer of the State may direct a transfer of funds on
deposit in the State Treasury for the payment of delinquent member or employer
contributions and an assessed interest penalty. (Arkansas Code §
19-5-106)
6. Refunds
A. Service History Conflicts
i. A conflict in a member's service history
due to concurrent service shall be resolved at the end of the fiscal year and
ATRS shall issue refunds as appropriate.
B. Overpayments and Underpayments
i. ATRS shall return overpayments of employee
contributions and employer contributions resulting from erroneous contribution
submissions or incorrect reporting of Salary Option 2 member salaries (first
seven thousand eight hundred dollars ($7,800)) to the appropriate covered
employer.
ii. Contribution
Overpayments
a. ATRS shall send written
notification to a covered employer of a contribution overpayment that is less
than the de minimis amount that may be refunded.
b. A contribution overpayment that is less
than the de minimis amount shall not be refunded to the appropriate covered
employer unless the covered employer submits a written request for a refund to
ATRS within fourteen (14) days of receiving the written notice of the
contribution overpayment from ATRS.
c. If a covered employer does not submit a
written request for a refund within fourteen (14) days of receiving the written
notice of the contribution overpayment from ATRS, the amount of the
contribution overpayment shall be forfeited to the trust assets of
ATRS.
iii. Contribution
Underpayments
a. ATRS shall not collect a
contribution underpayment of less than the de minimis amount from a covered
employer.
V.
Final Average Salary
a. Salary Limitations
1. Authority of the Board
A. The Board may adopt rules to modify the
definition of salary for the purpose of calculating ATRS retirement benefits.
(Arkansas Code § 24-7202)
2. Salary - Multiple Covered Employers
A. ATRS shall include the salary received
from each of a member's covered employers when calculating the member's final
average salary.
3.
Internal Revenue Code § 401(a)(17)
A.
Regardless of any provision in a state statute, rule, or regulation to the
contrary, remuneration, salary, or other compensation that exceeds the
limitations set forth provided in the Internal Revenue Code of 1986,
26 U.S.C.
§
401(a)(17), as it
existed on January 1, 2011, shall not be used for the purposes of calculating
the final average salary on which ATRS benefits are based.
B. The limitation on remuneration, salary, or
compensation for an eligible employee shall not be less than the amount that
was allowed to be considered by ATRS as in effect on July 1, 1993.
4. Excluded Remuneration, Salary,
or Compensation
A. ATRS shall not consider
remuneration, salary, or compensation paid by a covered employer to a member as
a salary earned by the member if the:
i.
Remuneration, salary, or compensation is paid as an incentive payment, bonus,
separation payment, additional salary, or special payment in consideration for
the member's agreement to retire, terminate employment, or not renew a contract
with the covered employer;
ii.
Offer described in this ATRS Rule 7 V.a.4.A.i. is extended by the covered
employer to two (2) or more members;
iii. Remuneration, salary, or compensation is
not offered as an additional salary or payment for the purchase of service
credit that is part of a separation agreement resulting from the resolution of
a claim of wrongful termination;
iv. Remuneration, salary, or compensation is
not payment for accumulated, unused sick leave that:
a. Accrued in the years immediately preceding
the member's termination of covered employment; and
b. Were in excess of the number of sick days
that the covered employer allowed the member to carry forward;
v. Covered employer
offers a voluntary early retirement incentive plan, staff reduction plan, or
buyout plan that would require the member as a participant of the plan to
retire or terminate his or her employment with the covered employer;
and
vi. Member voluntarily
participates in the plan in exchange for the renumeration, salary, or
compensation offered by the covered employer.
B. A covered employer shall not withhold a
member's contributions or pay employer contributions from a remuneration,
salary, or compensation paid to a member if the remuneration, salary, or
compensation is subject to a salary limitation as provided by this ATRS Rule
7.
C. A covered employer that
offers an early retirement plan, separation, plan, or contract nonrenewal plan
and intends to pay remuneration, salary, or compensation that is subject to a
salary limitation as provided by this ATRS Rule 7 shall notify ATRS before
making a payment under the plan.
D.
At the request of a covered employer, ATRS shall:
i. Review a potential plan or payment that
may be subject to a salary limitation as provided by this ATRS RULE 7;
and
ii. Provide guidance to the
covered employer concerning the applicability of the salary limitation to the
plan or payment.
E. A
covered employer may appeal ATRS' decision concerning the applicability of a
salary limitation to a plan or payment to the Board using ATRS' appeal
procedures provided in ATRS Rule 13.
5. Conflict of Laws
A. The law applicable to ATRS and the ATRS
Rules shall be controlling if a conflict exists between ATRS' calculation of
final average salary and a covered employer's laws or policies concerning the
compensation of final average salary.
b. Service Years Included in Computation of
Final Average Salary
1. Unused Leave
A. If a member dies during active service on
or after July 1, 2013, the member's paid or unpaid accrued, unused sick leave,
shall be credited as service in the fiscal year of the member's death for the
purpose of determining the member's retirement eligibility, final average
salary, and eligibility for other ATRS benefits.
2. Full Service and Partial Service Years
A. A partial service year shall be excluded
from the calculation of a member's final average salary unless the:
i. Partial service year is higher than a full
service year; or
ii. Member has
less than the required number of years to calculate a final average
salary.
3.
Number of Service Years Used to Calculate Final Average Salary
A. The Board shall set annually the
applicable number of years to be used in computing final average salary for
retirement benefits at not less three (3) years and not more than five (5)
years.
B. Unless otherwise provided
by law applicable to ATRS or the ATRS Rules, effective July 1, 2018, ATRS shall
calculate a member's final average salary using the five (5) years in which the
member received the highest salary from a covered employer.
C. Members with Insufficient Credited Service
or Full Service Years
i. If a member has less
than the minimum number of years of credited service that would be used to
calculate a final average salary, the member's final average salary shall be
the total salary paid to the member for his or her years of credited service
divided by the member's total credited years of service.
ii. If a member does not have full service
years for the total years of service used in the calculation of final average
salary, the Board may establish by rule a fair base salary for a member's final
average salary for purposes of comparing the member's highest salary
years.
D. Active Members
with Three (3) Full Service Years as of July 1, 2018
i. For an active member who has three (3) or
more full service years as of July 1, 2018, ATRS shall:
a. Treat the active member as if he or she
was retiring or entering the Teacher Deferred Retirement Option Plan (T-DROP)
as of June 30, 2018; and
b.
Determine the benchmark final average salary using the highest salary from the
member's three (3) full service years through fiscal year 2018.
ii. A final average salary
calculation using three (3) full service years shall be the benchmark
comparison for a five-year final average salary calculation to which the active
member may be entitled.
iii. ATRS
shall calculate the active member's final average salary using the five (5)
years in which the active member received the highest salary from a covered
employer if at the time of the active member's retirement using a five-year
calculation of the final average salary is higher than using a three-year
calculation.
E. Inactive
Members Who May Have Three (3) Full Service Years of July 1, 2018
i. ATRS shall not use a benchmark final
average salary for an inactive member unless the inactive member provides ATRS
with appropriate documentation showing that the inactive member was active in a
reciprocal system or alternate retirement plan during the 2018 fiscal
year.
F. Members with
Reciprocal Service Credit
i. For a member with
reciprocal service credit, ATRS shall use the highest final average salary
calculated, at the time of the member's retirement, by ATRS or a reciprocal
system in which the member has at least two (2) years of service credit
pursuant to Arkansas Code §
24-2-402.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.