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Retirement Options Explanation

Total Service Credit

Your service credit equals the number of full and partial years during which you made required contributions plus any Service Purchase credited to your account. For more information regarding the purchase of service credit, please visit the ASRS home page and select online estimators.

Average Monthly Compensation

Average Monthly Compensation is determined by one of three calculation methods listed below, based upon a member’s initial membership date:

36-Month Calculation

The 36-month calculation is required for members who began contributing to the ASRS on or after January 1, 1984 and prior to July 1, 2011. To determine your benefit using this formula, the ASRS averages your highest 36 consecutive months of salary within the last 120 months of service. This calculation excludes any termination payments you receive upon retirement, such as sick leave or vacation payouts.

60-Month Calculation - Post July 1, 2011 members

The 60-month calculation is required for members who began contributing to the ASRS on or after July 1, 2011. To determine your benefit using this formula, the ASRS averages your highest 60 consecutive months of salary within the last 120 months of service. This calculation excludes any termination payments you receive upon retirement, such as sick leave or vacation payouts.

60-Month Calculation - Pre January 1, 1984 members

The 60-month calculation is an option for members who began contributing to the ASRS before January 1, 1984. To determine your benefit using this formula, the ASRS averages your highest 60 consecutive months of salary within the last 120 months of service. This calculation includes base salary, additional contracts, overtime and any other form of compensation, plus termination payments. Termination payments may include sick pay (except for state and county employees), vacation pay, compensation time pay, retirement incentive pay (excludes payments made after retirement begins, such as VIP or ESP), or any other payments paid at the time of retirement. The average monthly compensation for members who began contributing before January 1, 1984 is automatically based on whichever calculation provides the greater benefit amount.

If you qualify for the pre-1984 60-month averaging, lump-sum payments when you leave work may increase your average and, as a result, your monthly benefit. These payments include accrued annual and sick leave compensatory time when you leave employment. Be sure to include the anticipated amounts of such payments when you request your benefit estimate. State and county employees may not use sick leave in the 60-month calculation.

Straight Life Annuity

The ASRS will pay you a monthly benefit during your lifetime. If your death occurs before all your contributions plus interest have been paid, the remaining balance will be paid to your beneficiary.

Term Certain Options

In addition to paying you a lifetime benefit, the Term Certain option guarantees a minimum number of payments. If you die before receiving the minimum number of payments, the ASRS will continue payments at the same amount to your beneficiary. Please see Five, Ten, and Fifteen Year Certain options for more information.

Five Year Certain Option

The ASRS will pay you a monthly benefit during your lifetime. If your death occurs before receiving 60 monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 60 have been made. Payments will cease upon your death if you die after you receive 60 monthly payments.

Ten Year Certain Option

The ASRS will pay you a monthly benefit during your lifetime. If your death occurs before receiving 120 monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 120 have been made. Payments will cease upon your death if you die after you receive 120 monthly payments.

Fifteen Year Certain Option

The ASRS will pay you a monthly benefit during your lifetime. If your death occurs before receiving 180 monthly payments, the ASRS will pay the remaining payments to your beneficiary until all 180 have been made. Payments will cease upon your death if you die after you receive 180 monthly payments.

Joint Survivor Options

The ASRS will pay you a lifetime benefit, and then continue paying a certain percentage of that benefit to your beneficiary at your death. The beneficiary will receive this benefit for his or her lifetime.

100% to Joint Survivor

The ASRS will pay you a monthly benefit during your lifetime. Upon your death, the ASRS will pay a benefit to your beneficiary for the rest of his or her life. The payment to your beneficiary will be equal to 100% of your monthly benefit. You may choose this option if your beneficiary is your spouse. If your beneficiary is not your spouse, you may choose this option only if you are NOT more than 10 years older than your beneficiary.

66 2/3% to Joint Survivor

The ASRS will pay you a monthly benefit during your lifetime. Upon your death, the ASRS will pay a benefit to your beneficiary for the rest of his or her life. The payment to your beneficiary will be equal to 66 2/3% of your monthly benefit. You may choose this option if your beneficiary is your spouse. If your beneficiary is not your spouse, you may choose this option only if you are NOT more than 24 years older than your beneficiary.

50% to Joint Survivor

The ASRS will pay you a monthly benefit during your lifetime. Upon your death, the ASRS will pay a benefit to your beneficiary for the rest of his or her life. The payment to your beneficiary will be equal to 50% of your monthly benefit. All members may choose this option.

Partial Lump Sum Distribution Options

At retirement, a member may elect a Partial Lump Sum payment equal to 1 to 36 months of the member's calculated Straight Life Annuity benefit. The life annuity amount will be actuarially reduced to offset the lump sum payment. The dollar amount of the lump sum is not affected by the retirement option chosen. Your account balance will be reduced by the Partial Lump Sum amount for purposes of the Refund Provision. The monthly benefit and the Partial Lump Sum benefit are shown before taxes or any other deductions are withheld.

This payment is subject to federal and state taxes, unless the money is rolled over to another eligible retirement plan. If you are retiring prior to attaining age 55 and do not roll the distribution into another eligible plan or IRA, the distribution may be subject to an additional premature distribution federal tax of 10%.

Optional Premium Benefit

You may elect to receive a reduced premium benefit that, upon your death, may be continued to your eligible beneficiary. You must elect a Joint and Survivor or a Term Certain retirement option to provide this premium benefit to your eligible beneficiary.

Medicare

Medicare is a health insurance program for people 65 years of age and older, some disabled people under 65, and people with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant). Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are a citizen or permanent resident of the U.S. You will be eligible for Medicare when you turn 65 even if you are not eligible for Social Security retirement benefits. Contact the Social Security Administration at least 3 months prior to your 65th birthday to learn more about Medicare Parts A (hospital coverage) and B (doctor coverage).

Basic Premium Benefit

The ASRS will provide a payment toward your medical and dental insurance premiums if you elect health insurance through the ASRS, Arizona Department of Administration (ADOA), or your participating employer. You need a minimum of 5 years of service to receive 50% of the Premium Benefit, 6 years for 60%, etc., and at least 10 years to receive 100%. It is important to note that the ASRS will never pay a Premium Benefit amount that exceeds your actual premium cost. For example, if the estimator lists that you are eligible to receive a Premium Benefit up to $260, but your actual health insurance premium cost is only $100, than you will only receive a $100 Premium Benefit.

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