AZ SB1082

Amends section 38-737 of Arizona Revised Statutes to allow employers to prepay 401(a) pension contributions directly to the Arizona State Retirement System (ASRS) through a written agreement.

Prepaid contributions may be deposited in either the ASRS trust fund or a Section 115 trust, with earnings accruing at the ASRS total 401(a) pension fund rate of return.

Employers cannot prepay contributions in amounts greater than their net pension liability, and prepayments must cease once unamortized contributions plus accrued earnings equal or exceed the employer's net pension liability.

Prepaid contributions and accrued earnings can only be used to reduce future 401(a) pension contributions required from the employer, and ASRS must provide annual statements documenting prepaid amounts and earnings.

Assets transferred in or out of ASRS trust funds and accrued earnings are exempt from state, county, and municipal taxes, with ASRS authorized to adopt rules to ensure federal tax-exempt status.