HB 2008 Summary

• Allows employers to prepay 401(a) pension contributions directly to the Arizona State Retirement System (ASRS) according to a written agreement.

• Prepaid contributions and accrued earnings can be deposited in either the ASRS trust fund or a section 115 trust, with earnings accruing at the ASRS total fund rate of return or actual rate of return from short-term investments as requested by the employer.

• Limits prepayment amounts to not exceed the employer's net pension liability and prohibits additional prepayments once unamortized prepaid contributions and accrued earnings equal or exceed the employer's net pension liability.

• Requires that any prepayment agreement involving the state or a state agency must be funded through a legislative appropriation signed by the governor, and any use of prepaid amounts or earnings must be authorized by legislation.

• Exempts prepaid contributions and accrued earnings from state, county, and municipal taxes, with intent that accrued earnings not be subject to federal income tax.