38-952

38-952. Supplemental defined contribution plan;
establishment; administration

A. The board or employer of an eligible group may establish, administer, manage and
operate a supplemental defined contribution plan. The board of trustees established by
section 38-848 may establish a single supplemental defined contribution plan for all
contributing members of the retirement system and plans it administers.

B. If a board or employer establishes a supplemental defined contribution plan:

1. The Arizona state retirement system board may delegate authority to implement
the plan to its director appointed pursuant to section 38-715.

2. The employer may delegate authority to implement the plan to its internal
benefits administrator or designee.

3. The board of trustees may delegate authority to implement the plan to the
administrator employed pursuant to section 38-848, subsection K, paragraph 6.

4. The board or employer may:

(a) Employ services it deems necessary, including legal services, for the operation
and administration of the plan.

(b) Administer the plan through contracts with multiple vendors.

(c) Perform all acts, whether or not expressly authorized, that it deems necessary
and proper for the operation and protection of the plan.

(d) For the purposes of this article, enter into intergovernmental agreements
pursuant to title 11, chapter 7, article 3.

C. A supplemental defined contribution plan shall be designed to be a qualified
governmental plan under section 401(a) of the internal revenue code. The legislature
intends that a supplemental defined contribution plan is a qualified plan under section
401 of the internal revenue code, as amended, or successor provisions of law, and that a
plan is exempt from taxation under section 501 of the internal revenue code. The board or
employer may adopt any additional provisions to a plan that are necessary to fulfill this
intent.

D. Although designated as employee contributions, all employee contributions made
to a 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 employee's compensation or an offset against future compensation increases, or a
combination of both. An employee participating in a plan does not have the option of
choosing to receive the contributed amounts directly instead of the employer paying the
amounts to the plan. It is intended that all employee 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 employees'
gross income for federal and state income tax purposes and are includable in the gross
income of the employees or their beneficiaries only in the taxable year in which they are
distributed. The specified effective date of the pickup pursuant to this subsection shall
not be before the date the plan receives notification from the internal revenue service
that all employee contributions that are picked up by the employer as provided in this
subsection shall be treated as employer contributions pursuant to section 414(h) of the
internal revenue code. Until notification is received, any employee contributions made
under section 38-953 are made with after-tax contributions.