Board of Supervisor’s Adopt ARC

On April 24th the Board of Supervisor’s adopted §31658, commonly known as Additional Retirement Credit (ARC) time. 

This means that if you are an active county employee in a contributory plan with 5 years of SamCERA service credit, you are eligible to purchase ARC.  

SamCERA is now accepting funds for ARC purchases.  

To request a cost, click here for the ARC Cost Request Form (PDF).  Each cost memo will bear a date after which it is no longer valid.  If a cost expires before a member can make the purchase or begin the purchase plan, the member must request an updated cost.

SamCERA Frequently Asked Questions (FAQ) for Additional Service Credit (ARC)

1.  Q:  What is Additional Retirement Credit (ARC)?
A:  Additional Retirement Credit or "ARC" is credit you can purchase to increase your total retirement service credit.  ARC differs from purchase of prior service because this additional service credit is not based on your actual employment with the County of San Mateo. 

2.  Q:  Why should you consider purchasing ARC?
A:  Adding years of service credit may increase your monthly retirement allowance and any continuance that would be received by an eligible beneficiary(s) with survivorship rights.  Also, each annual April 1 cost-of-living adjustment (COLA) increase is applied to the retiree's total monthly retirement allowance, which will include the increase in benefit due to any ARC purchased.

3.  Q:  Who is eligible to purchase ARC?
A:  Active county employees in a contributory plan with at least five years of SamCERA service credit may purchase ARC. For purposes of determining eligibility to purchase ARC, the five years of SamCERA service credit may include already purchased extra-help time and service that is reinstated due to a redeposit.  However, reciprocal service can not be included.
Deferred members, retired members and Plan 3 (noncontributory) members, are not eligible to buy ARC.  In all cases a member must sign their ARC Purchase Contract prior to termination from San Mateo County employment.

4.  Q.  How much ARC time can be purchased?
A:  ARC can be purchased from a minimum of one year to a maximum of five years in increments of one year.

5.  Q:  How do I find out what my cost will be to purchase ARC?
A:  The cost of ARC is calculated using a "present value formula," which factors your current salary and age with actuarial assumption to calculate the value of your additional benefit in today's dollars. The member pays the full actuarial value of the additional future retirement benefit, even if the county picks up all or a portion of your regular retirement contributions.  By law, ARC costs must be calculated so as to not place any additional financial burden on the retirement system.
To receive an exact cost, you must submit a completed SamCERA “ARC Cost Request Form.”  To request a Cost Statement, click here for the ARC Cost Request Form. 
A Purchase Contract setting forth the cost of your purchase will bear a date after which it is no longer valid.  If a cost expires before you commence your purchase, you must request an updated cost from SamCERA.

To estimate your own ARC costs, click here for the ARC Cost Estimator.

6.  Q:  What are the main limitations of ARC?
A:  ARC cannot be used to meet the minimum eligibility requirements for a service or disability retirement or toward a cancellation of contributions for certain members who attain 30 years of service credit.  Also, your retirement allowance cannot exceed 100 percent of your final compensation, regardless of ARC.

7.  Q: What happens if I stop working for the County before my ARC contract is paid in full?
A:  If you apply for and receive a service retirement before your contract is paid in full, you may complete the contract within 120 days after your effective date of retirement or the end of the agreed payment contract period, whichever date is earlier.  Your retirement allowance will be recalculated to reflect the total ARC purchased (prorated if not paid in full).
If you apply for and receive a disability retirement, either service-connected or non-service connected, your benefit amount may or may not be increased due to an ARC purchase. This will depend on how many years of service credit you have. In no event will contributions be returned to a member who has made an ARC purchase and later is approved for a disability retirement.
If you leave county service and go into deferred retiree status and you want to complete your purchase, you must do so within 120 days of termination of your county service or the end of the agreed payment contract period, whichever date is earlier.  If you do not complete the purchase, only the amount of ARC time paid for will be added to your service credit.
If you leave county service and choose to withdraw your contributions, then your withdrawn amount will include the funds from your ARC time purchase as well.  However, if you do withdraw all of your contributions, you will forfeit all SamCERA benefits, including but not limited to service retirement and disability retirement benefits. 

8.  Q:  What happens if I die before my ARC contract is paid in full?
A:  If you die before your contract is paid in full, your eligible beneficiary(s) with survivorship rights may complete the contract within 120 days after the date of death. The survivor's allowance will be recalculated to reflect the total ARC purchased (prorated if not paid in full).

9.  Q:  How can I pay for ARC?
A:  ARC may be purchased with any of these types of funds:

You may choose the length of your ARC contract; contract periods may range from a minimum of one lump sum payment to a maximum of ten years (260 payment periods).

10.  Q: Will my ARC payroll deductions affect my regular retirement contribution payroll deductions?
A:  No. Initiating an ARC contract will not change the payroll deductions for your regular bi-weekly retirement plan contributions. Any payroll deductions for ARC will be in addition to your regular retirement contributions.  Your ARC payroll deductions are separate and not subject to pick up, if any, by the county.

11.  Q:  What is the best time to purchase ARC from a financial standpoint?
A:  Because SamCERA assumes that it will earn income on your ARC payment(s) to help cover the cost of your additional benefit, the earlier a person purchases ARC the more interest is assumed to be earned and the lower the cost will be.  However, you should discuss with your financial and tax advisors whether to purchase ARC and, if so, at what time during your career.

12.  Q: Would I be able to purchase ARC through bi-weekly pre-taxed payroll deductions?
A: No, ARC contributions must be made with after-tax dollars if purchased through a bi-weekly payroll deduction.

13. Q: Can I buy more ARC later if I buy less than five years now?
A:  Yes.  Any combination of contracts that adds to no more than the purchase of five total years of ARC would be allowable.  At a maximum you could enter into five contracts over the course of your county career, each time buying one year of ARC.

PLEASE NOTE:

• SamCERA does not provide financial or tax advice.  You should consult your financial and tax advisors regarding financial decisions.
• This FAQ document summarizes information regarding federal and state laws, rules and regulations regarding the purchase of Additional Retirement Credit.  In any conflict between this document and federal and/or state laws, rules and regulations, the federal and/or state laws, rules and regulations shall apply.