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Indiana Public Retirement System

Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > My Fund > Public Employees > PERF ASA Only Plan FAQs > What is the difference between fixed and variable contributions in the ASA Only plan? What is the difference between fixed and variable contributions in the ASA Only plan?

There are two types of contributions within the ASA Only plan – a 3 percent fixed rate and a variable annual rate. Both are paid by the employer. Your employer also pays a percentage of payroll to fund defined benefit pension plan liabilities. This is true regardless of which PERF option (ASA Only or Hybrid) you select. These funds are not paid into members’ Annuity Savings Accounts in either the ASA Only or Hybrid plans. These funds are not available for your investment or withdrawal.

Members must meet vesting requirements (full years of participation) to qualify for a full distribution of the variable annual rate contributions and earnings.

Fixed and Variable Contributions

State law requires that 3 percent of your gross wages must be contributed to fund the ASA Only. There is also an employer contribution subaccount which receives an annual variable rate determined by the board of trustees. The employer contribution rate is 4.6 percent for the ASA Only plan through June 30, 2016. (Effective July 1, 2016 through June 30, 2017, the ASA Only plan employer contribution rate will be 3.3 percent.) In order to receive contributions and earnings from this subaccount, you must meet the vesting requirements below:

Vesting schedule is as follows:

  • One year of participation = 20 percent
  • Two years of participation = 40 percent
  • Three years of participation = 60 percent
  • Four years of participation = 80 percent
  • Five years of participation = 100 percent

As a new employee of the state of Indiana or a quasi-governmental agency, the 3 percent is paid by your employer before taxes are calculated on your wages.

This is a mandatory contribution. It is sent to INPRS for deposit in your ASA Only, as mandated by state law. If you are not vested at the time of distribution, the non-taxable benefit will be paid directly to you in a lump sum or you can elect to roll over the non-taxable amount in some cases. If you are vested at the time of distribution, IRS regulations mandate that your non-taxable benefit must be recovered over the life of the annuity. A portion of each payment will be non-taxable until your entire post-tax voluntary contribution amount has been recovered.