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BENEFITS

ADDITIONAL RETIREMENT CREDIT (ARC)

PURCHASING ARC

Additional Retirement Credit (ARC) provides a way to increase your years of service credit. It is not based on actual employment.

Adding years of service credit by purchasing ARC will increase your total years of service credit. Since years of service credit is one of the factors used to calculate your retirement allowance, increasing your service credit through ARC will increase your monthly retirement allowance.*

*In certain circumstances, this may not apply to a service-connected disability. For more information, call 1-800-786-6464.

Purchasing ARC: The Process

Purchasing ARC:

The Process

  1. Use the ARC Calculator on My LACERA to create an estimate based on your data on file with LACERA.*
  2. If you decide to proceed with the purchase, print the estimate and mail to LACERA to request an official ARC Purchase Contract or call 1-800-786-6464 for an ARC request.
  3. LACERA sends you a Cost Notification Letter, a Payment Contract, and a personalized ARC Payment Schedule.
  4. If you elect to purchase ARC, you must complete the contract and return it by the indicated expiration date.
  5. Payroll deductions (if elected) will begin within 60 days of receipt of your signed Payment Contract.

*If you’re not registered with My LACERA, use the original ARC Calculator to get a rough idea of your cost to purchase ARC.

WHO IS ELIGIBLE TO PURCHASE ARC?

If you are an active County employee in any LACERA retirement plan and you have at least five years of actual County service credit, you are eligible to purchase ARC.

County service may include:

  • All LACERA retirement plans
  • Dual account service (safety and general)
  • PERS transfer credit

Reciprocal service and purchased temporary time are not included. ARC is not available to deferred members.

Limitations

ARC is added to your total service credit only for the purpose of calculating your retirement. ARC is not applied:

  • To meet the minimum eligibility requirements for a service or disability retirement (disability retirement is not available to Plan E members)
  • When calculating additional LACERA-administered retiree healthcare benefits, or other benefits based on total years of service credit
  • Toward a cancellation of contributions for members who attain 30 years of service credit

Minimum/Maximum Purchase

The minimum purchase of ARC is one year (12 months); the maximum purchase is five years (60 months) under any Plan or combination of Plans. You may choose the length (payment period) of your ARC contract; contracts range from two payroll periods to a maximum of 240 payroll periods (up to ten years).

Differences In Applying ARC: Contributory Plans and Plan E
PROVISIONS PLAN A, B, C, D PLAN E
Cost-of-living (COLA) adjustments* Applied to a retiree's total monthly retirement allowance, which includes any ARC purchased. Applied to Plan E ARC service credit and any Plan E service earned after June 4, 2002.
Maximum percentage of final compensation allowed for retirement allowance, regardless of ARC 100% 80%
Convertible to Plan D N/A No. Plan E ARC remains as Plan E service credit; if you transfer to Plan D, you will have double accounts.**

*April 1 COLA increases are subject to annual approval by the Board of Retirement
**A member who has earned service credit in a contributory plan and in Plan E maintains a double account with LACERA. Certain requirements must be met.

COST OF ARC

The cost of ARC is calculated using a “present value formula,” which represents the value of the increased retirement income you will receive during retirement, computed in today’s dollars. In other words, the member pays the full actuarial cost of the additional future retirement benefit; by law, ARC cannot place any additional financial burden on the retirement system. The formula factors in your current age, retirement plan, and salary, along with actuarial assumptions for salary increases, age at retirement, and life expectancy. Typically, age and salary factors have the greatest impact on ARC cost. Therefore, when you initiate such a purchase also impacts the cost.

Rule of Thumb for ARC Purchases

Sooner, rather than later! It is in your best interest to initiate an ARC purchase as early in your career as you can afford.

ARC Calculator on My LACERA

Visit My LACERA and use its ARC Calculator to generate an estimate based on your data on file with LACERA. ARC estimates generated by My LACERA estimate your cost to purchase five years of ARC. The data is personalized and figures are itemized per individual year of ARC you purchase:

  • Lump-Sum Cost
  • Semimonthly Payments
  • Number of Payments
  • Estimated Additional Percentage Increase to Your Monthly Allowance
  • Approximate Additional Dollar Amount Increase to Your Monthly Allowance

If you decide to proceed with the purchase, you can print the estimate, select contract terms, sign, and mail it to LACERA to request an official ARC Purchase Contract.

Accepted Payment Methods

Under federal law, ARC may be purchased with any of these types of funds:

  • Payroll deductions (using before- or after-tax dollars)
  • Qualified Plans: 401(k)/KEOGH*
  • 457 Plan fund transfer: In-Service or After Termination
  • IRAs: Non-Roth/Non-After Tax
  • 403(b)
  • After-Tax Dollars

LACERA does not accept termination pay for ARC purchases.

ARC FAQS

For answers to frequently asked questions regarding ARC, click here.

*Rollovers from the County 401(k) Savings Plan by active employees are limited by age, years in plan, and contribution type. To determine your eligibility, contact Great-West at 1-800-947-0845.

1/20/12