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Alternate Retirement Program (ARP)

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About ARP

The Alternate Retirement Program, or ARP, is a retirement savings program in which certain State employees were automatically enrolled between August 11, 2004, and June 30, 2013 for their first two years of employment with the State of California. ARP provided up to two years of retirement savings in place of retirement service credit under the California Public Employees' Retirement System (CalPERS.) Even though employees did not earn retirement service credit with CalPERS during this period, employees still received CalPERS membership and were entitled to all other CalPERS benefits.

Note: Employees who became CalPERS eligible on or after July 1, 2013 were not subject to ARP. This included PST employees who were employed prior to July 1, 2013 and became CalPERS eligible on or after July 1, 2013.


Senate Bill 1105, effective August 11, 2004

CalHR Law 19999.3

Mandatory Coverage

Employees enrolled in ARP were covered by Social Security. New State miscellaneous and industrial employees hired between August 11, 2004 and June 30, 2013 were enrolled into ARP for 24 months from the date the employee first qualified for CalPERS membership (typically the employee's original hire date).

 A separation did not alter the 24 month period. If an employee separated and returned to a miscellaneous or industrial position within the 24 months of their enrollment to ARP, they went back into ARP to complete their 24 month period.

Employees were covered by ARP if they met all the following conditions:

  • First hired by the State between August 11, 2004 and June 30, 2013, and
  • Qualified for CalPERS membership as a State Miscellaneous or State Industrial category; and
  • Met the definition of "State employee" under GC Section 19815.

ARP Exemptions

Employees were excluded from ARP if they had State experience prior to August 11, 2004, or were hired after June 30, 2013, this included:
  • Part-Time, Seasonal, or Temporary (PST) experience (including State employment at a DAA Fair)
  • Student Assistant experience with a State Agency
  • Youth Aid experience

 The following employees were not subject to ARP:

  • Employees who became CalPERS eligible on or after July 1, 2013
  • Current or prior members of CalPERS
  • Members of a CalPERS reciprocal retirement system within the prior six months
  • Members of the Judges' Retirement System (JRS), Legislators' Retirement System (LRS), California State Teachers' Retirement System, or the University of California Retirement Plan
  • Employees of the California State University system (CSU Student Assistant employment does not count)
  • Employees of the California Legislative and Judicial branch of government
  • California Highway Patrol Cadets
  • Employees who qualified for CalPERS membership in the State Safety, State Patrol, or State Peace Officer/Firefighter categories
  • Part-Time California National Guard members who elected CalPERS membership
  • Non-resident aliens employed on a F1, J-1, M-1, or Q-1 visa and not coordinated with Social Security

ARP Enrollment

 ARP enrollment was effective upon appointment for all employees who met the criteria for ARP. Personnel departments were responsible for establishing ARP coverage for eligible employees.

Employees directly appointed by the Governor were not automatically covered by CalPERS, but had the option to become a member (see GC section 2032[a].) If they elected to become a member and did not have anything in their employment history that excluded them from ARP, their two year ARP enrollment began on the date they elected CalPERS membership.

ARP Phases

 ARP had three phases that spanned a four year period:


Employees contributed to ARP for the first 24 months from CalPERS eligibility and ARP enrollment. Employees did not earn CalPERS retirement service credit during this time; however, they were CalPERS members and entitled to all benefits such as health insurance.


Beginning at month 25, employees stopped contributing to their ARP account and began contributing to a CalPERS retirement account (deduction amount was the same.)


Employees had a three-month period beginning on the first day of month 47 through the last day of month 49 to decide what happened to their ARP funds. Most employees had three options:
1. Transfer ARP to CalPERS to receive service credit for the time worked during Phase 1; or,
2. Take a lump-sum distribution of their ARP account, or
3. Transfer their ARP funds to a Savings Plus 401(k) account.
Employees received a postcard at month 45, notifying them of their approaching election period (Phase III). Just prior to their election period, they received their ARP Payout Election Notification Letter in the mail. The letter included their election due date, details on their payout options, and instructions on how to make their election.

ARP to CalPERS Conversion

After month 24, SCO automatically processed a 505 transaction to change an employee's ARP account code to the appropriate CalPERS retirement account code. Transactions were processed during the first week of the month for employees whose 24 months of ARP participation ended the prior month (refer to Personnel Letter 06-009). Turnaround PARs were generated from the 505-transaction mass update process.

When the turnaround PAR was received, departments provided the employee with the CalPERS State Miscellaneous and Industrial Members Retirement Benefit Election Package (PUB 52) available at

ARP Waiting Period

Under IRS rules, ARP funds had to remain in the ARP account for 24 months after they became CalPERS contributors. Employees continued to receive ARP statements during this time.
Separated employees are eligible to take a distribution of their ARP account, (refer to Section 1048 for further details.)

Administrative Fees

Employers are charged an administrative fee to cover costs associated with administering ARP. The fee amount is determined by applying a per deduction fee of $4.80 and multiplying the fee by the number of ARP deductions, including corrections, regardless of whether the transaction involves a positive or negative amount. The fee is assessed quarterly by the SCO.

Address and Name Changes

Employees currently working for the State must notify their departmental personnel/payroll office of an address change and complete an Employee Action Request (EAR Form).

 Separated employees may update their address online, by phone, fax, or mail.

 Employees should provide their full name, Social Security number, former and new address, daytime phone number (including area code), signature and date.

 For name changes, employees should provide a copy of their marriage license, dissolution or court document authorizing the name change and a copy of their driver's license or picture ID.

Contact Savings Plus for more information. 

Beneficiary Designation

Beneficiary Designation is automatic. Upon an employee's death, all benefits are distributed to their statutory survivors, according to the terms and conditions of the existing plan document. ARP death benefits are paid in the following order:
  1. Surviving spouse or registered domestic partner (whether or not the employee was still living together with the spouse/partner at the time of his/her death); or, if none,
  2. Natural and adopted children, including a natural child adopted by another, share and share alike; or, if none,
  3. Parents, share and share alike; or, if none,
  4. Brothers and sisters, share and share alike; or, if none,
  5. Employee's estate (if probated or subject to probate); or, if not,
  6. Employee's trust (if one exists); or, if not,
  7. Stepchildren, share and share alike; or, if none,
  8. Grandchildren, including step-grandchildren, share and share alike; or, if none,
  9. Nieces and nephews, share and share alike; or, if none,
  10. Great-grandchildren, share and share alike; or, if none,
  11. Cousins, share and share alike; or, if none,
  12. In accordance with state law for intestate estates.

Annual Statements

Savings Plus issues annual statements reflecting employee contributions, earned interest, and their current balance. ARP Statements and Newsletters are mailed in August to the employee's address on record.

Employees must keep their address information updated, to insure receipt of their ARP Statement. Statements continue as long as the employee has a balance in their ARP account.

Payment/Distributions for Eligible Employees

Employees are eligible for a 100% distribution of their ARP account balance 90 days after permanent separation from all State employment or 90 days from the last transaction in their account (whichever is later). 
Payment is issued no sooner than 90 days after the last contribution posts into or out of the employee's ARP account and their eligibility has been verified. All payments are issued via direct deposit to one financial institution of the employee's choice.
A 1099-R is issued by January 31 of the following year for tax reporting purposes. The 1099-R will apply to both Direct Payment and Direct Rollover to Other Entity(non-taxable event) payment options.
There are consequences for taking a distribution from the ARP account upon separation. Employees are encouraged to carefully review their options prior to taking a distribution. Their decisions are irrevocable.

Employees may request a distribution by contacting Savings Plus for more information.

Payment Methods

Direct Payment

This payment method allows employees to receive their entire account balance. This payment is reported to the IRS as ordinary income. There is a mandatory 20% withholding for Federal income taxes.
State income taxes are withheld at a rate of married with three allowances unless the employee requests otherwise by completing a California State Withholding Certificate for Pension or Annuity Payments (DE-4P).
All payments are issued via direct deposit to one financial institution of the employee's choice. There is no fee for this electronic transfer.

Direct Rollover to Other Entity

This payment option allows employees to roll over funds from their ARP account to an Individual Retirement Account (IRA), 457(b), 401(k) Plan, or 403(b) Tax Sheltered Annuity as long as the entity sponsoring the plan accepts 401(a) funds.
If the employee is age 70½ or older and elects to rollover their funds, the Required Minimum Distribution (RMD) is processed and paid to them directly before the funds are rolled over to the new provider.

Eligibility to Contribute to a Savings Plus 401(k) Plan or 457(b) Plan

ARP employees are eligible to contribute to a Savings Plus 401(k) Plan and/or 457(b) Plan. To participate in Savings Plus employees enroll online at or Contact Savings Plus for more information.
Employees can roll their 401(k), 457(b) or 403(b) funds from another institution to their Savings Plus Plan. To submit a rollover request Contact Savings Plus.
Employees should review the Welcome Letter they receive from Savings Plus to select investment options available and manage their 401(k) Plan and/or 457(b) Plan.
Additional information and links to our investment providers, prospectus, and fund fact sheets are available at

Contact Savings Plus

​Contact Savings Plus for information about the plan.
Savings Plus Service Center:
Monday through Friday, 5 a.m. to 8 p.m. (PT)
  Updated: 3/6/2018
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