Alternative Retirement Plan for University and College Faculty (ARP)

Faculty and professional employees of New Mexico public universities and community colleges have the option of participating in the Alternative Retirement Plan (ARP), a defined contribution plan. They can opt to
participate in either ERB’s Defined Benefit Plan or ARP during the first 90 days of employment if they are in an eligible position.


In a defined contribution plan, participants have individual accounts with an ARP service provider (vendor). The current ARP vendors are TIAACREF and Fidelity. Benefits are based on contributions plus investment
earnings. ARP participants direct their own investments, and retirement benefits are tied to the value of the assets in the account at retirement. Upon retirement, ARP participants have three options:


• a monthly annuity based on the retiree’s estimated life span,
• payments received over a fixed term of years, or
• a lump-sum payout.

Contribution rates for ARP participants are the same as those for Defined Benefit Plan members. Refer to ERB’s website at www.nmerb.org for current employee and employer contribution rates. ERB employers pay a 3% contribution rate to cover the actuarial impact on the Defined Benefit Plan attributable to employees participating in the ARP. If you terminate your employment with a New Mexico university or community college, you may roll over the ARP account balance to another qualified retirement plan or withdraw the balance. If the distribution is not transferred directly from your ARP account into another qualified retirement plan, it is subject to federal and state income tax and a 10% penalty for early withdrawal. Contact your ARP vendor for information on rollovers and distributions, and IRS requirements. ERB cannot provide advice on the tax consequences of distributions.


As a result of legislative changes in 2009, ARP participants now have the opportunity to switch to the ERB Defined Benefit Plan. After you have made contributions to the ARP for seven years, you have a 120-day
window to enroll in the Defined Benefit Plan. Eligibility begins on the first day of the month after the date on which you have made seven years of contributions to the ARP. The seven-year mark is the only opportunity
you will have to switch to the Defined Benefit Plan. If you make the change, you cannot switch back to the ARP. If you opt to move to the DBP, the money in your ARP account will remain there. You must contribute to the Defined Benefit Plan for five years to vest in the plan and be eligible for retirement benefits. You cannot
purchase service credit for the time in which you were enrolled in the ARP; however, the seven years of participation in the ARP will count toward eligibility requirements to retire under the ERB Defined Benefit Plan.

ARP Post-Retirement Work
ERB requirements governing post-retirement work for an ERB employer (i.e., the RTW Program and the RTW Exception) apply to all persons who retire under either the Defined Benefit Plan or the ARP. Federal law
prohibits the suspension of ARP retirement benefits; however, ARP retirees are still required to comply with the requirements for the RTW Program and the RTW Exception. This includes the requirement under the RTW Program that a participant pay non-refundable contributions to the Educational Retirement Fund in an amount equal to the member contribution that an active member pays. ARP Retirees who do not qualify for the RTW Program may work for an ERB employer under the RTW Exception subject to the RTW earnings and FTE percentage limitations.


If an ARP retired participant exceeds the allowed limits under either of the two RTW exception subcategories, the participant will not be eligible for the exception. The ARP participant will be returned to active status and required pay nonrefundable contributions at the same rates as active members.