ARM 2.43.2110. CALCULATION OF HIGHEST AVERAGE COMPENSATION WITH LUMP-SUM PAYMENTS

(1) For applicable systems, lump-sum payments made upon termination of employment and for which required contributions have been made for paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave may be included in the calculation of a member's highest average compensation (HAC) by replacing lower compensation months with the same number of higher compensation months. (2) The number of replacement months and the amount of compensation included in the replacement months are determined by dividing the lump-sum payment by an amount calculated by multiplying the averaged hourly rate during the HAC period by the averaged hours worked per month during the same period. (3) Lump-sum payments made without termination of employment for banked holiday time, compensatory leave, sick leave, or vacation leave will not be considered as compensation for any purpose regardless how the payout is classified, including identifying the payout as a bonus.