WSR 99-14-008

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed June 24, 1999, 2:19 p.m. ]

Date of Adoption: June 24, 1999.

Purpose: To amend the department's rules implementing the law codified in chapters 41.40, 41.32, and 41.50 RCW in order to make those rules consistent with amendments.

Citation of Existing Rules Affected by this Order: Amending WAC 415-108-324, 415-108-326, 415-108-475, 415-108-485, 415-108-510, 415-108-520, 415-112-100, 415-112-270, 415-112-290, 415-112-400, 415-112-41301, 415-112-515, 415-112-520, 415-112-600, 415-112-700, 415-112-710, 415-112-725, 415-112-727, and 415-112-800.

Statutory Authority for Adoption: RCW 41.50.050.

Adopted under notice filed as WSR 99-11-006 on May 7, 1999.

Changes Other than Editing from Proposed to Adopted Version: After the proposed version was filed, the IRS issued proposed revenue procedure 98-41 which contained model deferred compensation plan language drafted to conform to the 1997 IRC amendments. The model language is added to the adopted version.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 10, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 9, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

June 24, 1999

John Charles

Director

OTS-2961.2


AMENDATORY SECTION(Amending WSR 96-01-047, filed 12/14/95, effective 1/14/96)

WAC 415-108-324
Married member's benefit selection--Spousal consent required.

(1) The member, if married, must provide the spouse's written consent to the option selected under WAC 415-108-326.  If a married member does not provide spousal consent, the department will pay the retired member a joint and one-half survivor benefit allowance and record the member's spouse as the survivor in compliance with chapter 41.40 RCW and RCW 41.40.660(2).

(2) Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an ex-spouse under RCW 41.50.790.

(3) "Spousal consent" means that the married member's spouse consents to the retirement option selected by the member.  The spouse's notarized signature on a completed retirement application constitutes spousal consent.

[Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660.  96-01-047, 415-108-324, filed 12/14/95, effective 1/14/96.  Statutory Authority: RCW 34.05.050 and 1990 c 249.  91-03-015, 415-108-324, filed 1/7/91, effective 2/7/91.]


AMENDATORY SECTION(Amending WSR 96-01-047, filed 12/14/95, effective 1/14/96)

WAC 415-108-326
Retirement benefit options.

RCW 41.40.188 (Plan 1) and RCW 41.40.660 (Plan 2) enable the department to provide retiring members with four retirement benefit options.  In addition, retiring Plan ((I)) 1 members may select the COLA (cost-of-living adjustment) option.  The retiring member must choose an option(s) when applying for service or disability retirement:

(1) Option One (standard allowance). The department will pay a monthly retirement allowance based solely on the single life of the member, as provided by RCW 41.40.185, 41.40.190, 41.40.230, 41.40.235, 41.40.250, 41.40.660, or 41.40.670.  When the retiree dies all benefits cease.  Any remaining balance of the retiree's accumulated contributions will be paid to:

(a) The retiree's designated beneficiary; or if none, to

(b) The retiree's surviving spouse; or if none, to

(c) The retiree's legal representative.

The member must designate a beneficiary at the time of retirement by filing a completed and notarized form provided by the department.

(2) Benefit options with a survivor feature. A retiring member is allowed to select from several retirement options which create an actuarially equivalent benefit that includes a survivor feature.  The survivor feature entitles the survivor to receive a monthly allowance after the retiree dies.  If the member chooses one of the survivor options, the monthly benefit the member will receive is actuarially reduced to offset the cost of the survivor feature.  After the retiree dies, the department pays the survivor an allowance for the duration of his or her life.  If the retiree and the survivor both die before the retiree's accumulated contributions are exhausted, the remaining balance is retained in the retirement fund.

(a) Option Two (joint and whole allowance).  When the retiree dies, the department pays the survivor an allowance equal to the gross monthly allowance received by the retiree.

(b) Option Three (joint and one-half allowance).  When the retiree dies, the department pays the survivor an allowance equal to one-half of the retiree's gross monthly retirement allowance.

(c) Option Four (joint and two-thirds allowance).

(i) This subsection applies to members retiring on or after January 1, 1996.

(ii) When the retiree dies, the department pays the survivor an allowance equal to two-thirds (66.667%) of the retiree's gross monthly retirement allowance.

(3) If a member retires on or after June 6, 1996, the department is required to pay an ex-spouse survivor benefits pursuant to a marital dissolution order that complies with RCW 41.50.790.

(4) Supplemental COLA option for Plan ((I)) 1 members. Retiring Plan ((I)) 1 members may select an annual cost-of-living adjustment (COLA) option, in addition to their choice of retirement benefit options listed in subsections (1) and (2) of this section.  Retiring members who choose this supplemental option will have their monthly retirement allowance actuarially reduced to offset the cost of annual adjustment.

(((4))) (5) Benefit increases when survivor predeceases retiree (pop-up provision).

(a) This section applies to members retiring on or after January 1, 1996, who select Option Two, Three, or Four.

(b) If the survivor dies before the retiree, the retiree's monthly retirement allowance increases, effective the first day of the following month, to:

(i) The amount that would have been received had the retiree chosen Option One; plus

(ii) Any cost-of-living adjustments the retiree received prior to the survivor's death based on the original option selection.

(c) Pop-up recalculation examples.

Plan One:

Lucinda retires from PERS Plan ((I)) 1 in 1996 (Year 0).  She would like Garth, her husband, to receive a monthly allowance when she dies.  Therefore, Lucinda chooses one of the benefit options with a survivor feature.  As a result, her monthly allowance is actuarially reduced from $2,000 (standard allowance) to $1,750.  Unfortunately, Garth dies in January 2001 (Year 5).  Under the "pop-up" provision, Lucinda's monthly benefit will increase to $2,000, the amount she would have received had she chosen the Option One (standard allowance) plus any COLA's Lucinda had received based on her prior benefit allowance:


Original Option 1 Benefit Amount + Total COLA's = New Benefit Amt.
$2,000.00 + 0 (None accrued) = $2,000.00*

Plan Two:

Agnes retires from PERS Plan ((II)) 2 in 1996 (Year 0).  Agnes would like Beatrice, her daughter, to receive a monthly allowance after Agnes dies.  Therefore, Agnes selects a retirement benefit option with a survivor feature.  As a result, her monthly allowance is reduced from $2,000 (standard allowance) to $1,750.  Unfortunately, Beatrice dies in 2001 (Year 5).  Under the "pop-up" provision, Agnes' monthly benefit will increase to $2,191.05, the amount she would have received had she chosen Option One (standard allowance) plus her accumulated COLA's:


Year Option One

(Standard Allow.)

Survivor Option

(2,3,4) plus COLAs

COLA incr.

(3% max)

$ Increase

0 (1996)

2,000.00

1,750.00

(ineligible)

0.00
1 (1997) 1,750.00 .02 35.00
2 (1998) 1,785.00 .03 53.55
3 (1999) 1,838.55 .025 45.96
4 (2000) 1,884.51 .03 56.54
5 (2001) 2,000.00 1,941.05
Total COLA's 191.05
Original Option One Benefit Amount

$2000

+ Total COLA's

+ $191.05

= New Benefit Amount

= $2,191.05*

*In the future (i.e. Year 4), COLAs will be based on the increased benefit amount.

(d) If the survivor dies and the retiree's benefit increases under this section, and thereafter the retiree also dies before all contributions are exhausted, the remaining balance is retained by the retirement fund.

(((5))) (6) Any retiree who retired before January 1, 1996, and who elected to receive a reduced retirement allowance under subsection (2) of this section is entitled to receive a retirement allowance adjustment if the retiree meets the following conditions:

(a) The retiree's designated beneficiary predeceases or has predeceased the retiree; and

(b) The retiree provides to the department proper proof of the designated beneficiary's death. The retiree is not required to apply for the increased benefit provided by this subsection.

The adjusted retirement allowance will be effective on July 1, 1998, or the first of the month following the date of death of the designated beneficiary, whichever comes last. The adjustment is computed as described in RCW 41.40.188 (3)(c) for Plan 1 retirees or RCW 41.40.660 (3)(c) for Plan 2 retirees.

(7) Survivor. For the purposes of this provision, "survivor" means a person nominated by the member to receive a monthly benefit allowance after the member dies.  A member nominates the survivor at the time of retirement by filing a completed and notarized form provided by the department.

[Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660.  96-01-047, 415-108-326, filed 12/14/95, effective 1/14/96.  Statutory Authority: RCW 34.05.050 and 1990 c 249.  91-03-015, 415-108-326, filed 1/7/91, effective 2/7/91.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-475
Fringe benefits.

Payments made by an employer to a third party to provide benefits for an employee are not part of the employee's salary or wage.  Those payments are not reportable compensation.  Examples of these types of payments are insurance premiums (other than those made under bona fide cafeteria plans, see WAC 415-108-455) and matching and nonmatching employer ((retirement)) contributions to a benefit plan.


Note: Mandatory salary deferrals are salary, not benefits.  Such payments are reportable see WAC 415-108-459.
Example: An employer makes matching payments to employees who participate in a deferred compensation plan. This is not a mandatory salary deferral for purposes of PERS reportable compensation. Since the employer matching payment (employer match) is made contingent upon employee plan participation, it is not payment for services rendered. Therefore, it is a fringe benefit that is not reportable compensation under PERS.

[Statutory Authority: RCW 41.50.050.  98-09-059, 415-108-475, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 94-11-009, filed 5/5/94, effective 6/5/94)

WAC 415-108-510
Treatment of cash payments made in lieu of unused leave--First-in-first-out accounting method for determining when leave earned--Forms of leave deemed excess compensation--Conversions.

(1) Cash compensation in lieu of unused annual or sick leave may be considered compensation earnable for Plan ((I)) 1 members subject to the provisions of RCW 41.40.010 (8)(a) and WAC ((415-108-450)) 415-108-456.  Employers may not limit the inclusion of cash compensation paid in lieu of unused annual or sick leave as compensation earnable in conflict with RCW 41.40.010 (8)(a).  Provisions of collective bargaining agreements, employment and administrative policies or other rules applied by an employer that conflict with RCW 41.40.010 (8)(a) and rules adopted thereunder are without legal effect.

(2) When an employer provides cash compensation in lieu of unused annual or sick leave, the department applies a first-in-first-out accounting method to determine when the compensated leave was earned, and when or whether the leave was used or cashed out, with the following exceptions:

(a) As otherwise provided in ((WAC 415-108-530 and)) Bowles v. Department of Retirement Systems, 121 Wn.2d 52 (1993); and

(b) The employer has in place a regulation, charter provision, ordinance, collective bargaining agreement, or other comparable written policy statement which clearly delineates when the cashed out leave was accrued, or a different method of accounting for the accrual and use of leave, and, if applicable, compensation for unused leave and the same such method is consistently applied in each instance and for all purposes.

Any employer's policy which is not consistent for all purposes which is contained in a regularly negotiated labor agreement in effect on the effective date of this section will be honored until the expiration date of the agreement not including any extensions at which time it will be brought into compliance with this section.  Any employer's policy which is not consistent for all purposes which is established by the employer shall be brought into compliance within sixty days of the effective date of this section.  In the event an employer fails to come into full compliance with this section by the dates established herein, the department will treat cashed out leave on the same basis as the employer has established for using leave.

(3) A cash out of leave which is not annual leave as defined under WAC 415-108-010, shall be treated by the department as "any other form of leave" under RCW 41.50.150(2).  The department shall bill the employer for any such leave cash out as excess compensation under RCW 41.50.150.

(4) For purposes of determining average final compensation and excess compensation, hours of leave earned by a member shall be considered for all purposes in the form in which it was earned.  The department shall disregard any conversion of leave by an employer from one form to another and bill the employer for the amount converted as excess compensation pursuant to RCW 41.50.150.

[Statutory Authority: RCW 41.50.050 and Bowles v. Retirement Systems, 121 Wn.2d 52 (1993).  94-11-009, 415-108-510, filed 5/5/94, effective 6/5/94.  Statutory Authority: RCW 41.40.010(8) and 41.40.020.  87-17-061 (Order DRS 87-08), 415-108-510, filed 8/19/87.]


AMENDATORY SECTION(Amending WSR 91-21-083, filed 10/18/91, effective 12/31/91)

WAC 415-108-520
Membership exceptions--Student and spouse of student.

(1) A person employed by a Washington state institution of higher education or community college (employer), who is employed at such institution or college primarily for the purpose of furthering her/his education or the education of the person's spouse, is excepted from membership in PERS when:

(a) The person is a full-time student or the spouse of a full-time student; and

(b) The person is employed at the same institution where she/he is a full-time student or where the person's spouse is a full-time student; and

(c) The person determines her/his employment is primarily an incident to and in furtherance of her/his education or training, or the education or training of the person's spouse.

(2) For purposes of this section, RCW ((41.40.120)) 41.40.023(7) shall be administered as follows:

(a) When a person begins employment in a PERS eligible position, a determination shall be made by the person as to whether the provisions of this section apply.  If this section applies to the person, she/he shall determine her/his membership status as either being excepted from membership in PERS, or being a member of PERS, based upon whether employment at the institution of higher education or community college is primarily as an incident to and in furtherance or her/his education or training, or the education or training of the person's spouse.  The person shall notify the employer in writing of her/his determination of membership status no later than two months after commencing employment in a PERS eligible position.  Based upon the provisions herein and the written notification of status, the person shall either be excepted from membership in PERS or become a member of PERS.  In the event that no written notification of status is provided to the employer, based upon the provisions of this section, the employer shall make the presumption:

(i) That the person shall remain a member of PERS where the person is employed in a PERS eligible position and is a member of PERS at the time the person, or his or her spouse, becomes a full-time student;

(ii) That the person shall be excepted from PERS membership where the person or the person's spouse is a full-time student at the time of becoming employed in a PERS eligible position.

(b) A person employed in a PERS eligible position at the time of becoming a full-time student or becoming the spouse of a full-time student, shall remain a member of PERS; except, at the time of becoming a full-time student or becoming the spouse of a full-time student, the person may elect to waive her/his membership in PERS, based upon the provisions of this section excepting membership.  The person must provide written notification of the waiver to the employer.  If the person elects to waive membership in PERS, she/he cannot later elect membership in PERS unless there is a change of status of the person or of the person's spouse, as set forth below, and the employer has received written notification from the person of the change of status.

(c) A person who is a full-time student or who is the spouse of a full-time student at the time of becoming employed in a PERS eligible position, shall not be eligible for membership in PERS; except, at the time of becoming employed in a PERS eligible position, the person may elect to become a member of PERS, based upon the person's determination that the provisions of this section excepting membership do not apply.  The person must provide written notification of the election to be a member of PERS to the employer.  If the person elects to become a member of PERS, she/he cannot later waive PERS membership unless there is a change of status of the person or of the person's spouse, as set forth below, and the employer has received written notification from the person of the change of status.

(d) For purposes of this section, status is defined as:

(i) Student status - is full-time student, part-time student or nonstudent.  Part-time student and nonstudent status do not meet the threshold for exception from PERS; only full-time student status meets the threshold:

(ii) Employment status - is employment in a PERS eligible position, employment in a PERS ineligible position, or unemployment.  Unemployment refers to termination of employment from a Washington state institution of higher education or community college employer;

(iii) Marital status - is single, married, widowed or divorced.

(3) The department shall rely upon the institutions of higher education and community college employers to:

(a) Notify each person, at the time of hire, of the provisions of this section;

(b) Request all written notifications from persons electing membership or waiving membership under this section;

(c) Retain and make available to the department upon request, all written notifications electing membership or waiving membership on a sixty-four year record retention schedule.

(4) It is recommended, but not required, that no less than annually employers provide notice that employees are required to notify the employer of any change in status as set forth in this section.

[Statutory Authority: RCW 41.50.050.  91-21-083, 415-108-520, filed 10/18/91, effective 12/31/91.]

OTS-3108.1


AMENDATORY SECTION(Amending WSR 95-22-006, filed 10/18/95, effective 11/18/95)

WAC 415-108-485
Vehicle allowances--Are vehicle allowances earnable compensation?

(1) If your employer provides you any payment or allowance in lieu of a reimbursement for expenses you incur or expect to incur in performing services for your employer, the payment or allowance is not compensation earnable. Your vehicle allowance does not qualify as compensation earnable if you receive the allowance in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes.  ((See WAC 415-108-450 (3)(e) and 415-108-460 (3)(g).))

(2) The department presumes that any vehicle allowance provided to you by your employer is a payment in lieu of reimbursement for expenses and is not compensation earnable. If the contract authorizing your vehicle allowance states that it is provided solely in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes, the department's presumption is not rebuttable.

(3) Your vehicle allowance may qualify as compensation earnable to the extent that it exceeds your actual expenses. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in driving your own vehicle for business purposes, the excess amount is compensation earnable.  Your employer must maintain monthly contemporaneous records documenting the following:

(a) The dates, if any, on which you used a privately owned vehicle in performing services for your employer;

(b) The miles you drove the vehicle on each of these trips; and

(c) Your itinerary for each of these trips.

(4) How to determine what amount of your vehicle allowance, if any, is reportable as compensation earnable. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in using your own vehicle for business purposes, your employer must report to the department as compensation earnable:


Your Vehicle Allowance LESS (Miles X IRS Rate)


(a) "Miles" above means the number of miles you drove a privately owned vehicle for business purposes during the month.

(b) "IRS rate" above means the Internal Revenue Service mileage rate for use by taxpayers computing the value of the use of a vehicle.

(5) Your vehicle allowance qualifies as compensation earnable if you also receive a separate reimbursement for each occasion you use your own vehicle for business purposes. If, in addition to your vehicle allowance, you receive a separate reimbursement for vehicle expenses for each occasion that you use a privately owned vehicle for business purposes, your vehicle allowance is compensation earnable.

(6) Any part of your vehicle allowance that qualifies as earnable compensation is excess compensation. If any part of your vehicle allowance is included in the calculation of your retirement allowance, your employer will be billed for excess compensation under RCW 41.50.150.  Your employer's bill will equal the total estimated cost of the portion of your retirement allowance payment attributable to your vehicle allowance.

[Statutory Authority: RCW 41.50.050.  95-22-006, 415-108-485, filed 10/18/95, effective 11/18/95.]

OTS-2962.4


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-100
Minimum requirement for membership.

With respect to members of TRS Plan 1 only, ninety calendar days of employment within a fiscal year as a full-time teacher, or the equivalent of ninety days of service within a fiscal year as a teacher employed on a part-time, occasional, hourly, or daily basis, shall be required, together with necessary contributions, before membership in the teachers' retirement system is established and before the director may approve an application for cancellation of exemption, for the granting of additional credit for previous service, or for the payment of any benefit.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-100, filed 2/15/78.  Formerly WAC 462-16-010.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-270
Evaluating credit for professional preparation.

If a TRS Plan 1 member is otherwise eligible, professional preparation credit may be allowed for additional study at an institution of higher learning, or at a commercial or technical school where the courses supplement the member's professional preparation.  Thirty-six quarter hours of credit, or the equivalent, shall be considered a year's work.  Any less credits shall be evaluated as a fractional part of a year.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-270, filed 2/15/78.  Formerly WAC 462-20-040.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-290
Credit for out-of-state service.

(1) A TRS Plan 1 member who leaves Washington public school service and terminates his membership in the teachers' retirement system by lapsation or withdrawal and who subsequently returns to service and membership may establish or reestablish only such credit for out-of-state service as may be credited under the laws in effect at the time when he reestablishes membership.

(2) Effective July 1, 1964, a new ((member)) or ((a)) former TRS Plan 1 member who returns to membership after his former membership was cancelled by lapsation or withdrawal may not establish or reestablish out-of-state prior service credit of any kind, including out-of-state prior service credit for teaching, professional preparation, or military service.

(3) Out-of-state membership service credit, regardless of when the service was rendered, may be established or reestablished after July 1, 1964, within the limitations of existing law, only if the out-of-state service was rendered while the member was on official leave of absence granted by a state of Washington employer.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-290, filed 2/15/78.  Formerly WAC 462-20-055.]


AMENDATORY SECTION(Amending Order 79-02, filed 9/10/79)

WAC 415-112-400
Salary deductions required by employer.

(((1) Plan I.

(a) Salary deductions for retirement shall be made from the beginning of the employment of every teacher employed full time (four-fifths or more) when the employment contract of such teacher calls for ninety or more days of employment in a school year.  Salary deductions for retirement shall be required for every member employed full time when his employment contract calls for twenty or more days of employment in a school year.

(b))) When does the employer deduct salary for retirement contributions?

If the teacher or member is entitled to have salary deducted for retirement contributions, the employer must make the deductions when the teacher or member starts work.

(1) Plan 1.

(a) The employer must deduct salary for retirement contributions for a teacher who has not been a member if:

(i) They are employed full time (at least four-fifths of a school day or full time assignment); and

(ii) Their employment contract calls for at least ninety days of employment in a school year.

(b) The employer must also deduct the salary of each teacher who is a member employed full time if their employment contract calls for at least twenty days of employment in a school year.

(c) If a teacher who is not a member is employed for less than ninety days in a school year, ((and thus)) they will fail((s)) to establish membership((, any)). The employer must refund their salary deductions for retirement ((shall be refunded in full upon termination of his)) when they terminate employment as a teacher ((and upon filing)). The nonmember must file a refund application with the department before they can receive the refund.

(d) If a member is employed by an employer for less than twenty days in a school year, ((any)) the employer must refund all salary deductions for retirement based on service during that year ((shall be refunded in full upon termination of his employment for that year and the filing of)) at the time the member terminates for the year. The nonmember must file a refund application with the department before they can receive the refund.

(2) Plan ((II)) 2.

(a) ((Salary deductions for retirement shall be made from the beginning of the employment of every teacher employed full time (four-fifths or more) when the employment contract of such teacher calls for ninety or more days of employment in a school year.)) The employer must deduct salary for retirement contributions for a teacher if:

(i) They work at least eight hundred ten hours for nine or more months between September and August of the following year; and

(ii) Their employment contract calls for at least ninety days of employment in a school year.

(b) If a teacher who is not a member is employed for less than ninety days in a school year, ((and thus)) they will fail((s)) to establish membership((, any)). The employer must refund their salary deductions for retirement ((shall be refunded in full upon termination of his)) when they terminate employment as a teacher ((and upon filing)). The nonmember must file a refund application with the department before they can receive the refund.

[Statutory Authority: RCW 41.50.050(6).  79-10-024 (Order 79-02), 415-112-400, filed 9/10/79.  Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-400, filed 2/15/78.  Formerly WAC 462-24-010.]


AMENDATORY SECTION(Amending WSR 91-21-084, filed 10/18/91, effective 11/18/91)

WAC 415-112-515
When a member of the teacher's retirement system Plan ((I)) 1 enters retirement status.

A member of the teacher's retirement system Plan ((I)) 1 enters retirement status when he or she:

(1) Has terminated all public school employment in the state of Washington;

(2) Has no written agreement to return to public school employment; and

(3) Has ((received his or her first monthly retirement payment)) made application, the accrual date has been determined, and the benefit begins to accrue.


Example: A member who is eligible for retirement on July 1st submits an application on June 1st with a July 1st retirement date. They terminate all employment on June 30th and do not have an agreement to return to work.
Their benefit will begin to accrue on July 1st and they will receive their first retirement allowance payment at the end of July. The member is a "retiree" beginning July 1st because that is when the benefit begins to accrue.

[Statutory Authority: RCW 41.50.050 and 41.32.570.  91-21-084, 415-112-515, filed 10/18/91, effective 11/18/91.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-520
Date from which service retirement allowance accrues.

(((1) Upon approval by the board of trustees of an application for service retirement, the teachers' retirement allowance shall accrue from the first of the month following that in which a member terminated public school service, unless a full year of Washington service credit is established for the school year in which a member retires, in which case the date of accrual of his retirement allowance shall be July 1st following the member's final year of service.  In no case shall the accrual date be prior to the first of the month following that in which proof and payment are received to establish membership or additional service credit.

(2) If a member terminates public school employment prior to eligibility for a service retirement allowance and at some future date qualifies for a deferred retirement allowance on the basis of age, the accrual date of such member's retirement allowance shall be the date on which the member reaches the minimum age required for such an allowance, provided the member is not employed in public education at the time.  (Cross reference: WAC 415-112-620))) When does my retirement allowance become payable?

(1) The department must receive proof and payment to establish membership or additional service credit before your retirement allowance will be payable. After the department receives the necessary proof and payment and approves your application for service retirement, your retirement allowance is payable on:

(a) July 1 following your final year of service if you established a full year of Washington service credit for the year in which you retired; or

(b) The first of the month following the month that you terminated public school service.

(2) If you terminate public school employment before you are eligible for a service retirement allowance, you may later qualify for a deferred retirement allowance based on your age if you are not employed in public education. If you qualify, your retirement allowance is payable on the date you reach the minimum age required to start receiving payments.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-520, filed 2/15/78.  Formerly WAC 462-28-020.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-600
Eligibility for temporary disability benefits.

A member of the teachers' retirement system shall be covered for benefits under the temporary disability program only while employed on a full-time basis.  ((The disability premium paid by a member during one school year shall afford disability protection until the beginning of the regular school term the following school year.)) Full-time employment during one school year shall afford disability protection until the beginning of the regular school term of the following school year.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-600, filed 2/15/78.  Formerly WAC 462-32-010.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-700
Determining dependency under RCW 41.32.520.

((In order for a beneficiary under RCW 41.32.520 to qualify as the dependent of a deceased member, the following conditions shall prevail:

(1) The deceased member shall have provided financial support for the beneficiary to the extent of one-half or more of reasonable living expense.  Such financial support shall have been in effect at the time of the member's death and shall have been reasonably continuous prior to that time;)) To qualify as a dependent of a deceased member under the authority of RCW 41.32.520 the individual must provide proof of the following conditions:

(1) The beneficiary must receive one-half or more of their financial support from the deceased member. Such support must have been continuous prior to death and in effect at the time of the member's death.

(2) The term "financial support" shall include the cost of food, clothing, shelter, education, medical and dental expenses, and other similar expenses.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-700, filed 2/15/78.  Formerly WAC 462-36-010.]


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-710
((Accrual date of survivor benefits under RCW 41.32.520.)) When are survivor benefits payable?

(1) ((The accrual date of a monthly survivor benefit under RCW 41.32.520(1) shall be the date following the date of the member's death or the fiftieth birthday of the beneficiary if the latter follows the date of the member's death.

(2) The accrual date of a survivor retirement allowance under RCW 41.32.520(2) shall be the day following the date of death of the member who was eligible for retirement, unless the deceased member had established a full year of service credit for his final year of service, in which case the effective date of the survivor retirement allowance shall be July 1st of the ensuing fiscal year.  In all cases the rate of the annuity benefit shall be computed as of the date following the date of)) If there is a named beneficiary, monthly survivor benefits under RCW 41.32.520(1) are payable on the later of the following two dates:

(a) The day after the member's death; or

(b) The beneficiary's fiftieth birthday.

(2) If there is no named beneficiary, the survivor retirement allowance under RCW 41.32.520(2) is payable on:

(a) July 1st of the first fiscal year after the member's death if the deceased established a full year of service credit for their final year of service; or

(b) The day after the death of a member eligible for retirement.

In all cases the rate of the annuity benefit will be computed as of the day after the member's death.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.  78-03-023 (Order IV), 415-112-710, filed 2/15/78.  Formerly WAC 462-36-020.]


AMENDATORY SECTION(Amending WSR 96-01-047, filed 12/14/95, effective 1/14/96)

WAC 415-112-725
Married member's benefit selection--Spousal consent required.

(1) A member, if married, must provide the spouse's written consent to the option selected under WAC 415-112-727.  If a married member does not provide spousal consent, the department will pay the retired member a joint and fifty percent survivor benefit allowance and record the member's spouse as the survivor, in compliance with RCW 41.32.530(2) and 41.32.785(2).

(2) Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an ex-spouse under RCW 41.50.790.

(3) "Spousal consent" means that the married member's spouse consents to the retirement option selected by the member.  The spouse's notarized signature on a completed retirement application constitutes spousal consent.

[Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660.  96-01-047, 415-112-725, filed 12/14/95, effective 1/14/96.  Statutory Authority: RCW 34.05.050 and 1990 c 249.  91-03-016, 415-112-725, filed 1/7/91, effective 2/7/91.]


AMENDATORY SECTION(Amending WSR 96-01-047, filed 12/14/95, effective 1/14/96)

WAC 415-112-727
Retirement benefit options.

RCW 41.32.530 (Plan ((I)) 1) and RCW 41.32.785 (Plan ((II)) 2) enable the department to provide retiring members with four retirement benefit options.  In addition, retiring Plan ((I)) 1 members may select the COLA (cost-of-living adjustment) option.  The retiring member must choose an option(s) when applying for service or disability retirement.

(1) Benefit options without survivor feature.

(a) Maximum benefit allowance.  Plan ((I)) 1 retirees may elect to receive the maximum benefit possible which is based on a single life annuity.  The maximum benefit allowance does not include a survivor allowance or beneficiary payment.  When the retiree dies, all benefits cease.  Any remaining balance in employee contributions is retained by the retirement system.

(b) Option One (standard allowance).  The department pays a monthly retirement allowance based on a reduced single life annuity of the member, as provided in RCW 41.32.480 (Plan ((I)) 1 -Service), RCW 41.32.550 (Plan ((I)) 1 - Disability), RCW 41.32.765 (Plan ((II)) 2 - Service), or RCW 41.32.790 (Plan ((II)) 2 -Disability).  When the retiree dies, all benefits cease.  Any remaining balance of the member's accumulated contributions will be paid to:

(i) The retiree's designated beneficiary; or if none, to

(ii) The retiree's surviving spouse; or if none, to

(iii) The retiree's legal representative.

A member selecting Option One must designate a beneficiary at the time of retirement by filing a completed and notarized form provided by the department.

(2) Benefit options with a survivor feature. A retiring member is allowed to select from several retirement options which create an actuarially equivalent benefit that includes a survivor feature.  The survivor feature entitles the survivor to receive a monthly allowance after the retiree dies. If the member chooses one of the survivor options, the monthly benefit the member will receive is actuarially reduced to offset the cost of the survivor feature.  After the retiree dies, the department pays the survivor an allowance for the duration of his or her life.  If the retiree and the survivor both die before the retiree's accumulated contributions are exhausted, the remaining balance is retained in the retirement fund.

(a) Option Two (joint and whole allowance).  When the retiree dies, the department pays the survivor a retirement allowance equal to the gross monthly allowance received by the retiree.

(b) Option Three (joint and one-half allowance).  When the retiree dies, the department pays the survivor an allowance equal to one-half of the retiree's gross monthly retirement allowance.

(c) Option Four (joint and two-thirds allowance).

(i) This subsection applies to members retiring on or after January 1, 1996.

(ii) When the retiree dies, the department pays the survivor an allowance equal to two-thirds (66.667%) of the retiree's gross monthly retirement benefit allowance.

(3) If a member retires on or after June 6, 1996, the department is required to pay an ex-spouse survivor benefits pursuant to a marital dissolution order that complies with RCW 41.50.790.

(4) Supplemental COLA option for Plan ((I)) 1 members. Retiring Plan ((I)) 1 members may select an annual cost-of-living adjustment (COLA) option in addition to their choice of retirement benefit options listed above in subsections (1) and (2) of this section.  Retiring members who choose this supplemental option will have their monthly retirement allowance actuarially reduced to offset the cost of annual adjustment.

(((4))) (5) Benefit increases when survivor predeceases retiree (pop-up provision).

(a) This section applies to members retiring on or after January 1, 1996, who select Option Two, Three, or Four.

(b) Plan ((I)) 1 members. If the survivor dies before the retiree, the retiree's monthly retirement allowance increases, effective the first day of the following month, to:

(i) The amount that would have been received had the retiree chosen the maximum benefit, minus;

(ii) Any reduction in the maximum allowance resulting from a withdrawal of contributions, plus;

(iii) Any cost-of-living adjustments the retiree received prior to the survivor's death based on the original option selection.

(c) Plan ((II)) 2 members. If the survivor dies before the retiree, the retiree's monthly retirement allowance increases, effective the first day of the following month, to:

(i) The amount that would have been received had the retiree chosen the standard allowance; plus

(ii) Any cost-of-living adjustments the retiree received prior to the survivor's death based on the original option selection.

(d) Pop-up recalculation example.


Plan One:

Lucinda retires from TRS Plan ((I)) 1 in 1996 (Year 0) with $55,000 in accumulated contributions.  As a TRS ((I)) 1 member she is allowed to withdraw some or all of her contributions when she retires.  She decides to withdraw $5,000 so she and Garth, her husband, can take a cruise.  This will actuarially reduce Lucinda's maximum benefit from $2,000 per month to $1,963.86.  Lucinda would also like Garth to receive a monthly allowance after she dies.  Therefore, Lucinda chooses one of the benefit options with a survivor feature.  As a result, her monthly allowance is further actuarially reduced from $1,963.86 to $1,846.03.  Unfortunately, Garth dies in January 2001 (Year 5).  Under the "pop-up" provision, Lucinda's monthly benefit will increase to $1,963.86, the amount she would have received had she chosen the maximum benefit (after reduction for her withdrawals).  If Lucinda selected the COLA option or if she has otherwise become eligible for a COLA, the accumulated COLAs (based on the prior benefit allowance) will be added to the $1,963.86*.


Plan Two:

Agnes retires from TRS Plan ((II)) 2 in 1996 (Year 0). She would like Beatrice, her daughter, to receive a monthly allowance after Agnes dies.  Therefore, Agnes selects a retirement benefit option with a survivor feature.  As a result her monthly allowance is reduced from $2,000 (standard allowance) to $1,750.  Unfortunately, Beatrice dies in January 2001 (Year 5).  Under the "pop-up" provision, Agnes' monthly benefit will increase to the amount she would have received had she chosen Option One (standard allowance) plus her accumulated COLA's:


Year Option One

(Standard Allowance)

Survivor Option

(2,3,4) plus COLAs

COLA incr.

(3% max)

$ Increase



0 (1996)
2,000.00 1,750.00 (inelig.) 0.00
1 (1997) 1,750.00 .02 35.00
2 (1998) 1,785.00 .03 53.55
3 (1999) 1,838.55 .025 45.96
4 (2000) 1,884.51 .03 56.54
5 (2001) 2,000.00 1,941.05 -- --
Total COLA's
191.05
Original Option One Benefit Amount

$2000

+Total COLA's

+$191.05

=New Benefit Amount

=$2,191.05*


*In the future (i.e., 2001 or Year 5), COLAs will be based on the increased benefit amount.


(e) If the survivor dies and the retiree's benefit increases under this section, and thereafter the retiree also dies before all contributions are exhausted, the remaining balance is retained by the retirement fund.

(((5))) (6) Any retiree who retired before January 1, 1996, and who elected to receive a reduced retirement allowance under subsection (2) of this section is entitled to receive a retirement allowance adjustment if the retiree meets the following conditions:

(a) The retiree's designated beneficiary predeceases or has predeceased the retiree; and

(b) The retiree provides the department proper proof of the designated beneficiary's death. The retiree is not required to apply for the increased benefit provided in this subsection.

The adjusted retirement allowance will be effective on July 1, 1998, or the first day of the month following the date of death of the designated beneficiary, whichever comes last. The adjustment is computed as described in RCW 41.32.530 (3)(c) for Plan 1 retirees or RCW 41.32.785 (3)(c) for Plan 2 retirees.

(7) Survivor. For the purposes of this provision, "survivor" means a person nominated by the member to receive a monthly benefit allowance after the member dies. A member nominates the survivor at the time of retirement by filing a completed and notarized form provided by the department.

[Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660.  96-01-047, 415-112-727, filed 12/14/95, effective 1/14/96.  Statutory Authority: RCW 34.05.050 and 1990 c 249.  91-03-016, 415-112-727, filed 1/7/91, effective 2/7/91.]


AMENDATORY SECTION(Amending Order 87-09, filed 10/7/87)

WAC 415-112-800
Scope.

WAC 415-112-800 through 415-112-820 govern the application of RCW 41.32.010 (((11))) (10)(a)(ii), as amended by section 1, chapter 265, Laws of 1987 and by section 2, chapter 265, Laws of 1987, and shall apply only to persons who became members prior to October 1, 1977.

[Statutory Authority: Chapter 41.32 RCW as amended by 1987 c 265.  87-20-082 (Order 87-09), 415-112-800, filed 10/7/87.]

OTS-3109.1


AMENDATORY SECTION(Amending WSR 95-22-006, filed 10/18/95, effective 11/18/95)

WAC 415-112-41301
Vehicle allowances--Are vehicle allowances earnable compensation?

(1) If your employer provides you any payment or allowance in lieu of a reimbursement for expenses you incur or expect to incur in performing services for your employer, the payment or allowance is not earnable compensation. Your vehicle allowance does not qualify as earnable compensation if you receive the allowance in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes.  ((See WAC 415-112-410 (3)(e) and 415-112-411 (3)(g).))

(2) The department presumes that any vehicle allowance provided to you by your employer is a payment in lieu of reimbursement for expenses and is not earnable compensation. If the contract authorizing your vehicle allowance states that it is provided solely in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes, the department's presumption is not rebuttable.

(3) Your vehicle allowance may qualify as earnable compensation to the extent that it exceeds your actual expenses. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in driving your own vehicle for business purposes, the excess amount is earnable compensation.  Your employer must maintain monthly contemporaneous records documenting the following:

(a) The dates, if any, on which you used a privately owned vehicle in performing services for your employer;

(b) The miles you drove the vehicle on each of these trips; and

(c) Your itinerary for each of these trips.

(4) How to determine what amount of your vehicle allowance, if any, is reportable as earnable compensation. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in using your own vehicle for business purposes, your employer must report to the department as earnable compensation:


Your Vehicle Allowance LESS (Miles X IRS Rate)

(a) "Miles" above means the number of miles you drove a privately owned vehicle for business purposes during the month.

(b) "IRS rate" above means the Internal Revenue Service mileage rate for use by taxpayers computing the value of the use of a vehicle.

(5) Your vehicle allowance qualifies as earnable compensation if you also receive a separate reimbursement for each occasion you use your own vehicle for business purposes. If, in addition to your vehicle allowance, you receive a separate reimbursement for vehicle expenses for each occasion that you use a privately owned vehicle for business purposes, your vehicle allowance is earnable compensation.

(6) Any part of your vehicle allowance that qualifies as earnable compensation is excess compensation. If any part of your vehicle allowance is included in the calculation of your retirement allowance, your employer will be billed for excess compensation under RCW 41.50.150.  Your employer's bill will equal the total estimated cost of the portion of your retirement allowance payment attributable to your vehicle allowance.

[Statutory Authority: RCW 41.50.050.  95-22-006, 415-112-41301, filed 10/18/95, effective 11/18/95.]

Washington State Code Reviser's Office