Date of Adoption: February 1, 2001.

Purpose: Effective January 10, 2001, the Internal Revenue Service amended Income Tax Regulations (26 C.F.R. Part 1) under section 125 of the Internal Revenue Code. The changes in the department's dependent care assistance salary reduction plan will make the department's rules as consistent as possible with the increased flexibility in the federal rules.

Citation of Existing Rules Affected by this Order: Amending WAC 415-630-030 Changes in the family status.

Statutory Authority for Adoption: RCW 41.40.020, 41.50.050(5), 41.04.640.

Other Authority: RCW 34.05.350, 26 U.S.C. 125, 26 C.F.R. Part 1 (Tax Treatment of Cafeteria Plans).

Under RCW 34.05.350 the agency for good cause finds that state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule.

Reasons for this Finding: The Internal Revenue Service amended Income Tax Regulations (26 C.F.R. Part 1) effective January 10, 2001. Immediate adoption is needed to make state rules consistent with the federal change.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.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: Immediately.

January 30, 2001

John Charles

Director

OTS-4644.1

AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-630-030   Changes in family status.   A participant is permitted to revoke a salary reduction agreement after the period of coverage has commenced and to enter a new salary reduction agreement regarding the remainder of the plan year if both the revocation and new election are on account of and consistent with any of the following changes in family status:

     (1) Marriage;

     (2) Divorce or legal separation;

     (3) Death of a spouse or dependent;

     (4) Birth or adoption of a child or addition of a dependent to the eligible employee's household;

     (5) Termination of employment of a spouse;

     (6) Employment of an unemployed spouse; ((and))

     (7) A change in the eligible employee's or eligible employee's spouse's working hours which significantly alters the need for dependent care; example: A shift from full time to part time, part time to full time, or a change to or from leave without pay status((.));

     (8) Such other events that the department determines will permit a change or revocation of an election during a plan year under regulations and rulings of the Internal Revenue Service; or

     (9) Any other reason provided by the Internal Revenue Code, 26 CFR Part 1.

     An eligible employee may also become a participant in the plan on the basis of a change in family status.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-630-030, filed 7/29/96, effective 7/29/96.]

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