WSR 06-04-059

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed January 27, 2006, 2:00 p.m. , effective February 27, 2006 ]


Effective Date of Rule: Thirty-one days after filing.

Purpose: To correct technical errors and rewrite rules for clarity.

Citation of Existing Rules Affected by this Order: Amending WAC 415-108-443, 415-108-470, and 415-108-800.

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

Adopted under notice filed as WSR 06-01-049 on December 16, 2005.

Changes Other than Editing from Proposed to Adopted Version: The term "compensation earnable" has been changed to "reportable compensation" in WAC 415-108-443 and 415-108-470. The term "reportable compensation," as defined in WAC 415-108-010(7) means, "compensation earnable as that term is defined in RCW 41.40.010(8)." This change in terminology does not change the affect of the rules.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 3, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 3, Repealed 0.

Date Adopted: January 26, 2006.

Sandra J. Matheson

Director

OTS-8519.3


AMENDATORY SECTION(Amending WSR 03-06-042, filed 2/27/03, effective 4/1/03)

WAC 415-108-443   PERS reportable compensation table.   The following table ((will help you determine)) indicates whether certain types of payments are reportable compensation under PERS Plan((s)) 1, 2, or 3((. Be sure to read the referenced rule to ensure that you have correctly identified the payment in question. The department determines reportable compensation based upon the nature of the payment, not the name applied to it. See WAC 415-108-445)) and provides a cross-reference to the specific WAC.


Type of Payment PERS 1 Reportable

Compensation?

PERS 2 or 3 Reportable

Compensation?

Annual Leave Cash Outs Yes - WAC 415-108-456 No - WAC 415-108-456
Assault Pay (State Emp.) Yes - WAC 415-108-468 Yes - WAC 415-108-468
Base Rate Yes - WAC 415-108-451 Yes - WAC 415-108-451
Car Allowances No - WAC 415-108-4851 No - WAC 415-108-4851
Cafeteria Plans Yes - WAC 415-108-455 Yes - WAC 415-108-455
Deferred Wages Yes - WAC 415-108-459 Yes - WAC 415-108-459
Disability Payments No - WAC 415-108-477 No - WAC 415-108-477
Disability: Salary lost while on disability leave Yes - WAC 415-108-468 Yes - WAC 415-108-468
RCW 41.40.038 RCW 41.40.038
Employer Provided Vehicle No - WAC 415-108-4802 No - WAC 415-108-480
Employer taxes/contributions No - WAC 415-108-459 No - WAC 415-108-459
Fringe Benefits, including insurance No - WAC 415-108-475 No - WAC 415-108-475
Illegal Payments No - WAC 415-108-482 No - WAC 415-108-482
Legislative Leave Yes - WAC 415-108-464 Yes - WAC 415-108-464
Longevity/Education Attainment Pay Yes - WAC 415-108-451 Yes - WAC 415-108-451
Nonmoney Maintenance Yes - WAC 415-108-4703 No - WAC 415-108-470
Optional Payments No - WAC 415-108-483 No - WAC 415-108-483
Payments in Lieu of Excluded Items No - WAC 415-108-463 No - WAC 415-108-463
Performance Bonuses Yes - WAC 415-108-453 Yes - WAC 415-108-453

1A portion of the value of an employer car allowance may be reportable compensation. See WAC 415-108-485.


2A portion of the value of an employer provided vehicle may be reportable compensation in Plan 1 only. See WAC 415-108-480.


3A portion of the value of nonmoney maintenance provided may be reportable compensation in Plan 1 only. See WAC 415-108-470.


Type of Payment PERS 1 Reportable

Compensation?

PERS 2 or 3 Reportable

Compensation?

Retroactive Salary Increase Yes - WAC 415-108-457 Yes - WAC 415-108-457
Reimbursements No - WAC 415-108-484 No - WAC 415-108-484
Reinstatement Payments Yes - WAC 415-108-467 Yes - WAC 415-108-467
Retirement or Termination Bonuses No - WAC 415-108-487 No - WAC 415-108-487
Severance Pay - Earned Over Time Yes - WAC 415-108-458 No - WAC 415-108-458
Severance Pay - Not Earned Over Time No - WAC 415-108-488 No - WAC 415-108-488
Shared Leave - State Emp. Yes - WAC 415-108-468 Yes - WAC 415-108-468
Shared Leave - Local Government Employees No - WAC 415-108-468 No - WAC 415-108-468
Sick Leave Cash Outs - State Employees No - WAC 415-108-456 No - WAC 415-108-456
Sick Leave Cash Out - Local Government Employees Yes - WAC 415-108-456 No - WAC 415-108-456
Standby Pay Yes - WAC 415-108-469 Yes - WAC 415-108-469
Time Off with Pay Yes - WAC 415-108-456 Yes - WAC 415-108-456
WAC 415-108-465 WAC 415-108-465
Union Leave4 Yes - WAC 415-108-466 Yes - WAC 415-108-466
Workers' Compensation No - WAC 415-108-479 No - WAC 415-108-479

4Only specific types of union leave are reportable compensation. See WAC 415-108-466.

[Statutory Authority: RCW 41.50.050(5) and chapter 41.40 RCW. 03-06-042, 415-108-443, filed 2/27/03, effective 4/1/03. Statutory Authority: RCW 41.50.050(5), 41.40.010(8), chapter 41.40 RCW. 02-03-120, 415-108-443, filed 1/23/02, effective 3/1/02. Statutory Authority: RCW 41.50.050. 98-09-059, 415-108-443, filed 4/17/98, effective 5/18/98.]


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

WAC 415-108-470   Nonmoney maintenance.   Are payments from my employer in any form other than money ((considered)) reportable compensation ((earnable))?

(1) ((PERS Plan I members.

(a) If your employer provides you with materials in lieu of reimbursement for your business expenses, the value of the materials is not compensation earnable.

(i) The value of employer-provided materials is not compensation earnable if you use the materials solely in connection with your employer's business.

(ii) "Materials" includes, but is not limited to, living quarters, food, board, equipment, clothing, laundry, transportation, fuel, and utilities.


Example: An employer provides an employee with uniforms which the employee must wear in performing services for his employer. Because the uniforms are to be used solely in connection with the employer's business, they do not qualify as nonmoney maintenance compensation. Therefore, the value of the uniforms is not compensation earnable.

(b) The department presumes that your employer provides you materials solely in lieu of reimbursement for business expenses. Unless you or your employer can show by corroborating evidence that your employer provided you materials in whole or in part as payment for your personal expenses, as opposed to business expenses, the value of the materials is not compensation earnable.

(c) If your employer provides you with materials for your personal use, the value of that use is nonmoney maintenance compensation and is included in your earnable compensation.

(i) "Nonmoney maintenance compensation" means the fair market value of any form of materials other than cash legally furnished by your employer to you or your dependents for personal use.

(ii) Nonmoney maintenance does not include any form of payment other than cash that is excludable from taxation under provisions of the Internal Revenue Code. This applies regardless of whether you or your employer reported the compensation to the Internal Revenue Service as taxable income.

(d) Your use of employer-provided materials will qualify as nonmoney maintenance compensation if your employer substantiates that they were provided to you as payment for personal services. In order for employer-provided materials to qualify as nonmoney maintenance compensation, your employer must:

(i) Establish and regularly update a written schedule reflecting the monthly fair market value of each item of employer-provided materials claimed as nonmoney maintenance compensation. Typically, the fair market value would be the cost of the item if it were acquired in a purchase or lease transaction;

(ii) Report the fair market value of employer-provided materials as nonmoney maintenance compensation to the department as compensation earnable. If you pay any amount to your employer in order to own or use the materials, your employer must report as compensation earnable the amount by which the fair market value of the materials exceeds the amount of your payment;

(iii) Substantiate by adequate records or by other sufficient corroborating evidence the following:

(A) That the fair market value of each item of nonmoney maintenance compensation as reported to the department is accurate;

(B) That each item of nonmoney maintenance compensation is provided to you for your personal use as payment for your services to the employer; and

(C) That each item of nonmoney maintenance compensation is includable in your taxable income for federal income tax purposes.


Example: An employer leases an apartment for $700.00 per month. The employer charges an employee $300.00 per month to use the apartment for temporary living quarters. Because the employee uses the apartment for personal, rather than business, purposes, the amount by which the lease value exceeds the employee's payment is nonmoney maintenance compensation. The employer must report $400.00 per month to the department as compensation earnable for the employee.

(e) How to corroborate that your use of employer-provided materials qualifies as nonmoney maintenance compensation. In addition to the records required under (d) of this subsection, you may provide the department with any oral or written evidence which you or your employer believe corroborates that your use of employer-provided materials qualifies as compensation earnable. However, oral evidence alone has considerably less value than written evidence. Written evidence prepared at or near the time your employer provides you with the item of compensation is generally much stronger than oral evidence or written evidence created years later.

(2) PERS Plan II members. If you are a PERS Plan II member, you are not entitled to count the value of any nonmoney maintenance compensation you receive from your employer as compensation earnable.)) Nonmoney maintenance compensation, as defined in this section:

(a) Is reportable compensation to the extent authorized by this section, for Plan 1 members; and

(b) Is not reportable compensation for Plan 2 and 3 members.

(2) Nonmoney maintenance compensation is compensation legally provided to you in a form other than money. For example, nonmoney maintenance compensation may include the provision of materials such as living quarters, food, board, equipment, clothing, laundry, transportation, fuel, and utilities. To be considered nonmoney maintenance compensation, the materials must be provided for your personal use and/or the personal use of your dependents, not for a business use. The materials are not nonmoney maintenance compensation if:

(a) You use them solely in connection with your employer's business; or

(b) They are provided in lieu of reimbursement for your business expenses.

(3) To prove that the provision of materials constitutes nonmoney maintenance compensation:

(a) Your employer must substantiate by adequate records or other sufficient corroborating evidence that the materials were provided to you for your personal use as payment for your services to the employer.

(b) Your employer must substantiate that the fair market value of the materials provided is includable in your taxable income for federal income tax purposes.

(c) You may provide corroborating evidence to the department. Written documentation prepared at or near the time the materials were provided is generally preferred.

(d) In the absence of clear proof, the department will presume that employer-provided materials were not nonmoney maintenance compensation.

(4) Your employer must report nonmoney maintenance compensation to the department. The amount reported as compensation is the fair market value of materials legally provided by your employer. To substantiate the value of nonmoney maintenance compensation:

(a) Your employer must establish and regularly update a written schedule reflecting the monthly fair market value of the materials provided. Typically, the fair market value would be the cost of the item if it were acquired in a purchase or lease transaction. Your employer must be able to substantiate the accuracy of this schedule with adequate records.

(b) If you pay any amount to your employer in order to own or use the materials, your employer must report the amount by which the fair market value exceeds the amount of your payment.


Example: Your employer leases an apartment for $700.00 per month and charges you $300.00 per month to use the apartment for temporary living quarters. Because you use the apartment for personal, rather than business purposes, the amount by which the lease value exceeds your payment is nonmoney maintenance compensation. $400.00 per month is reportable compensation.

[Statutory Authority: RCW 41.50.050. 95-22-006, 415-108-470, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.40.010(8) and 41.40.020. 87-17-061 (Order DRS 87-08), 415-108-470, filed 8/19/87.]

OTS-8281.2


AMENDATORY SECTION(Amending WSR 02-02-060, filed 12/28/01, effective 1/1/02)

WAC 415-108-800   When ((does a member of the public employees' retirement system (PERS))) do I enter retirement status?   As a member of PERS, you enter((s)) retirement status when ((he or she)) you:

(1) ((Has)) Have separated from service as defined in RCW 41.40.010(((41))) (42);

(2) ((Has)) Have no written or oral agreement to return to employment ((prior to entering "retiree status")); and

(3) ((Has)) Have applied for retirement, the accrual date has been determined under RCW 41.40.193, 41.40.680, or 41.40.801, and ((the)) your benefit begins to accrue.


Example: Sally is eligible for retirement on July 1st. She submits an application on June 1st with a July 1st retirement date. Her last day of employment is June 30th and she does not have an agreement to return to work.
Sally's retirement date (accrual date) is July 1st and the benefit begins to accrue. The first retirement payment will be paid at the end of July. Sally entered "retiree status" effective July 1st.

[Statutory Authority: RCW 41.50.050(5), 41.04.270, 41.26.030, 41.32.010, 41.32.025, 41.32.480, 41.32.500, 41.32.570, 41.32.765, 41.32.795, 41.32.802, 41.32.855, 41.32.860, 41.32.862, 41.35.010, 41.35.030, 41.35.060, 41.35.450, 41.35.640, 41.40.010, 41.40.023, 41.40.037, 41.40.150, 41.40.193, 41.40.680, 41.40.750, 41.40.801. 02-02-060, 415-108-800, filed 12/28/01, effective 1/1/02.]