PROPOSED RULES
RETIREMENT SYSTEMS
Original Notice.
Preproposal statement of inquiry was filed as WSR 05-13-047.
Title of Rule and Other Identifying Information: WAC 415-104-480 LEOFF Plan 2 duty disability benefits.
Hearing Location(s): Department of Retirement Systems, 6835 Capitol Boulevard, Conference Room 115, Tumwater, WA, on August 22, 2006, at 9:00 a.m.
Date of Intended Adoption: August 23, 2006.
Submit Written Comments to: Leslie L. Saeger, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail leslies@drs.wa.gov, fax (360) 753-3166, by 5:00 p.m. on August 22, 2006.
Assistance for Persons with Disabilities: Contact Leslie L. Saeger by August 14, 2006, TDD (360) 664-7291, TTY (360) 586-5450, phone (360) 664-7291.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WAC 415-104-480 is being amended to incorporate the provisions of chapter 451, Laws of 2005 (the allowance under this section is no longer actuarially reduced for early retirement) and to clarify eligibility requirements.
Statutory Authority for Adoption: RCW 41.50.050(5).
Statute Being Implemented: RCW 41.26.470 (6) and (7).
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of retirement systems, governmental.
Name of Agency Personnel Responsible for Drafting: Leslie Saeger, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; Implementation and Enforcement: Dave Nelsen, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291.
No small business economic impact statement has been prepared under chapter 19.85 RCW. These rules have no effect on businesses.
A cost-benefit analysis is not required under RCW 34.05.328. The department of retirement systems is not one of the named departments in RCW 34.05.328.
July 6, 2006
Leslie L. Saeger
Rules Coordinator
OTS-8989.2
AMENDATORY SECTION(Amending WSR 04-22-074, filed 11/1/04,
effective 12/2/04)
WAC 415-104-480
LEOFF Plan 2 duty disability benefits.
((Members of the law enforcement officers' and fire fighters'
retirement system (LEOFF) Plan 2)) This section applies to you
if you are a LEOFF Plan 2 member who incurs a disability in
the line of duty ((are entitled to duty disability benefits
subject to the requirements in)) per RCW 41.26.470 (6) and (7)
and this section.
(1) Who is entitled to duty disability benefits? Any
member of LEOFF Plan 2 who ((is deemed by the department to
have)) the department determines has:
(a) Incurred a physical or mental disability in the line of duty;
(b) ((Been)) Become totally incapacitated for continued
employment in a LEOFF eligible position; and
(c) Separated from a LEOFF eligible position due to the
disability((, and who:
(i) Has a retirement date on or after January 1, 2001; or
(ii) Is eligible under this section to have a retirement date on or after January 1, 2001.
The disability may be physical or mental, and may be caused by injury or occupational disease)).
(2) How is "line of duty" defined? Line of duty means
any action or activity ((done)) occurring in conjunction with
your employment or your status as a law enforcement officer or
fire fighter ((that is)) and required((, obligated,)) or
authorized by law, rule, regulations, or condition of
employment or service.
(3) When are the duty disability provisions effective?
The ((effective date of the)) duty disability provisions under
RCW 41.26.470 (6) and (7) ((is)) are effective June 10,
2004((, and applies retroactively to January 1, 2001. In
order to qualify for the provisions, you must have separated
from your LEOFF-eligible position due to a duty disability
with a retirement date on or after January 1, 2001)).
(4) How do I apply for duty disability benefits? ((You
must submit)) The department must receive:
(a) A completed three-part disability retirement application on the form provided by the department.
(i) Part 1: Disability retirement application. You must
complete and sign the application. If you are married, your
spouse must sign ((consent of)) consenting to the retirement
payment option you choose. ((You must have)) Your
signature(s) must be notarized.
(ii) Part 2: Employer's statement and report. Your employer must complete, sign and return it directly to the department.
(iii) Part 3: Medical report. You must complete Section
1. The remainder must be completed and signed by a person
licensed according to Washington state law to practice
medicine and surgery, osteopathic medicine and surgery,
chiropractic, ((naturopathy)) clinical psychology, podiatry,
dentistry, or optometry((.));
(b) ((Proof of applying to the Washington state
department of labor and industries (L&I) or a self-insurer for
workers' compensation benefits under Title 51 RCW and, if L&I
or the self-insurer determined eligibility, a copy of the
determination;
(c))) Additional information ((that may be)) requested by
the department; and
(((d))) (c) Any other material you want the department to
consider.
(5) What ((types of)) evidence will the department use to
determine whether I am entitled to benefits under this
section? The department will consider any relevant
information submitted by you or your employer, or otherwise
available to the department, including:
(a) Information and determinations ((obtained from)) by
the department of labor and industries (L&I) or a
self-insurer;
(b) ((The documentation you submit;
(c) Facts surrounding your injury or occupational disease)) Medical, vocational, and other information about your disability;
(((d))) (c) Your job description;
(((e))) (d) Your membership records, maintained by the
department;
(((f) Materials obtained or provided by your employer;))
and
(((g))) (e) Any other relevant evidence.
(6) What would disqualify me for duty disability benefits? You are not eligible for duty disability benefits if any of the following apply:
(a) Your application does not provide adequate proof that you are totally incapacitated for continued employment in a LEOFF-eligible position;
(b) Your application ((is incomplete or lacks sufficient
documentation to prove)) does not provide adequate proof that
your disability was incurred in the line of duty;
(c) ((Your claim for workers' compensation benefits under
Title 51 RCW was denied either because your disability was not
incurred in the course of employment or because your condition
was not recognized as a disability;
(d))) The disability occurred as a result of intentional
misconduct((;
(e))) including but not limited to:
(i) An action ((was taken by)) you took intentionally to
bring about your own disability;
(((f) Your mental or physical faculties were impaired due
to voluntary intoxication as defined in subsection (17) of
this section; or
(g) You were performing your duties in a grossly negligent manner at the time the disability occurred)) (ii) Gross negligence on your part; or
(iii) Your voluntary intoxication. As used in this section, "intoxication" means a disturbance of mental or physical faculties resulting from the introduction of:
(A) Alcohol into the body as evidenced by:
(I) A blood alcohol level of .20 per centum or greater; or
(II) A blood alcohol level of at least .10 per centum but less than .20 per centum unless the department receives convincing evidence that the officer or fire fighter was not acting in an intoxicated manner immediately prior to the injury; or
(B) Drugs or other substances in the body.
(7) Who decides if I meet the requirements for benefits under this section? The LEOFF plan administrator.
(8) May I petition a decision made by the LEOFF plan
administrator? Yes. If the LEOFF plan administrator denies
your request for a disability benefit ((or determines your
disability was not incurred in the line of duty)) under this
section, you may petition for review under chapter 415-04 WAC.
(9) What are the duty disability retirement benefits? As a duty disability retiree, you may choose between:
(a) A nontaxable, one-time lump sum payment equal to one hundred fifty percent of your retirement contributions; except that, any payments made to restore service credit after the five-year deadline will be paid at one hundred percent; or
(b) A monthly ((benefit)) allowance equal to (((b)(i) or
(ii) of this subsection, whichever provides the greater
benefit)):
(i) ((A minimum monthly benefit equal to)) Ten percent of
your final average salary (FAS), which is nontaxable; ((or))
and
(ii) ((A monthly benefit of)) Two percent of your FAS for
each year of service((, adjusted for early retirement if you
are under age fifty-three and any survivor option chosen. A
portion of your benefit, equal to ten percent of your FAS, is
nontaxable)) beyond five years.
Your monthly allowance will not be adjusted for early
retirement. However, if you choose a benefit option with a
survivor feature as described in WAC 415-104-215, your monthly
allowance will be actuarially reduced to offset the cost. The
factors used to determine the amount of the reduction are in
WAC 415-02-380.
| Example: | Tom incurs a duty disability at age 42 after
twenty years of service. His final average
salary is $5000 per month. Tom's wife is also
age 42(( |
| Allowance | $5000 X 10% = | $500 |
| (( |
$500 X 0.87 = | $435 (nontaxable) |
| Allowance | (( |
$(( |
| (( |
||
| (( |
$(( |
$(( |
(10) Are my duty disability benefits taxable? The department reports disability benefits to the Internal Revenue Service as required by federal law. Based on current federal law, part of your benefit may be taxable. You should consult with your own tax advisor regarding all questions of federal or state income, payroll, personal property or other tax consequences regarding any payments you receive from the department.
((It is important that you realize that)) The department
does not:
(a) Guarantee that payments ((should or should not be
designated as)) are exempt from federal income tax;
(b) Guarantee that it was correct in withholding or not withholding taxes from benefit payments to you;
(c) Represent or guarantee that any particular federal or
state income, payroll, personal property or other tax
consequence will occur because of its ((nontaxable))
determination; or
(d) Assume any liability for your compliance with the Internal Revenue Code.
(11) ((If I retired on or after January 1, 2001, may I
apply for duty disability benefits? If you separated
employment due to disability and retired with a service or
nonduty disability retirement date on or after January 1,
2001, you may apply to the department for duty disability
benefits according to the provisions of subsection (4) of this
section.
(12) If I separated from employment)) If I previously
withdrew my contributions, may I apply for duty disability
benefits? If you separated from employment due to a
disability and ((qualify for a retirement date on or after
January 1, 2001)) withdrew your contributions, you may apply
for duty disability benefits according to the provisions of
subsection (4) of this section. ((If the LEOFF administrator
determines you are entitled to duty disability benefits, you
will receive a monthly benefit calculated as provided in
subsection (9)(b) of this section. However, if you withdrew
your contributions, you must repay the entire amount you
withdrew. You may repay the withdrawn amount:
(a) By returning the entire amount you withdrew to the department; or
(b) By an actuarial reduction in your monthly benefit.))
(12) If I previously withdrew my contributions and am approved for duty disability benefits, what will I receive as a benefit? If the LEOFF plan administrator determines you are entitled to duty disability benefits, the department will amend Internal Revenue Service reporting to designate your previous withdrawal as nontaxable. In addition, you may choose either of the following:
(a) If you previously withdrew 100% of your contributions, you may choose to receive an additional lump sum payment equal to 50% of the contributions you withdrew. The payment will be nontaxable; or
(b) If you previously withdrew 100% or 150% of your
contributions, you may choose to receive a monthly allowance
according to subsection (9) of this section. You must repay
the amount you withdrew, either in a lump sum payment or by
having your monthly allowance permanently actuarially reduced
to offset the amount of your previous withdrawal.
| Example: | John was injured on the job and separated from his LEOFF position in March 2002. At the time he separated, he was 43 years old, had 10 years of service, and his final average salary was $5,000.00 per month. At that time, John chose to withdraw $75,000, which equaled 150 percent of his retirement contributions. |
| John subsequently applied under the provisions of RCW 41.26.470 (6) and (7) and was deemed eligible for duty disability benefits. | |
| The department calculated John's benefit
according to the methods in subsection (9) of
this section (( |
| Minimum monthly
(( |
10% X (( |
$500 (nontaxable) |
| Plus: | ||
| Monthly allowance | 5 years X 2% X FAS ($5000) = | $500 |
| John's total monthly allowance will be $1,0001. | ||
| (( |
(( |
$(( |
| Reduction to repay the withdrawn amount ($75,000) | $75,000 X .0049904 (annuity factor, which is based on the retiree's age) = | -$374.28 |
| Monthly
(( |
$(( |
| 1 Annuity factors are provided in WAC 415-02-340. | |
| 2 If John chooses a benefit option with a survivor feature, as described in WAC 415-104-215, his monthly allowance will be actuarially reduced to offset the cost. Survivor option factors are provided in WAC 415-02-380. |
(a) You return to work in a LEOFF-eligible position; or
(b) Medical examination reveals that you ((have recovered
from the incapacitating disability)) are no longer totally
incapacitated for employment in a LEOFF eligible position and
you are no longer entitled to workers' compensation benefits
under Title 51 RCW.
(14) If I retire for a duty disability and die, will my
survivor beneficiary receive a monthly ((benefit)) allowance?
If you ((elect a survivor option)) choose a benefit option
with a survivor feature under WAC 415-104-215(2) at the time
of retirement, your survivor beneficiary will receive a
monthly ((benefit)) allowance after your death.
(15) What happens if I return to a LEOFF-eligible
position? If you ((recover from your disability and)) return
to a LEOFF-eligible position, your monthly ((retirement
benefit)) allowance will stop.
(16) If I return to a LEOFF-eligible position, how will
my future retirement benefit be affected? When you reretire,
your monthly ((benefit)) allowance will be calculated pursuant
to RCW 41.26.500 ((using any additional service credit and
your highest sixty consecutive months of salary, but will be
reduced if:
(a) You were receiving a monthly benefit equal to ten percent of your FAS; or
(b) You were receiving a monthly benefit calculated under the normal two percent rule but had an early retirement factor applied; or
(c) You received the one-time lump sum payment equal to one hundred fifty percent of your contributions, unless you repay the amount you received.
(17) As used in this section, intoxication means a disturbance of mental or physical faculties resulting from the introduction of alcohol into the body as evidenced by:
(a) A blood alcohol level of .20 per centum or greater;
(b) A blood alcohol level of at least .10 per centum but less than .20 per centum unless the department receives convincing evidence that the public safety officer was not acting in an intoxicated manner immediately prior to his/her injury; or
Resulting from drugs or other substances in the body)) and WAC 415-104-111.
[Statutory Authority: RCW 41.50.050(5) and 41.26.470. 04-22-074, § 415-104-480, filed 11/1/04, effective 12/2/04.]