(1) ((How do I))What are the requirements to request a distribution (withdrawal) of funds from my defined contribution account?

(a) You must separate from all eligible employment;

(b) The department must receive the notice of separation from your employer(s); and

(c) The department's designated recordkeeper must receive a completed request for a defined contribution distribution from your account. See WAC 415-111-110.

(2) Can I receive a special exception distribution?

(a) If you are terminally ill and eligible, the department's designated recordkeeper will arrange for payment to you within ten workdays. To be eligible for a special exception payment:

(i) You must separate from all eligible employment;

(ii) The department must receive the notice of separation from your employer(s);

(iii) The department's designated recordkeeper must receive documentation verifying your terminal illness; and

(iv) The department's designated recordkeeper must receive a completed request for a defined contribution distribution from your account (see WAC 415-111-110).

(b) If you have an unforeseeable emergency, the department's designated recordkeeper will consider your request for a special exception payment and arrange for payment to you whenever possible. To be eligible for consideration:

(i) You must separate from all eligible employment;

(ii) The department must receive the notice of separation from your employer(s);

(iii) The department's designated recordkeeper must receive documentation verifying and explaining your unforeseeable emergency. The recordkeeper will consider only unforeseeable emergencies. An unforeseeable emergency is defined as a severe financial hardship resulting from:

(A) An accident or serious illness of you or an immediate family member;

(B) The need to pay for medical expenses for you or a dependent;

(D) The need to pay for funeral expenses of a spouse or immediate family member; or

(E) Loss of property due to casualty.

(iv) The department's designated recordkeeper must receive a completed request for a defined contribution distribution from your account (see WAC 415-111-110).

(c) Depending on which program you are invested in, self-directed or WSIB Total Allocation Portfolio (TAP), the recordkeeper will distribute your special exception payment as specified in the table below, less any applicable tax withholding.

	Terminal Illness	Unforeseeable Emergency
Self-Directed	Up to 100% of the balance in the account within 10 days after approvals are completed.	Up to 100% of the balance in the account within 10 days after approvals are completed.
WSIB Total Allocation Portfolio (TAP)	Up to 100% of the balance in the account based on the most recent valuation within 10 days after approvals are completed.	Up to 80% of the balance in the account distributed as a lump sum payment through the normal month-end distribution process. If 100% liquidation is requested, the remaining balance in the account will be disbursed after the final valuation has been made.

(3) Can I still receive my defined contribution distribution if I have returned to work before receiving my funds? If you return to work in an eligible position after all the criteria in subsection (1) of this section are met, you may receive distribution from your defined contribution account.

(4) What are my options for distributing my defined contribution funds? You have the following options for distributions from your Plan 3 defined contribution account. Options for both the WSIB and the self-directed investment programs are combined where applicable.

(a) Lump sum cash distribution. In either program, you may request the entire amount of your funds in a single lump-sum payment.

(b) Direct rollover. In either program, you may have some or all of your funds rolled over to an eligible retirement plan or individual retirement account (IRA). If you choose a partial rollover, the remaining funds that were not rolled over will be distributed to you as a lump sum, unless you create a personal payment schedule under (d) of this subsection.

(c) Scheduled payments. In either program, subject to the distribution requirements of IRC section 401 (a)(9), you may request that your funds be distributed in equal payments over a specified period of time, or that a specific dollar amount be paid on a monthly basis until the account is exhausted. You may also request equal payments over your lifetime or the lifetimes of you and your beneficiary. Scheduled payments for the WSIB program are made monthly only. Scheduled payments for the self-directed program may be made monthly, quarterly, semiannually or annually. ((Both programs have a minimum payment requirement of one hundred dollars per month.))

(d) Personalized payment plan. In either program, you may create a personalized payment plan using any part of one or more of the distribution options provided in (a), (b), and (c) of this subsection (see examples below).

(e) Annuity purchase. In either program, you may ((request to have your funds used to)) purchase an annuity that pays a benefit for your lifetime or the lifetimes of you and your joint annuitant. See WAC 415-111-320 for information about purchasing an annuity and descriptions of the various annuity contracts.

(5) Market fluctuations. Your defined contribution account is subject to actual investment earnings (both gains and losses). These gains or losses ((will be used to adjust))impact the value of your account. The defined contribution payment plans are subject to the same market fluctuations. As a result, the funding of your selected payment plan may last longer than anticipated due to market gains, or end earlier than anticipated due to market losses.

example (WSIB - Partial rollover with payments until account exhausted):

Pat has $10,000 in the WSIB investment program. Pat wants to rollover $2,000 of the total to an IRA, but does not want to receive the remainder of the account in a lump sum payment as provided by the partial direct rollover option. Pat selects the personalized payment schedule option and requests to do a partial rollover of $2,000 and receive the remaining $8,000 in equal monthly payments of $125 until the account is exhausted (approximately 64 months).

example (Self - Partial rollover with payments for fixed period):

Chris has $10,000 in the self-directed investment program. Chris wants to rollover $3,000 of the total to an IRA, but does not want to receive the remainder of the account in a lump sum payment as provided by the partial direct rollover option. Chris selects the personalized payment schedule option and requests to do a partial rollover of $3,000 and receive the remaining $7,000 in quarterly payments of $250 over the next 7 years (28 quarters).

Summary of Distribution Options
SELF	WSIB
Lump Sum Cash Distribution or Direct Rollover	Lump Sum Cash Distribution or Direct Rollover
– Entire account	– Entire account
– Partial amount	– Partial amount
– Remaining funds can be distributed in a lump-sum payment or by a personalized payment schedule (see below).	– Remaining funds can be distributed in a lump-sum payment or by a personalized payment schedule (see below).
Scheduled Payments	Scheduled Payments
– Equal payments	– Equal payments
– Monthly, quarterly, semiannual or annual	– Monthly payments only
– Specified period of time, or	– Specified period of time, or
– Until the account is exhausted	– Until the account is exhausted
– Payments can be combined life expectancy of you and a beneficiary.	– Payments can be combined life expectancy of you and a beneficiary.
Annuity Purchase	Annuity Purchase
– Purchase an annuity from an insurance company	– Purchase an annuity, administered by the state of Washington
– Set up to pay benefits for	– Set up to pay benefits for
– Your lifetime, or	– Your lifetime, or
– Lifetimes of you and your joint annuitant.	– Lifetimes of you and your joint annuitant.
In addition to the above, you may set up:	In addition to the above, you may set up:
Personalized Payment Plan	Personalized Payment Plan
– Customized for your needs	– Customized for your needs
– Available for options above.	– Available for options above.

(6) Minimum required distribution.((Beginning on))No later than April 1st of the calendar year following the year in which you turn age ((70 1/2))seventy-two, you are required to withdraw a minimum amount from your defined contributions annually. (Prior to January 2020, required minimum distributions began at age seventy and one-half.) Subsequent withdrawals must be taken by December 31st of each year. If you are still working at age ((70 1/2))seventy-two, distribution is required to begin ((immediately upon retirement.))by April 1st the year following separation.

(7) See RCW 41.34.070 for additional information.

Distribution from the plan is governed by Internal Revenue Code Sections 401 (a)(9) and 457(d); the treasury regulations interpreting these sections; and these rules to the extent they are not inconsistent with the Internal Revenue Code. The options for distribution are ((set forth in the instructions which will be provided by the department))available from the department's designated record keeper.

(1) Date of distribution. You may choose the date on which to begin distribution from your deferred compensation account, subject to the requirements in (a) through (c) of this subsection.

(a) Earliest date. You may not begin distribution prior to your termination of employment, with the following exceptions:

(i) A distribution for an unforeseeable emergency under WAC 415-501-510;

(ii) A voluntary in-service distribution under subsection (4) of this section;

(iii) A distribution from funds that were rolled into the deferred compensation account (may be subject to tax penalties); or

(iv) An in-service distribution in any calendar year in which you will reach age seventy and one-half or more.

(b) Latest date. You must begin distribution on or before April 1st of the calendar year following the latter of:

(i) The calendar year in which you reach age ((seventy and one-half))seventy-two; or

(ii) The calendar year in which you retire.

(c) If you do not choose a distribution date, the department will begin distribution according to the minimum distribution requirements in IRC Section 401 (a)(9).

(2) Method of distribution. Payment options include a lump sum payment, partial lump sum payment, periodic payments, or an annuity purchase.

(((a) Periodic payments must total at least six hundred dollars per year.

(b))) Beginning at age ((seventy and one-half))seventy-two or when you terminate employment, whichever comes later, payment must be in an amount to satisfy minimum distribution requirements in IRC Section 401 (a)(9).

(3) Voluntary in-service distribution at any age. You may choose to withdraw the total amount payable to you under the plan while you are employed if the following three requirements are met:

(a) Your entire account value does not exceed five thousand dollars;

(b) You have not previously received an in-service distribution; and

(c) You have made no ((annual deferral))deferrals during the two-year period ending on the date of the in-service distribution.

(4) Unforeseeable emergencies. See WAC 415-501-510.

(5) Rehire. If you begin to receive distributions and then return to employment with a DCP employer, distributions from your DCP account will cease. You may request distribution when you are again eligible consistent with these rules.

If you die with money in your account and your beneficiary is your spouse, ((your account will be distributed in accordance with this rule.))an account will be established in ((the name of)) your spouse's name.

(1) The distribution options will be ((mailed))provided to your spouse when DCP is notified of your death. Your spouse may choose any method of distribution (annuity, periodic payments, or lump sum) that provides at least the required minimum distribution each calendar year until your account is exhausted.

(a) The department must receive your spouse's election ((form)) at least thirty days before distribution is to begin.

(b) ((Periodic distributions must total at least six hundred dollars per year.

(c))) Receiving more than the required minimum distribution during one calendar year does not excuse your spouse from taking the required minimum in any calendar year to which the required minimum applies.

(2) Required minimum distribution.

(a) First required distribution if you die before your "required beginning date" (see WAC 415-501-485 (1)(b)). Beginning in the later of:

(i) The calendar year following the calendar year of your death; or

(ii) The calendar year you would have attained age ((seventy and one half))seventy-two, your spouse must receive the required minimum distribution. This distribution must be taken by December 31st of the applicable calendar year. (Prior to January 2020, the age for required minimum distributions was seventy and one-half.)

(b) First required distribution if you die after your "required beginning date" (see WAC 415-501-485 (1)(b)), your spouse must receive the required minimum distribution during the calendar year following the year of your death. The distribution must be taken by December 31st of the applicable calendar year.

(c) Your spouse must receive the required minimum distribution during each subsequent calendar year until the account is exhausted.

(d) The required minimum distribution in each of the relevant calendar years is based on life expectancies set forth in the treasury regulations.

(3) If your spouse dies before ((his or her))the entire account is exhausted, the remainder of the account will be paid according to the beneficiary election(s) on file (see WAC 415-501-480). If there is no beneficiary election on file, the remaining balance will be paid to ((his or her))their estate.

If you die with money in your account and your beneficiary is an individual other than your spouse, ((your account will be distributed in accordance with this rule.))an account will be established in ((the name of)) your ((beneficiary))beneficiary's name.

(1) For rules governing distribution to an entity other than an individual (e.g., a trust, estate, or organization), see WAC 415-501-493.

(2) The distribution options will be ((mailed))provided to your beneficiary when DCP is notified of your death. Your beneficiary may choose any method of distribution (annuity, periodic payments, or lump sum) that provides at least the required minimum distribution each calendar year until your account is exhausted.

(a) The department must receive your beneficiary's election ((form)) at least thirty days before distribution is to begin.

(b) ((Periodic distributions must total at least six hundred dollars per year.

(c))) Receiving more than the required minimum distribution during one calendar year does not excuse your beneficiary from taking the required minimum in any calendar year to which the required minimum applies.

(3) Required minimum distribution.

(a) First required distribution if you die before your "required beginning date" (see WAC 415-501-485 (1)(b)), your beneficiary may ((chose))choose to receive the required minimum distribution under either the "life expectancy rule" or the "five year rule." Your beneficiary must elect one of the two rules at least thirty days before distribution would be required to begin under the life expectancy rule. If a timely election is not received, your beneficiary will be required to receive the required minimum distribution under the "five year rule."

(i) Life expectancy rule. Distribution under this rule allows your beneficiary to spread distribution over ((his or her))their life expectancy. Beginning in the calendar year following the calendar year of your death, your beneficiary must receive a required minimum distribution. This distribution must be taken by December 31st of the calendar year.

(ii) Five year rule. Under this rule, the first mandatory distribution is later than under the life expectancy rule. However, the beneficiary's entire account must be distributed on or before December 31st of the fifth calendar year following the calendar year of your death.

(b) First required distribution if you die after your "required beginning date" (see WAC 415-501-485 (1)(b)), your beneficiary must receive a required minimum distribution during the calendar year following the year of your death. The distribution must be taken by December 31st of the applicable calendar year.

(c) Your beneficiary must receive a required minimum distribution during each subsequent calendar year until the account is exhausted.

(d) The required minimum distribution in each of the relevant calendar years is based on life expectancies set forth in the treasury regulations.

(4) If your beneficiary dies before ((his or her))the entire account is exhausted, the remainder of the account will be paid according to the beneficiary election(s) on file (see WAC 415-501-480). If there is no beneficiary election on file, the remaining balance will be paid to ((his or her))their estate.

(1) The department will honor a domestic relations order (DRO) only if the order:

(a) Was entered by a court of competent jurisdiction pursuant to the domestic relations law of any state;

(b) Establishes a right of a spouse or former spouse to a portion of your deferred compensation account pursuant to a division of property;

(c) Clearly states either the dollar amount or a percentage of the account to be transferred to the account of the spouse or former spouse from your account; and

(d) Provides your name and date of birth, and the name and date of birth of your spouse or former spouse.

(2) You must provide the address and Social Security number of both you and your spouse or former spouse to the department. ((This information may be submitted in a cover letter, in another document, or by other means arranged with the department.))

(3) To implement a DRO, the department will establish a separate account for the spouse or former spouse in the amount specified in subsection (1)(c) of this section. The transfer(s) will be prorated across all funds and money sources based on the amount awarded to the spouse or former spouse. Thereafter, the spouse or former spouse may provide investment instructions under WAC 415-501-475.

(4) Your spouse or former spouse may choose a method of distribution, including an eligible direct rollover.

(5) If a DRO filed with the department prior to January 1, 2002, provides that distribution to the spouse or former spouse is not available until you separate from service, the department will comply with the express terms of the order unless it is subsequently amended.

(6) If the spouse or former spouse has not elected another method of distribution before the original account holder reaches age ((seventy and one-half))seventy-two, the department will begin distribution in accordance with the minimum distribution requirements in IRC 401 (a)(9) and the treasury regulations thereunder.

(7) If the spouse or former spouse dies before the account is fully distributed, the remaining balance will be paid according to the beneficiary election(s) on file (see WAC 415-501-480). If there is no beneficiary election on file, the remaining balance will be paid to ((his or her))their estate.

If you die before your entire account has been distributed and if one or more of your beneficiaries is a minor child, ((the department will distribute)) your deferred compensation funds will be distributed to the minor according to the following:

(1) ((Nominated UTMA custodian. If your beneficiary is a minor at the time of your death, and if you have nominated a custodian to receive funds on behalf of your minor beneficiary pursuant to RCW 11.114.030 of the Uniform Transfers to Minors Act (UTMA), the department will distribute your funds to the custodian regardless of the amount to be distributed. If you have more than one minor beneficiary, a separate custodianship must be established for each minor.

(2) No nominated UTMA custodian. If, at the time of your death, your beneficiary is a minor and you did not nominate a custodian to receive the funds on behalf of your minor beneficiary, then your funds will be distributed according to the following:

(a) If your beneficiary is an emancipated minor and your DCP account balance is less than five thousand dollars, the department will distribute the funds directly to the minor.

(b) If your beneficiary is an unemancipated minor and your DCP account balance is less than five thousand dollars, the department will distribute the funds to an adult member of the minor's family or to a court-appointed custodian who submits a claim on behalf of the minor beneficiary. If no adult family member or court-appointed custodian submits a claim within one hundred eighty days of your death, the department will directly petition the court for the appointment of a custodian under the UTMA. After a custodian is appointed, the department will distribute the funds to the custodian.

(c) If your beneficiary is a minor and your DCP account balance is five thousand dollars or greater, the department will distribute the funds only to a court-appointed guardian.

(i) Upon satisfactory proof of guardianship, the department will distribute the funds to the guardian of the minor.

(ii) If the department does not receive satisfactory proof of guardianship within one hundred eighty days of your death, the department will petition the court for the appointment of a guardian under chapters 11.88 and 11.92 RCW. After a guardian is appointed, the department will distribute the funds to the guardian pursuant to the terms of the guardianship order.))If the guardian is a parent, a Proof of Guardianship form and a copy of the minor's birth certificate is required.

(2) If the guardian is not a parent, a Proof of Guardianship form and court documentation verifying the guardianship of the minor is required.

(3) Distribution consistent with this rule releases the department and its designated recordkeeper from further liability with regard to your DCP account.

(4) The person receiving the distribution pursuant to this rule must choose a distribution date and method on behalf of the minor, consistent with the requirements of this chapter.

(((5) Terms used. For purposes of this rule, the following terms are defined as:

(a) An "adult" is any person who has attained the age of twenty-one years.

(b) A "member of the minor's family" means a parent, stepparent, spouse, grandparent, brother, sister, uncle, or aunt of the minor, whether in whole or half blood or by adoption.))

(1) Notwithstanding any other provisions in this chapter, you may request all or a portion of your accumulated deferrals in the event of an unforeseeable emergency. Distribution will be made within sixty days following the department's approval of your request. The amount paid will be limited strictly to that amount reasonably necessary to satisfy the emergency need.

(2) For purposes of this plan, an unforeseeable emergency is severe financial hardship resulting from:

(a) A personal illness or accident or the illness or injury of a spouse or dependent who meets the definition in Section 152(a) of the Internal Revenue Code;

(b) Loss of your property due to casualty, including the need to rebuild a home following damage not otherwise covered by homeowner's insurance, e.g., as a result of natural disaster; or

(c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control, such as:

(i) The imminent foreclosure of or eviction from your primary residence due to circumstances that were beyond your control;

(ii) The need to pay medical expenses, including nonrefundable deductibles as well as the cost of prescription drug medication; or

(iii) The need to pay funeral expenses of a participant's or beneficiary's spouse or dependent (as defined in Section 152(a) of the Internal Revenue Code without regard to Sections 152 (b)(1), (2), and (d)(1)).

(3) The circumstances that constitute an unforeseeable emergency depend upon the facts of each case, but, in no case will the department approve a distribution request if the financial hardship is or may be relieved:

(a) Through reimbursement or compensation by insurance or otherwise; or

(b) By liquidation of your assets, to the extent liquidation of such assets would not itself cause severe financial hardship; or

(4) Examples: The following types of occurrences are not considered unforeseeable emergencies: Sending your child to college or purchasing a home.

(5) If the department denies your request for distribution, you may request a review of that decision according to the provisions of WAC 415-08-015.

(((6) If your request meets the requirement for a financial emergency withdrawal, contributions into this plan must cease for a period of at least six months from the date of the withdrawal.))