[atlas:bill]

AN ACT Relating to encouraging employees to take advantage of the deferred compensation program; and amending RCW 41.50.770 and 28A.400.240.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 41.50.770 and 1995 c 239 s 314 are each amended to read as follows:

(1) "Employee" as used in this section and RCW 41.50.780 includes all full-time, part-time, and career seasonal employees of the state, a county, a municipality, or other political subdivision of the state, whether or not covered by civil service; elected and appointed officials of the executive branch of the government, including full-time members of boards, commissions, or committees; justices of the supreme court and judges of the court of appeals and of the superior and district courts; and members of the state legislature or of the legislative authority of any county, city, or town.

(2) The state, through the department, and any county, municipality, or other political subdivision of the state acting through its principal supervising official or governing body is authorized to contract with an employee to defer a portion of that employee's income, which deferred portion shall in no event exceed the amount allowable under 26 U.S.C. Sec. 457, and deposit or invest such deferred portion in a credit union, savings and loan association, bank, or mutual savings bank or purchase life insurance, shares of an investment company, or fixed and/or variable annuity contracts from any insurance company or any investment company licensed to contract business in this state.

(3) The department can provide such plans as the employee retirement benefits board, established under RCW 41.50.086, deems are in the interests of state employees. In addition to the types of investments described in this section, the department may invest the deferred portion of an employee's income, without limitation as to amount, in any of the class of investments described in RCW 43.84.150 as in effect on January 1, 1981. Any income deferred under such a plan shall continue to be included as regular compensation, for the purpose of computing the state or local retirement and pension benefits earned by any employee.

(4) Coverage of an employee under a deferred compensation plan under this section shall not render such employee ineligible for simultaneous membership and participation in any pension system for public employees.

(5) Effective with the July 10, 1998, state payroll warrant only, a one-time additional salary payment of five hundred dollars shall be paid to all state employees, adjusted proportionally for less than full-time state education employees. The employees must be employed as of June 30, 1998, in a state position and have been employed ninety days or more for the period January 1, 1998, through June 30, 1998. This one-time salary payment is intended to encourage employees to begin or to continue to take advantage of the deferred compensation program. Participation in the deferred compensation program is not required for receipt of this salary payment. The July 24, 1998, and subsequent payroll warrants shall not include this salary payment.

(6) Effective with the October 9, 1998, higher education payroll warrant only, a one-time additional salary payment of five hundred dollars shall be paid to all higher education employees, adjusted proportionally for less than full-time higher education employees. The employees must be employed as of September 30, 1998, in a higher education position and have been employed ninety days or more for the period January 1, 1998, through June 30, 1998. This one-time salary payment is intended to encourage employees to begin or to continue to take advantage of the deferred compensation program. Participation in the deferred compensation program is not required for receipt of this salary payment. The October 26, 1998, and subsequent payroll warrants shall not include this salary payment.

Sec. 2. RCW 28A.400.240 and 1975 1st ex.s. c 205 s 1 are each amended to read as follows:

(1) In addition to any other powers and duties, any school district may contract with any classified or certificated employee to defer a portion of that employee's income, which deferred portion shall in no event exceed the appropriate internal revenue service exclusion allowance for such plans, and shall subsequently with the consent of the employee, deposit or invest in a credit union, savings and loan association, bank, mutual savings bank, or purchase life insurance, shares of an investment company, or a fixed and/or variable annuity contract, for the purpose of funding a deferred compensation program for the employee, from any life underwriter or registered representative duly licensed by this state who represents an insurance company or an investment company licensed to contract business in this state. In no event shall the total investments or payments, and the employee's nondeferred income for any year exceed the total annual salary, or compensation under the existing salary schedule or classification plan applicable to such employee in such year. Any income deferred under such a plan shall continue to be included as regular compensation, for the purpose of computing the retirement and pension benefits earned by any employee, but any sum so deducted shall not be included in the computation of any taxes withheld on behalf of any such employee.

(2) Effective with the October 9, 1998, K-12 payroll warrant only, a one-time additional salary payment of five hundred dollars shall be paid to all K-12 employees, adjusted proportionally for less than full-time K-12 employees. The employees must be employed as of September 30, 1998, in a K-12 position and have been employed ninety days or more for the period January 1, 1998, through June 30, 1998. This one-time salary payment is intended to encourage employees to begin or to continue to take advantage of the deferred compensation program. Participation in the deferred compensation program is not required for receipt of this salary payment. The October 26, 1998, and subsequent payroll warrants shall not include this salary payment.