BILL REQ. #:  Z-1038.1 

Read first time 01/15/2004.   Referred to Committee on Ways & Means.

     AN ACT Relating to permitting members of the public employees' retirement system plan 2 and plan 3 and the school employees' retirement system plan 2 and plan 3 to buy down the early retirement reduction amounts; amending RCW 41.40.630, 41.40.820, 41.35.420, and 41.35.680; adding new sections to chapter 41.40 RCW; adding new sections to chapter 41.35 RCW; and providing an effective date.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 41.40 RCW under the subchapter heading "plan 2" to read as follows:
     (1) A member eligible to retire under RCW 41.40.630 (2) or (3) may, at the time of filing a written application for retirement with the department, apply to the department to buy down the early retirement reduction amounts with the department.
     (2) A member may buy down all or part of the amount required to fully offset the reduction in benefits that the member is subject to in computing the member's retirement allowance under RCW 41.40.630 (2) or (3), as applicable.
     (3) Subject to rules adopted by the department, a member buying down the early retirement reduction amounts under this section may pay all or part of the cost with a lump sum payment, eligible rollover, direct rollover, or trustee-to-trustee transfer from an eligible retirement plan. The department shall adopt rules to ensure that the lump sum payments, rollovers, and transfers comply with the requirements of the federal internal revenue code and the regulations adopted by the internal revenue service. The rules adopted by the department may condition the acceptance of a rollover or transfer from another plan on the receipt of information necessary to enable the department to determine the eligibility of any transferred funds for the tax-free rollover treatment or other treatment under federal tax law.

Sec. 2   RCW 41.40.630 and 2000 c 247 s 901 are each amended to read as follows:
     (1) NORMAL RETIREMENT. Any member with at least five service credit years who has attained at least age sixty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.620.
     (2) EARLY RETIREMENT. Any member who has completed at least twenty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.620, except that a member retiring pursuant to this subsection shall have the retirement allowance actuarially reduced to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (3) ALTERNATE EARLY RETIREMENT. Any member who has completed at least thirty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.620, except that a member retiring pursuant to this subsection shall have the retirement allowance reduced by three percent per year to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (4) The actuarial reduction provided for in subsection (2) of this section and the three percent per year reduction provided for in subsection (3) of this section shall be adjusted for any buydown of those amounts under section 1 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.40 RCW under the subchapter heading "plan 3" to read as follows:
     (1) A member eligible to retire under RCW 41.40.820 (2) or (3) may, at the time of filing a written application for retirement with the department, apply to the department to buy down the early retirement reduction amounts with the department.
     (2) A member may buy down all or part of the amount required to fully offset the reduction in benefits that the member is subject to in computing the member's retirement allowance under RCW 41.40.820 (2) or (3), as applicable
     (3) Subject to rules adopted by the department, a member buying-down the early retirement reduction amounts under this section may pay all or part of the cost with a lump sum payment, eligible rollover, direct rollover, or trustee-to-trustee transfer from an eligible retirement plan. The department shall adopt rules to ensure that the lump sum payments, rollovers, and transfers comply with the requirements of the federal internal revenue code and the regulations adopted by the internal revenue service. The rules adopted by the department may condition the acceptance of a rollover or transfer from another plan on the receipt of information necessary to enable the department to determine the eligibility of any transferred funds for the tax-free rollover treatment or other treatment under federal tax law.

Sec. 4   RCW 41.40.820 and 2000 c 247 s 309 are each amended to read as follows:
     (1) NORMAL RETIREMENT. Any member who is at least age sixty-five and who has:
     (a) Completed ten service credit years; or
     (b) Completed five service credit years, including twelve service credit months after attaining age fifty-four; or
     (c) Completed five service credit years by the transfer payment date specified in RCW 41.40.795, under the public employees' retirement system plan 2 and who transferred to plan 3 under RCW 41.40.795;
shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.790.
     (2) EARLY RETIREMENT. Any member who has attained at least age fifty-five and has completed at least ten years of service shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.790, except that a member retiring pursuant to this subsection shall have the retirement allowance actuarially reduced to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (3) ALTERNATE EARLY RETIREMENT. Any member who has completed at least thirty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.40.790, except that a member retiring pursuant to this subsection shall have the retirement allowance reduced by three percent per year to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (4) The actuarial reduction provided for in subsection (2) of this section and the three percent per year reduction provided for in subsection (3) of this section shall be adjusted for any buydown of those amounts under section 3 of this act.

NEW SECTION.  Sec. 5   A new section is added to chapter 41.35 RCW under the subchapter heading "plan 2" to read as follows:
     (1) A member eligible to retire under RCW 41.35.420 (2) or (3) may, at the time of filing a written application for retirement with the department, apply to the department to buy down the early retirement reduction amounts with the department.
     (2) A member may buy down all or part of the amount required to fully offset the reduction in benefits that the member is subject to in computing the member's retirement allowance under RCW 41.35.420 (2) or (3), as applicable.
     (3) Subject to rules adopted by the department, a member buying down the early retirement reduction amounts under this section may pay all or part of the cost with a lump sum payment, eligible rollover, direct rollover, or trustee-to-trustee transfer from an eligible retirement plan. The department shall adopt rules to ensure that the lump sum payments, rollovers, and transfers comply with the requirements of the federal internal revenue code and the regulations adopted by the internal revenue service. The rules adopted by the department may condition the acceptance of a rollover or transfer from another plan on the receipt of information necessary to enable the department to determine the eligibility of any transferred funds for the tax-free rollover treatment or other treatment under federal tax law.

Sec. 6   RCW 41.35.420 and 2000 c 247 s 905 are each amended to read as follows:
     (1) NORMAL RETIREMENT. Any member with at least five service credit years who has attained at least age sixty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.400.
     (2) EARLY RETIREMENT. Any member who has completed at least twenty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.400, except that a member retiring pursuant to this subsection shall have the retirement allowance actuarially reduced to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (3) ALTERNATE EARLY RETIREMENT. Any member who has completed at least thirty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.400, except that a member retiring pursuant to this subsection shall have the retirement allowance reduced by three percent per year to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (4) The actuarial reduction provided for in subsection (2) of this section and the three percent per year reduction provided for in subsection (3) of this section shall be adjusted for any buydown of those amounts under section 5 of this act.

NEW SECTION.  Sec. 7   A new section is added to chapter 41.35 RCW under the subchapter heading "plan 3" to read as follows:
     (1) A member eligible to retire under RCW 41.35.680 (2) or (3) may, at the time of filing a written application for retirement with the department, apply to the department to buy down the early retirement reduction amounts with the department.
     (2) A member may buy down all or part of the amount required to fully offset the reduction in benefits that the member is subject to in computing the member's retirement allowance under RCW 41.35.680 (2) or (3), as applicable.
     (3) Subject to rules adopted by the department, a member buying down the early retirement reduction amounts under this section may pay all or part of the cost with a lump sum payment, eligible rollover, direct rollover, or trustee-to-trustee transfer from an eligible retirement plan. The department shall adopt rules to ensure that the lump sum payments, rollovers, and transfers comply with the requirements of the federal internal revenue code and the regulations adopted by the internal revenue service. The rules adopted by the department may condition the acceptance of a rollover or transfer from another plan on the receipt of information necessary to enable the department to determine the eligibility of any transferred funds for the tax-free rollover treatment or other treatment under federal tax law.

Sec. 8   RCW 41.35.680 and 2000 c 247 s 906 are each amended to read as follows:
     (1) NORMAL RETIREMENT. Any member who is at least age sixty-five and who has:
     (a) Completed ten service credit years; or
     (b) Completed five service credit years, including twelve service credit months after attaining age fifty-four; or
     (c) Completed five service credit years by September 1, 2000, under the public employees' retirement system plan 2 and who transferred to plan 3 under RCW 41.35.510;
shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.620.
     (2) EARLY RETIREMENT. Any member who has attained at least age fifty-five and has completed at least ten years of service shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.620, except that a member retiring pursuant to this subsection shall have the retirement allowance actuarially reduced to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (3) ALTERNATE EARLY RETIREMENT. Any member who has completed at least thirty service credit years and has attained age fifty-five shall be eligible to retire and to receive a retirement allowance computed according to the provisions of RCW 41.35.620, except that a member retiring pursuant to this subsection shall have the retirement allowance reduced by three percent per year to reflect the difference in the number of years between age at retirement and the attainment of age sixty-five.
     (4) The actuarial reduction provided for in subsection (2) of this section and the three percent per year reduction provided for in subsection (3) of this section shall be adjusted for any buydown of those amounts under section 7 of this act.

NEW SECTION.  Sec. 9   This act takes effect July 1, 2006.