FINAL BILL REPORT
HB 2877
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
C 41 L 10
Synopsis as Enacted
Brief Description: Authorizing payment of regulated company stock in lieu of a portion of salary for educational employees.
Sponsors: Representative Moeller.
House Committee on Ways & Means
Senate Committee on Ways & Means
Background:
The board of directors of a school district, the Teachers’ Retirement System, the Superintendent of Public Instruction, and Educational Service District Superintendents are permitted to establish tax-deferred annuities for their employees through the establishment of a deferral program under the provisions of federal law commonly referred to as 403(b) plans.
A 403(b) plan is a tax-advantaged salary deferral retirement program for employees of educational institutions and certain other non-profit organizations. The 403(b) plans must be sponsored by the institution, which then acts in the capacity of a fiduciary. The employer is responsible for establishing the plan and selecting the plan investments. Once the plan has been established, the employee defers a portion of his/her annual salary into the fund. Among the types of investments that are permitted in 403(b) accounts are annuity and variable annuity contracts with insurance companies and custodial accounts that consist of mutual funds which meet the definition of qualified regulated company stock. The latter of these is called a 403(b) (7) account. The 403(b) plan requirements do not permit investment in individual stocks. If offered by an employer, 403(b) plans must be made available to all employees.
State law permits Washington educational employers to establish 403(b) programs, but limits the types of investments to tax deferred annuity contracts.
Summary:
The board of directors of a school district, the Teachers’ Retirement System, the Superintendent of Public Instruction, and Educational Service District Superintendents are authorized to provide the option to purchase certain mutual funds qualified as regulated company stock held in a custodial account, as well as tax deferred annuities for employees’ federal Internal Revenue Service qualified section 403(b) accounts.
Votes on Final Passage:
House | 94 | 0 | |
Senate | 48 | 0 |
Effective: | June 10, 2010 |