SENATE BILL REPORT

SB 6458

BYSenators Johnson, Gaspard, McDonald and von Reichbauer; by request of Department of Retirement Systems

Providing for termination of membership in the teachers' retirement system.

Senate Committee on Ways & Means

Senate Hearing Date(s):

Senate Staff:Charles Langen (786-7715)

AS OF JANUARY 25, 1988

BACKGROUND:

When the plan II systems were created for the Public Employees' Retirement System (PERS), Teachers' Retirement System (TRS) and Law Enforcement Officers' and Fire Fighters Retirement System (LEOFF) only PERS II and LEOFF II contained provisions for termination of membership when a member separated from service and withdrew contributions.

Under TRS II, it is the 90 total hours worked in a given month which requires a member to contribute and for which service is granted.  If a TRS II member separates from service and withdraws contributions and then returns as a substitute teacher, the employer generally withholds the employee contribution because the substitute employee may work 90 hours among several employers in a given month.  The member then is continually withdrawing these contributions when those 90 hours are not credited for a given month.

The 1986 Federal Tax Reform Act provides a penalty of 10.0 percent for withdrawal of retirement funds by persons who have not attained age 59 and one-half.

SUMMARY:

When a member of TRS II separates from service and withdraws contributions, termination of TRS II membership shall also occur.

A member who has withdrawn contributions is required to reestablish membership by completing a minimum of ninety days or the equivalent of ninety days employment during a fiscal year.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 21, 1988

Effective Date:June 30, 1988