WSR 98-20-047
PERMANENT RULES
DEPARTMENT OF
RETIREMENT SYSTEMS
[Filed September 30, 1998, 4:10 p.m.]
Date of Adoption: September 30, 1998.
Purpose: To amend the department's rules implementing the deferred compensation plan codified in chapter 41.50 RCW in order to make those rules consistent with the 1998 amendments to chapter 41.50 RCW and the 1997 amendments to the Internal Revenue Code (IRC).
Citation of Existing Rules Affected by this Order: Amending WAC 415-512-015 through 415-512-030, 415-512-050 through 415-512-080, 415-512-090 through 415-512-110, 415-524-010, 415-544-010, 415-548-010, and 415-560-010.
Statutory Authority for Adoption: RCW 41.50.050.
Adopted under notice filed as WSR 98-15-098 on July 17, 1998.
Changes Other than Editing from Proposed to Adopted Version: After the proposed version was filed, the IRS issued proposed revenue procedure 98-41 which contained model deferred compensation plan language drafted to conform to the 1997 IRC amendments. The model language is added to the adopted version.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 9, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 9, repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 1, amended 1, repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, amended 9, repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 0, repealed 0.
Effective Date of Rule: Thirty-one days after filing.
September 30, 1998
John Charles
Director
OTS-2095.6
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-015 Plan to plan transfers. (1) Transfers to
the plan following a change in employment. If a participant was
formerly a participant in an eligible ((state)) deferred
compensation plan (within the meaning of Section 457 of the code
and ((the)) its regulations ((thereunder))), ((and if such a
plan)) which permits the direct transfer of the participant's
interest ((therein)) to ((the)) another plan, then the transferee
plan shall accept assets representing the value of such
interest((; provided,)). However, the department may require in
its sole discretion that some or all of such interest be
transferred in cash or its equivalent. Such amount shall be
held, accounted for, administered, and otherwise treated in the
same manner as compensation deferred by the participant under the
plan except that:
(a) Only the amount, if any, transferred to the plan which was deferred under the transferor plan in the taxable year when transfer occurs shall be treated as compensation deferred under the plan in such year.
(b) Such amount shall remain subject to, and shall be administered in accordance with, any irrevocable elections made under the transferor plan with respect to such amount.
(2) Transfers from the plan following a change in employment. The only rollovers or transfers allowable under Section 457 of the Internal Revenue Code are from one eligible Section 457 plan to another eligible Section 457 plan.
If a participant, prior to making a final election under WAC 415-512-090(2) regarding the method of payment, accepts employment with an employer who offers an eligible Section 457 plan, and the participant becomes a participant in that plan, then accumulated deferrals may, at the election of the participant and after written notice to the department, be transferred to the other plan, provided that plan provides for the acceptance of such transfers.
(3) Transfers by employees of participating political subdivisions. Transfers of funds by an employee of a participating political subdivision are allowed to and from other IRC Section 457 plans maintained by the political subdivision, but only if the other plan also allows transfers to and from its plan and the participant has not made an irrevocable payout election relating to either plan.
(4) Application for transfer. If the conditions in
subsection((s)) (1) ((and)), (2), or (3) of this section are met
and the participant wishes to transfer his/her account, he/she
shall complete ((any)) an application form and/or other documents
as may be required by the department.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-015, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-020 Deferral ((limitation)) limit. (1) Except
as provided in WAC 415-512-030, relating to catch-up, the maximum
that may be deferred under the plan for any taxable year of a
participant shall not exceed the lesser of seven thousand five
hundred dollars, adjusted for the calendar year to reflect cost-of-living increases in accordance with Sections 457 (e)(15) and
415(d) of the Internal Revenue Code (dollar deferral limit) or
thirty-three and one-third percent of the participant's
includible compensation, each reduced:
(a) By any amount excludable from the participant's gross income for that taxable year under Section 403(b) of the Internal Revenue Code; and
(b) By any amount:
(i) Excluded from gross income under Section 402 (e)(3) or 402 (h)(1)(B) of the Internal Revenue Code (relating to a participant's elective deferrals to simplified employee pensions) for that taxable year;
(ii) For which a deduction is allowable for that taxable year by reason of a contribution to an organization described in Section 501 (c)(18) of the Internal Revenue Code (relating to pension trusts created before June 25, 1959, forming part of a plan for payment of benefits under a pension plan funded only by contributions of employees); or
(iii) Which is deferred by a participant under Section 401(k) of the Internal Revenue Code (relating to qualified cash or deferred arrangement) during that taxable year; and
(c) By any amount the participant contributes to any other Section 457 of the Internal Revenue Code plan (relating to deferred compensation plan(s)) during the taxable year.
(2) "Includible compensation" for purposes of this section means includible compensation as defined in Section 457 (e)(5) of the Internal Revenue Code and as further defined by Treasury Department Regulation 1.457-2 (e)(2) interpreting that section, and is determined without regard to community property laws. Includible compensation for a taxable year includes only compensation from the employer that is attributable to services performed for the employer and that is includible in the participant's gross income for the taxable year for federal income tax purposes. Accordingly, a participant's includible compensation for a taxable year does not include an amount payable by the employer that is excludable from the employee's gross income under:
(a) Section 457 of the Internal Revenue Code;
(b) Section 403(b) of the Internal Revenue Code (relating to annuity contracts purchased by Section 501 (c)(3) of the Internal Revenue Code organizations or public schools);
(c) Section 105(d) of the Internal Revenue Code (relating to wage continuation plans);
(d) Section 911 of the Internal Revenue Code (relating to citizens or residents of the United States living abroad);
(e) Section 402 (e)(3) or 402 (h)(1)(B) or 402(k) of the Internal Revenue Code (relating to simplified employee pensions);
(f) Section 501 (c)(18) of the Internal Revenue Code (relating to certain pension trusts); or
(g) Section 401(k) of the Internal Revenue Code (relating to qualified cash or deferred arrangements).
(3) In computing includible compensation, total gross compensation as shown on state earnings statements must be reduced by:
(a) Section 414(h) of the Internal Revenue Code, before tax contributions to retirement plans (including those described in RCW 41.04.440, 41.04.445, and 41.04.450); and
(b) Any Section 125 of the Internal Revenue Code contributions to cafeteria plans (including those which include such items as dependent care salary reduction plans) before excluding the items listed in subsection (2)(a) through (g) of this section.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-020, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-030 Catch-up provision. For one or more of the participant's last three taxable years ending before attaining normal retirement age under the plan, the maximum deferral shall be the lesser of:
(1) Fifteen thousand dollars for the taxable year, reduced
in the same manner as the ((seven thousand five hundred))
dollar((s limitation)) deferral limit is reduced in WAC 415-512-020(1); or
(2) The sum of:
(a) The ((limitations)) limits established for purposes of
WAC 415-512-020 of the plan for the taxable year (determined
without regard to this section), plus
(b) So much of the ((limitation)) limit established under
WAC 415-512-020 for taxable years before the taxable year as has
not theretofore been used under WAC 415-512-020 or 415-512-030.
A prior taxable year shall be taken into account only if:
(i) It begins after December 31, 1978;
(ii) The participant was eligible to participate in the plan during all or any portion of the taxable year, and;
(iii) Compensation deferred (if any) under the plan during
the taxable year was subject to a maximum ((limitation)) limit
(as established under WAC 415-512-020).
A prior taxable year includes a taxable year in which the participant was eligible to participate in an eligible plan sponsored by another entity. In no event can the participant elect to have the catch-up provision apply more than once whether or not the full catch-up had been utilized.
"Normal retirement age," as used in chapters 415-501 through 415-568 WAC, means the range of ages:
Ending not later than age seventy and one-half; and
Beginning not earlier than the earliest age at which the participant has the right to retire under a state authorized pension for which the participant is eligible without consent of the state and under which the participant will receive immediate retirement benefits without actuarial adjustment due to retirement prior to some later specified age in a state authorized pension plan.
This catch-up provision may not be used in the year in which the participant attains age seventy and one-half, and may not be used in any year thereafter.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-030, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-050 Modification of deferral or investment
option(s). A participant may change his/her deferral or
investment option(s) ((not more than four times in any calendar
year)) by executing a participation agreement. Changes in the
amount of deferral must equal at least ten dollars or more per
month. (Beneficiaries entitled to receive accumulated deferrals
may also change investment options ((not more than four times per
year)).)
((An increase (or an increase and a change in investment
option(s) which are effective the same date) shall not be counted
as a change. Only a decrease in the amount of deferral, a
transfer, or a change in investment option(s) not accompanied by
an increase, shall be counted as a change.
Any combination of a decrease, a transfer, or a change in
investment option(s) effective the same date, shall be considered
one change.
A change (whether counted as such or not) shall be effective
for any calendar month only if the participant signs a new
participation agreement and it is approved by the department or
its designee before the beginning of that calendar month. All
participation agreements indicating changes in investment
option(s) must be filed with the department no later than fifteen
days prior to the established pay date for which the change will
occur. The department reserves the right to defer the effective
date of any change.)) A change in the deferral amount shall be
effective for any calendar month only if the participant signs a
new participation agreement prior to the earning period for which
the change is requested. All participation agreements indicating
changes in investment option(s) and transfer request forms
indicating a transfer from one investment option to another must
be filed with the department no later than twelve days prior to
the established pay date for which the change will occur.
During the payout process, the department may periodically liquidate mutual fund shares in amounts necessary to meet distribution requirements for a six-month period.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-050, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-070 Suspension and reinstatement of deferrals. Suspension. A participant may at any time direct that deferrals under the participant's participation agreement cease by completing the proper form and filing it with the department no later than the last day of the payroll period prior to the payroll period during which the deferrals are to cease; however, accumulated deferrals shall only be paid as provided in WAC 415-512-080 through 415-512-110.
Reinstatement. A participant who has directed the cessation
of deferrals as part of an unforeseeable emergency payment
request may resume deferrals ((for any calendar month commencing
no)) by executing a new participation agreement to defer
compensation. The deferrals cannot resume sooner than six months
after ((such)) deferrals ceased ((by executing a new
participation agreement to defer compensation)). Deferrals will
begin the month immediately following the month that the
participation agreement is signed. The six-month waiting period
shall not apply to participants who are on leave without pay as
discussed in WAC 415-528-010.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-070, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-075 Investment options. Each participant shall
designate on his/her participation agreement the investment
option(s) in which he/she wishes to have funds invested. The
investment option(s) shall be selected from those options made
available for this purpose from time to time by the ((employee
retirement benefits board, in its sole discretion)) state
investment board after consultation with the employee retirement
benefits board.
The ((employee retirement benefits)) state investment board
may make available as options for investment:
(1) A fixed rate investment or pool of investments including deposits with a credit union, savings and loan association, mutual savings bank and fixed annuities;
(2) Specified mutual fund shares, shares of an investment company, or variable annuities; or
(3) Fixed or variable life insurance, or other options
permitted by law ((and selected by the employee retirement
benefits board)). In the event that a selected investment option
experiences a loss, the participant's benefits payable hereunder
shall likewise reflect a loss, rather than income, for the
period.
Nothing in this section shall require the ((employer)) state
investment board to invest any amount in the investments selected
((and whether or not the employer so invests, no participant
shall have any right, title, or interest in the amounts deferred
or assets so invested)). The state investment board may open,
change or close investment options according to its investment
policy.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-075, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-080 Designation of beneficiaries. Each participant shall have the right to designate a beneficiary or beneficiaries to receive accumulated deferrals in the event of the participant's death. If no such designation is in effect on a participant's death, the beneficiary shall be the surviving spouse. If there be no such surviving spouse, then the beneficiary shall be the participant's estate. A participant may change his/her beneficiary designation at any time by filing a change of beneficiary form with the department. A participant may also change his/her beneficiary designation by completing the beneficiary designation portion of a participation agreement form.
The participant may name:
(1) A designated organization or person (including without
limitation his/her unborn or later adopted children). If unborn
or later adopted children are to be included, the designation
must so indicate. The date of birth must be furnished for any
living person who is named ((and who is under the age of
eighteen)) as a beneficiary.
(2) His or her estate.
(3) A trust which is in existence, or which is to be
established under the participant's last will. For an existing
trust, the participant must provide ((the name of the trust and
the date it was established)) a copy of the trust document and
the name, address, and telephone number of the current trustee,
and the tax identification number.
The participant may name contingent beneficiaries in addition to primary beneficiaries.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-080, filed 7/29/96, effective 7/29/96.]
AMENDATORY SECTION (Amending WSR 97-05-009, filed 2/7/97, effective 3/10/97)
WAC 415-512-090 Elections regarding distribution. Each participant (or in the event of death, each beneficiary other than an organization, an estate, or a trust) shall elect when his/her payout will begin and the payout period.
(1) Election ((regarding time of payment)) preconditions and
irrevocability. Except as otherwise provided in WAC 415-512-110(8) the election regarding the date when payment will begin
shall be made when a participant separates from service (or dies
having separated from service and having previously elected when
payment will begin).
Once made, the election regarding when payout will begin is irrevocable except as described in subsection (2) of this section as to the participant or beneficiary making the election, unless:
(a) The participant or beneficiary, more than thirty days prior to the elected date payment is to begin, elects to postpone the original date. Only one such postponement is allowed; or
(b) The participant, after separating from service is again hired by the employer and, before the originally elected date payment is to begin, reenrolls in the plan.
((The)) (2) If a participant has elected, under subsection
(1)(a) of this section, to defer the commencement of
distributions beyond the first permissible payout date, then the
participant may make an additional election to further defer the
commencement of distributions, provided that the election is
filed before distributions actually begin and the later
commencement date meets the required distribution commencement
date provisions of Sections 401 (a)(9) and 457 (d)(2) of the
Internal Revenue Code. A participant may not make more than one
such additional deferral election after the first permissible
payout date.
For purposes of the preceding paragraph, the "first permissible payout date" is the earliest date on which the plan permits payments to begin after separation from service, disregarding payments to a participant who has an unforeseeable emergency or attains age seventy and one-half, or under the in-service distribution provisions of the plan.
(3) Timing of election ((regarding when payment will
begin:)).
(a) ((By)) A participant who separates from service other
than by reason of death, must ((be made not)) make an election no
later than sixty days after separation from service. Payment may
begin on the central payroll date nearest the twenty-fifth day of
the month following the month in which an election is filed with
the department on forms provided for that purpose, and payment
must begin within the time prescribed by WAC 415-512-110;
(b) ((By)) A beneficiary, other than an organization, estate
or trust, where the participant was not already receiving
payments, must ((be made not)) make an election no later than
sixty days after the participant's death. Payment may begin on
the central payroll date nearest the twenty-fifth day of the
month following the month in which an election is filed with the
department on forms provided for that purpose, and payment must
begin within the time prescribed by WAC 415-512-110. The plan
will not distribute to a minor beneficiary if it does not receive
proof that the minor has either:
(i) A court-appointed guardian; or
(ii) A custodian whom the participant during his or her lifetime designated in a beneficiary designation, will, trust or other instrument exercising a power of appointment, followed in substance by the words: "As custodian for . . . . . . . . (name of minor) under the Washington Uniform Transfers to Minors Act."
Where a legal guardianship is not obtained, and where the participant has not previously named a custodian under the Washington Uniform Transfers to Minors Act as described above, or if such custodian has been named but dies or is unable or unwilling to serve, the plan may, following the expiration of one hundred eighty days after the participant's death, request a court of competent jurisdiction to establish a custodianship under the Washington Uniform Transfers to Minors Act, chapter 11.114 RCW, irrespective of the amount at issue.
Once a custodianship has been established either by the participant's prior designation or by court order, the plan will transfer the funds in the deceased participant's account to the named custodian.
A transfer may be made only for one minor, and only one person may be the custodian, as set forth in the Washington Uniform Transfers to Minors Act. Written confirmation of delivery by the custodian constitutes a sufficient receipt and discharge of the plan for the deceased participant's account balance transferred to the custodian.
The custodian will have sixty days after the date of transfer to make an election regarding the payout period and when the payout will begin under this section.
(((2))) (4) Election regarding method of payment. The
participant (or beneficiary) who makes an election regarding the
date payment will begin, may also elect the period over which
payments will be made. The payout period election may be made
either at the time he/she elects a beginning date for payout or
at any time not later than sixty days prior to the date payout is
to begin. Once having made this election, the participant (or
beneficiary, other than an organization, estate, or trust) may
change the payout period election not later than thirty days
prior to the date payout is to begin. Such a beneficiary may
also make this election where the participant was already
receiving payments but, as provided in WAC 415-512-110 (3)(a),
must receive distribution at least as rapidly as it was being
distributed to the participant. Such a beneficiary must make the
payout period election not later than sixty days after the death
of the participant and payout will be suspended following the
participant's death until the beneficiary either makes a payout
period election or begins receiving payment as provided in
subsection (((4))) (6) of this section. Provided, if the
participant was receiving payout in the form of an annuity
contract, then the successor's right shall be limited by the
terms of that contract.
(((3))) (5) How elections are made. A participant or
beneficiary makes elections allowed under this section by
completing and filing applicable payment request forms with the
department. Only a court-appointed guardian may elect between a
monthly and a lump sum benefit on behalf of the minor.
(((4))) (6) Consequences in absence of a timely election
regarding time of payment. Absent a timely election regarding
when payout is to begin, payout will begin on the central payroll
date nearest the twenty-fifth day of the month following the
month in which the election period ends, and will be made, in a
lump sum if the accumulated deferrals as of the end of the
election period are less than twenty-five thousand dollars or, if
the accumulated deferrals are twenty-five thousand dollars or
more, in ((equal)) monthly installments over a period of one
hundred twenty months or such lesser period:
(a) As may be necessary under the minimum payout requirements of Section 457 (d)(2)(B)(i)(I) of the Internal Revenue Code, requiring amounts to be paid not later than as determined under Section 401 (a)(9)(G) of the Internal Revenue Code; or
(b) As may be necessary under Section 457 (d)(2)(B)(i)(II) of the Internal Revenue Code, requiring amounts not distributed to the participant during his/her life to be distributed at least as rapidly as they were being distributed as of the participant's death.
(((5))) (7) Effects of certain employment changes.
Transfers from the plan are allowed in the circumstances
described in WAC 415-512-015(2).
(((6))) (8) Consequences in absence of a timely election
regarding method of payment. In the absence of a timely election
regarding the period of time over which payment will be made,
payment will be made in the manner described in subsection
(((4))) (6) of this section.
(((7))) (9) Payment to an organization, estate, or trust.
Any amount payable to an organization, estate, or trust shall be
paid in a lump sum as prescribed in WAC 415-512-110(3).
[Statutory Authority: RCW 41.50.780(1) and 41.50.050. 97-05-009, § 415-512-090, filed 2/7/97, effective 3/10/97. Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-090, filed 7/29/96, effective 7/29/96.]
NEW SECTION
WAC 415-512-095 Domestic relations orders. (1) Domestic relation orders, which establish a right of the nonparticipant to a portion of a participant's account after the participant separates from service, will be honored at the discretion of the department:
(a) Only if the plan participant is eligible for, or is in actual payout status; and
(b) Based upon the capabilities of the deferred compensation program recordkeeping system.
(2) The plan will honor domestic relation orders by either:
(a) Recognizing that there is a lien against the plan's assets (provided the order establishes a fixed or determinable future amount to be paid); or
(b) Establishing a separate account for the nonparticipant spouse.
[]
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-512-110 Distribution of deferrals. (1) General
rule. Assuming a timely election is allowed and has been made
pursuant to WAC 415-512-090, payment will be made in at least
annual, substantially nonincreasing amounts. Payments are also
subject to the limitations in subsections (2) through (((5))) (8)
of this section.
(2) Distribution to participant. A participant must either:
(a) Receive his/her entire interest prior to the ((latest))
later of:
(i) The April 1st immediately following the close of the calendar year in which the participant attains age seventy and one-half; or
(ii) The April 1st immediately following the close of the calendar year in which the participant separates from service with the employer; or
(b) Begin receiving his/her interest not later than the time
specified in (a) of this subsection and receive it over a period
not longer than ((either)) one of the following:
(i) The life of the participant;
(ii) The life of the participant and a beneficiary designated by the participant;
(iii) The life expectancy of the participant; or
(iv) The life expectancy of the participant and a designated beneficiary.
Payment must be sufficiently rapid to satisfy the
requirements of Section 457 (d)(2)(B)(i)(I) and Section 401
(a)(9)(G) of the Internal Revenue Code. ((Provided, that until
tables are issued by the Secretary of the Treasury, if provision
is made for the payment of a portion of the benefits to a
beneficiary, the amount payable to the participant actuarially
must exceed two-thirds of the maximum amount payable to the
participant had no provision been made for payments to the
beneficiary (determined as of the commencement of the
distribution).))
Once payments to a participant begin, the participant may accelerate the payment schedule only in the event of an unforeseeable emergency (and subject to the provisions of WAC 415-524-010 regarding such emergencies).
(3) Distribution to beneficiaries.
(a) When distribution begins prior to the participant's death, then payout must be made at least as rapidly as it was being made to the participant. When the beneficiary is an organization, estate or trust, then payment will be payable in a lump sum on the twenty-fifth day of the second month following the participant's death.
(b) When distribution does not begin prior to the participant's death, and is to be made:
(i) To an organization, estate or trust, then payment will be payable in a lump sum on the twenty-fifth day of the second month following the participant's death;
(ii) To a living beneficiary designated by the participant other than the participant's surviving spouse, and, by election, not to begin within one year of the participant's death, then payment must be made within five years of the participant's death. The plan will not distribute to a minor beneficiary if it does not receive proof that the minor has either:
(A) A court-appointed guardian; or
(B) A custodian whom the participant during his or her lifetime designated in a beneficiary designation, will, trust or other instrument exercising a power of appointment, followed in substance by the words: "As custodian for . . . . . . . . (name of minor) under the Washington Uniform Transfers to Minors Act." See WAC 415-512-090 (3)(b);
(iii) To a living beneficiary designated by the participant other than the participant's surviving spouse, and, by election, beginning within one year of the participant's death, then payment must be made within fifteen years of the participant's death. The plan will not distribute to a minor beneficiary if it does not receive proof that the minor has either:
(A) A court-appointed guardian; or
(B) A custodian whom the participant during his or her lifetime designated in a beneficiary designation, will, trust or other instrument exercising a power of appointment, followed in substance by the words: "As custodian for . . . . . . . . (name of minor) under the Washington Uniform Transfers to Minors Act." See WAC 415-512-090 (3)(b);
(iv) To the participant's surviving spouse, whether as
designated beneficiary, or by default, then payment must begin
prior to the April 1st immediately following the ((later)) latter
of the close of the plan year in which the participant would have
attained age seventy and one-half or, if later, the year in which
the participant separated from service((, and)). Payment may be
made over the lifetime of the surviving spouse or over a period
not longer than the life expectancy of the surviving spouse.
(4) For purposes of this section, life expectancies will be
computed by use of the expected return multiples in Treasury
Department Regulation 1.72-9 or, if distribution is to be
effected through a contract issued by an insurance company, by
use of the mortality tables of such company. ((Where payment is
being made over the joint lives of the participant and the
participant's surviving spouse, the life expectancy of the
participant and the participant's surviving spouse may be
recalculated annually.))
(5) Except as provided in subsection (6) of this section, periodic payments made by the department must be at least fifty dollars per month if paid monthly, and six hundred dollars per year, if paid annually.
(6) An annuity may be purchased from an insurance company that has a contract with the department. The minimum amount to purchase a monthly annuity is one hundred thousand dollars. The minimum amount for an annuity paid quarterly is twenty-five thousand dollars.
(7) Notwithstanding anything in this plan to the contrary, distributions from the plan will be made in compliance with the minimum distribution rules of Section 457 (d)(2) of the Internal Revenue Code, and in compliance with Treasury Department Regulations issued under Sections 401 (a)(9) and 457 (d)(2) of the Internal Revenue Code.
(8) Voluntary in-service distribution: A participant who is an active employee of an eligible employer shall receive a distribution of the total amount payable to the participant under the plan if the following requirements are met:
(a) The total amount payable to the participant under the plan does not exceed five thousand dollars (or the dollar limit under Section 411 (a)(11) of the Internal Revenue Code, if greater);
(b) The participant has not previously received an in-service distribution of the total amount payable to the participant under the plan;
(c) No amount has been deferred under the plan with respect to the participant during the two-year period ending on the date of the in-service distribution; and
(d) The participant elects to receive the distribution.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-512-110, filed 7/29/96, effective 7/29/96.]
OTS-2097.4
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-548-010 Plan assets. ((All amounts of compensation
deferred under the plan, all property and rights to property
(including rights as a beneficiary of a contract providing life
insurance protection) purchased with such amounts, and all income
attributable to such amounts, property or rights to property
shall remain (until paid or made available to the participant or
the participant's beneficiary or beneficiaries under the plan)
solely the property and rights of the employer, (without being
restricted to the benefits under the plan) and shall be subject
only to the claims of general creditors of the employer.))
Despite any contrary provision of the plan, in accordance with
Section 457(g) of the Internal Revenue Code, all compensation
deferred under the plan, all property and rights purchased with
such compensation, and all income attributable to such
compensation, property, or rights shall be held in trust for the
exclusive benefit of participants and beneficiaries under the
plan. Any trust under the plan shall be established under the
laws of Washington.
All amounts of compensation deferred under the plan shall be transferred to a trust established under the plan within a period that is not longer than is reasonable for the proper administration of the accounts of participants. Under RCW 41.50.780(4) the state investment board is made trustee of state deferred compensation plan assets.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-548-010, filed 7/29/96, effective 7/29/96.]
OTS-2275.2
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-544-010 Accumulated deferrals not assignable. ((It
is agreed that neither the participant, nor the participant's
beneficiary or beneficiaries, nor any other designee, shall have
any right to commute, sell, assign, transfer, or otherwise convey
the right to receive any payments hereunder, which payments and
right thereto are expressly declared to be nonassignable and
nontransferable; and in the event of attempt to assign or
transfer, the employer shall have no further liability hereunder,
nor shall any unpaid accumulated deferrals be subject to
attachment, garnishment or execution, or be transferable by
operation of law in event of bankruptcy, insolvency, except to
the extent otherwise required by law.)) Neither the participant,
nor the participant's beneficiary or beneficiaries, nor any other
designee, has any right to sell, assign, transfer, commute, or
otherwise convey the right to receive any payments under the
plan. These payments and right thereto are nonassignable and
nontransferable. Unpaid accumulated deferrals are not subject to
attachment, garnishment, or execution and are not transferable by
operation of law in event of bankruptcy or insolvency, except to
the extent otherwise required by law. In the event of any
attempt to assign or transfer, the state investment board and the
department will have no liability.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-544-010, filed 7/29/96, effective 7/29/96.]
OTS-2210.3
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-560-010 Investment responsibility. ((The employer
and department may, but are not required to, invest funds held
pursuant to participation agreements between participants and the
employer in accordance with the requests made by each
participant. The department shall retain the right to approve or
disapprove such investment requests. Any)) Action by the
((department in investing funds,)) state investment board as plan
trustee or by the department ((or employee retirement benefits
board approving of any such investment of funds, shall)) as plan
administrator will not be considered ((to be either)) an
endorsement or guarantee of any investment((, nor shall it)).
Such action will not be considered to attest to the financial
soundness or the suitability of any investment for the purpose of
meeting future obligations.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-560-010, filed 7/29/96, effective 7/29/96.]
OTS-2096.3
AMENDATORY SECTION (Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)
WAC 415-524-010 Unforeseeable emergency. (1) Payout request. Notwithstanding any other provisions in plan chapters 415-501 through 415-568 WAC, in the event of an unforeseeable emergency, a participant (or a beneficiary entitled to accumulated deferrals) may request the department to pay out all or a portion of accumulated deferrals. If the application for payment is approved by the department, payment will be made within sixty days following such an approval. The amount paid shall be limited strictly to that amount reasonably necessary to satisfy the emergency need.
For purposes of this plan, an unforeseeable emergency shall be severe financial hardship to the participant resulting from:
(a) A sudden and unexpected illness or accident of the participant or of a dependent (as defined in Section 152(a) of the Internal Revenue Code) of the participant,
(b) Loss of the participant's property due to casualty, or
(c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment shall not be made to the extent that such hardship is or may be relieved:
(i) Through reimbursement or compensation by insurance or otherwise;
(ii) By liquidation of the participant's assets, to the extent liquidation of such assets would not itself cause severe financial hardship; or
(iii) By cessation of deferrals under the plan.
Examples of what shall not be considered to be unforeseeable emergencies include the need to send a participant's child to college or the desire to purchase a home.
A divorce does not constitute an "unforeseeable emergency" or "severe financial hardship."
(2) Applications for review. All applications for review of decisions on requests for pay out of accumulated deferrals due to an unforeseeable emergency shall follow the procedure established in WAC 415-08-015.
[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, § 415-524-010, filed 7/29/96, effective 7/29/96.]