WSR 00-08-092

PROPOSED RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed April 5, 2000, 8:36 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 99-23-085.

Title of Rule: Deferred compensation plan -- Record-keeping changes and recodification.

Purpose: RCW 41.50.770 and 41.50.780 govern the deferred compensation plan. These rules are intended to improve the plan's record-keeping process and to recodify to ensure clarity.

Statutory Authority for Adoption: RCW 41.50.050.

Statute Being Implemented: RCW 41.50.770 and 41.50.780.

Summary: Deferred compensation plan -- Record-keeping changes and recodification.

Reasons Supporting Proposal: Clarify existing rules and bring them into conformity with new administrative practices involving record keeping.

Name of Agency Personnel Responsible for Drafting: Tim Valencia, 6835 Capitol Boulevard, Tumwater, WA, (360) 664-7117; Implementation and Enforcement: Anne Holdren, 6835 Capitol Boulevard, Tumwater, WA, (360) 664-7009.

Name of Proponent: Department of Retirement Systems, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rules amend chapter 415-501 WAC et seq., the department's rules implementing the state's deferred compensation plan, RCW 41.50.770 and [41.50.]780 and chapter 41.50 RCW. The amendments are necessary to conform to the changes in the department's record-keeping processes.

In addition, deferred compensation rules have been recodified to promote clarity in keeping with Executive Order 97-02 per the proposed rule draft shown below.

Proposal Changes the Following Existing Rules: Program proposal amends the following rules:

WAC 415-501-010 updates references to RCW 41.50.088.

WAC 415-504-010 clarifies the definition of "accumulated deferrals."

WAC 415-504-090 clarifies the definition of "participant."

WAC 415-504-100 clarifies the definition of "participation agreement."

WAC 415-504-110 clarifies the definition of "separation from service."

WAC 415-508-010 clarifies that the department will administer the plan to maintain a plan eligible under Section 457 of the Internal Revenue Code.

WAC 415-508-050 clarifies that amounts in the deferred compensation principal account are invested pursuant to RCW 41.50.770.

WAC 415-512-010 changes the reference from "pay period" to "month," from "revoked" to "suspended" and to delete the $30.00 minimum requirement for participation.

WAC 415-512-015 clarifies how a participant may transfer funds into or out of the state's deferred compensation plan.

WAC 415-512-020 conforms to the updated Internal Revenue Code Section 457 deferral limits.

WAC 415-512-030 changes references to "the state" to refer to "the employer."

WAC 415-512-050 describes how a participant may change deferral or investment options.

WAC 415-512-070 describes how a participant may suspend or reinstate deferrals.

WAC 415-512-080 allows a participant to change a designated beneficiary by filing the appropriate form.

WAC 415-512-086 describes the process for distribution in the event of the participant's death.

WAC 415-512-087 provides more flexibility in the distribution process if the beneficiary dies.

WAC 415-512-090 describes when and how a participant or beneficiary may elect distributions, modify or postpone them.

WAC 415-512-095 clarifies the rights of nonparticipants to benefits under domestic relations orders and the department's process for compliance with such orders.

WAC 415-512-110 clarifies the process and duration of deferral distribution.

WAC 415-524-010 clarifies that requests for distributions due to unforeseeable emergency will automatically result in the mandatory suspension plan participation.

WAC 415-556-010 authorizes employers to withhold additional deferred compensation without a copy of a plan participation agreement.

WAC 415-564-010 clarifies that the terms of the plan prevail over any form or document used in administering the plan.

WAC 415-564-020 articulates the process by which a participant may obtain review of a department decision.

WAC 415-564-040 clarifies the scope of the department's responsibility for an individual participant's compliance with the Internal Revenue Code.

WAC 415-536-010, 415-540-010, 415-544-010, and 415-564-050 refer to "distribution" rather than "payment."

WAC 415-512-075, 415-512-085, 415-532-020, 415-552-010 conform to clear rule-writing standards as required by Executive Order 97-02.

Current Proposed

Recodification

415-501-010 415-501-010
415-501-020 415-501-020
415-504-010 415-501-110
415-504-020 415-501-120
415-504-030 415-501-130
415-504-040 415-501-140
415-504-050 415-501-150
415-504-060 415-501-160
415-504-070 415-501-170
415-504-080 415-501-180
415-504-090 415-501-190
415-504-100 415-501-200
415-504-110 415-501-210
415-508-010 415-501-310
NEW SECTION 415-501-315
415-508-020 415-501-300
415-508-030 415-501-350
415-508-040 415-501-330
415-508-050 415-501-340
415-512-010 415-501-410
415-512-015 415-501-415
415-512-020 415-501-420
415-512-030 415-501-430
415-512-040 415-501-440
415-512-050 415-501-450
415-512-070 415-501-470
415-512-075 415-501-475
415-512-080 415-501-480
415-512-085 415-501-485
415-512-086 415-501-486
415-512-087 415-501-487
415-512-090 415-501-490
415-512-095 415-501-495
415-512-110 415-501-500
415-524-010 415-501-510
415-528-010 415-501-520
415-532-010 415-501-530
415-532-020 415-501-540
415-536-010 415-501-550
415-540-010 415-501-560
415-544-010 415-501-570
415-548-010 415-501-580
415-552-010 415-501-590
415-556-010 415-501-600
415-560-010 415-501-610
415-564-010 415-501-360
415-564-020 415-501-370
415-564-030 415-501-305
415-564-040 415-501-320
415-564-050 415-501-380
415-564-060 415-501-390
415-568-010 415-501-710
415-568-020 415-501-720

The following rules have been amended to conform cross references to the recodified rules: WAC 415-501-020, 415-512-040, 415-532-010, 415-532-020, and 415-556-010.

WAC 415-501-315 has been drafted to clarify the employer's responsibility as a plan sponsor.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The rules apply to public employers and employees participating in the deferred compensation plan administered by the Department of Retirement Systems (DRS). No private business is affected by the rules, therefore, no small business impact statement is required.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. DRS is not one of the agencies that RCW 34.05.328 applies to. DRS does not opt to voluntarily bring itself within the coverage of that statute.

Hearing Location: Department of Retirement Systems, Boardroom, 3rd Floor, 6835 Capitol Boulevard, Tumwater, WA, on May 12, 2000, at 9:00 - 11:00 a.m.

Assistance for Persons with Disabilities: Contact Amy Martin by May 11, 2000, 5:00 p.m., TDD (360) 586-5450.

Submit Written Comments to: Tim Valencia, Anne Holdren, Department of Retirement Systems, P.O. Box 48330, Olympia, WA 98504-8380.

Date of Intended Adoption: May 12, 2000.

April 5, 2000

Elyette Weinstein

Rules Coordinator

OTS-3933.1

PLAN ESTABLISHED
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-501-010
Plan established.

In accordance with the provisions of RCW 41.50.030(2), 41.50.088(((5))) (2), 41.50.770, and 41.50.780, and as provided in Section 457 of the Internal Revenue Code, the state of Washington hereby establishes the deferred compensation plan for employees of the state of Washington and approved political subdivisions of the state of Washington, hereinafter referred to as the "plan." Nothing contained in this plan shall be deemed to constitute an employment agreement between the participant and the employer and nothing contained herein shall be deemed to give a participant any right to be retained in the employ of the employer.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-501-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-501-020
Separate plan.

The provisions in chapter((s)) 415-501 ((through 415-568)) WAC apply only to the deferred compensation plan and not to any other plan administered by the department.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-501-020, filed 7/29/96, effective 7/29/96.]


NEW SECTION
WAC 415-501-315
Employer responsibility.

The employer as plan sponsor has responsibilities including, but not limited to, monitoring for deferral limits and determining employees' eligibility to participate.

The department's administration of the plan does not replace the employer's responsibilities as the plan sponsor.

[]

OTS-3934.1

DEFINITIONS
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-504-010
Accumulated deferrals.

"Accumulated deferrals" means compensation deferred under the plan, adjusted ((until date of payment)) by income received, increases or decreases in investment value, fees, and any prior distributions made.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-504-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-504-090
Participant.

"Participant" means any eligible employee of ((the)) an employer who executes a participation agreement with the department assenting to the provisions of this plan, once the agreement has been approved by the department or its designee.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-504-090, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-504-100
Participation agreement.

"Participation agreement" means the agreement executed ((and filed)) by an eligible employee ((with the employer)) pursuant to WAC ((415-512-010)) 415-501-410, in which the eligible employee elects to become a participant in the plan.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-504-100, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-504-110
Separation from service.

"Separation (or separates) from service" means "separation from service" as that term is interpreted for purposes of Section 402 (d)(4)(A)(iii) of the Internal Revenue Code ((and refers to lump sum payments and the severance of the participant's employment with the employer. A participant will be deemed to have severed his or her employment as of the date of his or her last payroll)).

For distribution eligibility purposes, separation of service is a participant's last day of employment with his/her employer(s).

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-504-110, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following sections of the Washington Administrative Code are recodified as follows:

Old WAC Number New WAC Number
415-504-010 415-501-110
415-504-020 415-501-120
415-504-030 415-501-130
415-504-040 415-501-140
415-504-050 415-501-150
415-504-060 415-501-160
415-504-070 415-501-170
415-504-080 415-501-180
415-504-090 415-501-190
415-504-100 415-501-200
415-504-110 415-501-210

OTS-3935.1

ADMINISTRATION
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-508-010
Administered by department.

((This plan shall be administered by the department which shall represent the employer in all matters concerning the administration of this plan.)) The department shall administer the plan in accordance with Section 457 of the Internal Revenue Code to maintain an eligible deferred compensation plan.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-508-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-508-050
Deferred compensation accounts.

All deferred compensation hereunder shall be paid into a special fund created in the treasury of the state of Washington called the "deferred compensation principal account." All costs of administration and staffing of the plan, expenses of the department, and such other amounts determined by the department and permitted by law, shall be paid as necessary out of the deferred compensation administrative account. Amounts in the deferred compensation principal account may be invested pursuant to RCW 41.50.770 ((as directed by the department)). All accumulated deferrals payable to participants or their respective beneficiary or beneficiaries shall be paid from the deferred compensation principal account unless otherwise paid.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-508-050, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following sections of the Washington Administrative Code are recodified as follows:

Old WAC Number New WAC Number
415-508-010 415-501-310
415-508-020 415-501-300
415-508-030 415-501-350
415-508-040 415-501-330
415-508-050 415-501-340

OTS-3936.1

PARTICIPATION IN THE PLAN
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-512-010
Enrollment.

(1) An eligible employee may become a participant by executing a participation agreement. Compensation will be deferred for any calendar month only if a participation agreement providing for such deferral is executed by the participant and approved by the department or its designee before the beginning of such month.

(2) In signing the participation agreement, the participant elects to participate in this plan and consents to the employer deferring the amount specified in the participation agreement from the participant's gross compensation for each ((pay period)) month. The amount specified ((must equal at least thirty dollars per month and)) shall continue until changed or ((revoked)) suspended pursuant to WAC ((415-512-050)) 415-501-450 or ((415-512-070)) 415-501-470 of this plan.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-512-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-015
Plan to plan transfers.

The only transfers allowable under Section 457 of the Internal Revenue Code are from one eligible Section 457 plan to another eligible Section 457 plan.

(1) Transfers ((to)) into the plan following a change in employment. If a participant was formerly a participant in an eligible deferred compensation plan (within the meaning of Section 457 of the Internal Revenue Code and its regulations), which permits the direct transfer of the participant's interest to another plan, then ((the transferee)) this plan shall accept assets representing the value of such interest. 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)) this 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)). 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.

Transfer of the participant's interest will not be allowed if the participant has made any irrevocable distribution election, with respect to such interest, under the transferor plan.

(2) Transfers ((from)) out of 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)) an irrevocable distribution election under WAC ((415-512-090(2) regarding the method of payment)) 415-501-409, 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 of the Internal Revenue Code maintained by the political subdivision, but only if the other plan also allows ((transfers to and from its plan)) the proposed transfer and the participant has not made an irrevocable ((payout)) distribution election relating to either plan.

(4) Application for transfer. If the conditions in subsection (1), (2), or (3) of this section are met and the participant wishes to transfer his/her account, ((he/she)) the participant shall complete ((an application)) the appropriate form and/or other documents as may be required by the department.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-015, filed 9/30/98, effective 10/31/98. 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 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-020
Deferral limit.

(1) Except as provided in WAC ((415-512-030)) 415-501-430, 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)) eight thousand 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. 98-20-047, 415-512-020, filed 9/30/98, effective 10/31/98. 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 98-20-047, filed 9/30/98, effective 10/31/98)

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 dollar deferral limit is reduced in WAC ((415-512-020(1))) 415-501-420; or

(2) The sum of:

(a) The limits established for purposes of WAC ((415-512-020)) 415-501-420 of the plan for the taxable year (determined without regard to this section), plus

(b) So much of the limit established under WAC ((415-512-020)) 415-501-420 for taxable years before the taxable year as has not theretofore been used under WAC ((415-512-020)) 415-501-420 or ((415-512-030)) 415-501-430. 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 limit (as established under WAC ((415-512-020)) 415-501-420).

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 chapter((s)) 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)) an employer 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)) an employer 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. 98-20-047, 415-512-030, filed 9/30/98, effective 10/31/98. 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 415-512-040
Department may disallow deferral.

The participant acknowledges the right of the department to disallow deferral of compensation under the plan in excess of the limitations in WAC ((415-512-020)) 415-501-420 and ((415-512-030)) 415-501-430. However, the department shall have no duty to assure that amounts deferred are in compliance with such limitations.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-512-040, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-050
Modification of deferral or investment option(s).

Deferral or investment option(s) may be changed. A participant may change his/her deferral or investment option(s) ((by executing a participation agreement)) through the methods established by the department. ((Changes in the amount of deferral must equal at least ten dollars or more per month. (Beneficiaries)) (A beneficiary or beneficiaries entitled to receive accumulated deferrals may also change investment options.) Deferral changes may be made only in:

(1) Whole dollar increments or;

(2) Whole percentages if percentage deferrals are allowed for the participant's employer.

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)) notifies the department or its designee of the change through the methods available, prior to the month for which the change is requested and prior to the established payroll cutoff date, for the participant's employer, for which the change will occur.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-050, filed 9/30/98, effective 10/31/98. 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 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-070
Suspension and reinstatement of deferrals.

Suspension. A participant may at any time, through the methods established by the department, direct that his/her deferrals ((under the participant's participation agreement cease by completing the proper form and filing it with the department)) cease. The direction to cease deferrals must be provided to the department or its designee no later than the last day of the ((payroll period)) month prior to the ((payroll period)) month during which the deferrals are to cease; however, accumulated deferrals shall ((only)) be paid only as provided in WAC ((415-512-080)) 415-501-480 through ((415-512-110)) 415-501-500.

Reinstatement. A participant may reinstate deferrals at any time, except after having ceased deferrals as part of an unforeseeable emergency distribution request. A participant who has directed the cessation of deferrals as part of an unforeseeable emergency ((payment)) distribution request ((may resume deferrals by executing a new participation agreement to defer compensation. The deferrals)) cannot resume deferrals sooner than six months after his/her deferrals ceased. 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)) resumption of deferrals is requested.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-070, filed 9/30/98, effective 10/31/98. 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 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-075
Investment options.

Each participant shall designate on his/her participation agreement the investment option(s) in which ((he/she)) the participant 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 state investment board after consultation with the employee retirement benefits board.

The 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. 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 state investment board to invest any amount in the investments selected. The state investment board may open, change or close investment options according to its investment policy.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-075, filed 9/30/98, effective 10/31/98. 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 98-20-047, filed 9/30/98, effective 10/31/98)

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)) the appropriate 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 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 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. 98-20-047, 415-512-080, filed 9/30/98, effective 10/31/98. 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 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-512-085
Distribution to participant after separation from service.

After separation from service, ((accumulated deferrals)) the participant shall be paid ((to the participant)) his/her accumulated deferrals in one or more installments as elected by the participant pursuant to WAC ((415-512-090)) 415-501-490.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-512-085, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-512-086
Distribution in the event of death of participant.

Should the participant die at any time, whether before or after separation from service, accumulated deferrals shall be paid to the beneficiary or beneficiaries designated by the participant pursuant to WAC ((415-512-080)) 415-501-480. The accumulated deferrals shall be paid out as provided in WAC ((415-512-080)) 415-501-480 through ((415-512-110)) 415-501-500. If no beneficiary is designated ((as provided in the participation agreement)), or if the designated beneficiary does not survive the participant by a period of thirty days, then a lump sum or series of ((payments)) distributions shall be paid, in accordance with WAC ((415-512-080)) 415-501-480 through ((415-512-110)) 415-501-500, to the surviving spouse, or if none, a lump sum shall be paid to the estate of the participant.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-512-086, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-512-087
Distribution in event of death of beneficiary.

In the event a beneficiary survives the participant by thirty days and becomes entitled to receive accumulated deferrals, accumulated deferrals shall become payable to the beneficiary's estate ((on the twenty-fifth day of)) in the second month following the beneficiary's death, unless benefits are being paid in the form of an annuity, in which case the disposition of the remaining amount shall be determined by the annuity contract. Such annuity contracts shall be issued pursuant to the rules set forth in WAC ((415-512-110)) 415-501-500.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-512-087, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

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)) distribution will begin and the ((payout period.

(1) Election 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.

(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.

(a) A participant who separates from service other than by reason of death, must 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) A beneficiary, other than an organization, estate or trust, where the participant was not already receiving payments, must 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.

(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 (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.

(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.

(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 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.

(7) Effects of certain employment changes. Transfers from the plan are allowed in the circumstances described in WAC 415-512-015(2).

(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 (6) of this section.

(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))) distribution method.

(1) Election regarding distribution date. For the purposes of this section, distribution date is the date on which distribution is to begin, 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.

(a) Distribution date election preconditions. Except as otherwise provided in WAC 415-501-500, the election regarding the distribution date shall be made by the participant when the participant separates from service, or by the beneficiary, when the participant dies having separated from service and having previously elected a distribution date.

(b) Distribution date election irrevocability. Once made, the election regarding distribution date is irrevocable, unless:

(i) The participant or beneficiary as provided in (a) of this subsection, more than thirty days prior to the elected date distribution is to begin, elects to postpone the original date. Only one such postponement is allowed.

Such a participant or beneficiary may elect to postpone his/her original distribution date only if the election to postpone is filed thirty days before the date distribution actually begins and the later distribution date meets the requirements of Sections 401 (a)(9) and 457 (d)(2) of the Internal Revenue Code; or

(ii) The participant, after separating from service is again hired by an employer and, thirty days before the originally elected date distribution is to begin, reenrolls in the plan.

(c) Timing of distribution date election.

(i) A participant who separates from service other than by reason of death must make a distribution date election no later than sixty days after notification of the participant's separation from service has been received by the department from the participant's employer(s). Distribution must begin within the time prescribed by WAC 415-501-500;

(ii) A beneficiary, other than an organization, estate or trust, where the participant was not already receiving distributions, must make a distribution date election no later than sixty days after notification of the participant's death. Distribution must begin within the time prescribed by WAC 415-501-500. The plan will not distribute to a minor beneficiary if the department 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."

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 for only 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 distribution period and when the distribution will begin under this section.

(2) Election regarding distribution method. For the purposes of this section, distribution method is the period over which accumulated deferrals will be distributed or the amount of accumulated deferrals to be distributed.

(a) Distribution method election preconditions. The participant (or beneficiary) who makes a distribution date election may also elect the distribution method. The distribution method election may be made either at the time the participant or beneficiary elects a distribution date or at any time not later than thirty days prior to the distribution date.

(b) Distribution method election irrevocability. Once having made the distribution method election, the participant or beneficiary (other than an organization, estate, or trust) may change the distribution method election not later than thirty days prior to the distribution date. The election of a distribution method becomes irrevocable thirty days prior to the date that the participant's distribution is to begin.

A beneficiary may make the distribution method election where the participant was already receiving distributions but, as provided in subsection (1)(c) of this section, the beneficiary must receive distribution at least as rapidly as it was being distributed to the participant. Such a beneficiary must make the distribution method election not later than sixty days after the notification of death of the participant. Distribution will be suspended following the participant's death until the beneficiary either makes a distribution method election or begins receiving distribution as provided in subsection (4) of this section. Provided, if the participant was receiving distribution in the form of an annuity contract, then the beneficiary's right shall be limited by the terms of that contract. The election of a distribution method becomes irrevocable thirty days prior to the date that the beneficiary's distribution is to begin.

(3) How elections are made. A participant or beneficiary makes elections allowed under this section by completing and filing the appropriate forms with the department. Only a court-appointed guardian may elect between installments and a lump sum benefit on behalf of a minor.

(4) Consequences in absence of a timely election regarding distribution date. Absent a timely election regarding when distribution is to begin:

(a) If the accumulated deferrals as of the end of the election period are less than twenty-five thousand dollars, the distribution will be made in a lump sum within thirty days of when the election period ended.

(b) If the accumulated deferrals are twenty-five thousand dollars or more, the distribution to a participant will be made in monthly installments over a period of one hundred twenty months or such lesser period:

(i) As may be necessary under the minimum distribution 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

(ii) 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) Consequences in absence of a timely election regarding distribution method. In the absence of a timely election distribution method, distribution will be made in the manner described in subsection (4) of this section.

(6) Effects of certain employment changes. Transfers from the plan are allowed in the circumstances described in WAC 415-501-415.

(7) Distribution 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 415-501-500.

(8) Distribution date and method cannot change after distribution begins. Once distribution to the participant or beneficiary begins, the elections made under this section as to the distribution date or distribution method, may not be changed.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-090, filed 9/30/98, effective 10/31/98. 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.]


AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

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.)) Domestic relation orders establish a right of the (ex) spouse to a portion of a participant's account after the participant separates from service.

(1) Order requirements. The department may, at its discretion, honor a court ordered or court approved decree of dissolution, decree of legal separation, or property settlement agreement incident to a court decree of dissolution or legal separation. In order for the department to honor the court ordered or court approved document, it must:

(a) Direct disbursement to (ex) spouse as a specified portion of the proceeds expressed as a current dollar amount or as a percentage of the value of the participant's deferred compensation account as of a specific date; and

(b) Require the participant to begin receiving distribution of proceeds from the plan not later than the April 1st immediately following the close of the year in which the participant separates from service; and

(c) Specify whether or not the participant, if he/she goes to work for another employer who offers an eligible Section 457 plan, shall have the right to transfer funds to the employer's Section 457 plan; and

(d) Be from a court of competent jurisdiction, be certified, and be personally served upon the department in a manner provided by the civil rules of superior court or applicable statute; and

(e) Provide a limitation, expressed as a cumulative dollar amount, above which the participant may not request and receive hardship withdrawals.

(2) A separate account for the (ex) spouse will be established for an order that is in compliance with subsection (1) of this section and honored by the department. Such an account will be established with the amount specified in subsection (1)(a) of this section.

(3) Distribution. If a participant has separated from service and makes an irrevocable distribution date election, distribution to the (ex) spouse will be made when distribution begins to the participant. The (ex) spouse may choose the method of distribution as provided in WAC 415-501-500.

(4) The department cannot honor an order directing immediate distribution into court, or to the spouse of an employee-participant.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-512-095, filed 9/30/98, effective 10/31/98.]


AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-512-110
Distribution of deferrals.

(1) General rule. ((Assuming a timely)) Once a timely distribution date election ((is allowed and)) has been made pursuant to WAC ((415-512-090)) 415-501-490, ((payment)) distribution(s) will be made in at least annual, substantially nonincreasing amounts. ((Payments)) Distributions are also subject to the limitations in subsections (2) through (8) of this section.

(2) Distribution to participant. A participant must either:

(a) Receive his/her entire ((interest)) value of accumulated deferrals prior to the 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 the value of his/her ((interest)) accumulated deferrals not later than the time specified in (a) of this subsection and receive it over a period not longer than 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)) the life expectancy of the participant's spouse.

((Payment)) Distribution 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.

Once ((payments)) distributions to a participant begin, ((the participant may accelerate the payment schedule only)) distribution may not be changed except in the event of an unforeseeable emergency (and subject to the provisions of WAC ((415-524-010)) 415-501-510 regarding such emergencies).

(3) Distribution to beneficiaries.

(a) When distribution begins prior to the participant's death, then ((payout)) distribution 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)) distribution will be payable in a lump sum ((on)) in 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)) distribution will be payable in a lump sum ((on)) in 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)) distribution must be made ((within)) over a period ending no later than five years ((of)) after the participant's death. The plan will not distribute to a minor beneficiary if ((it)) the department 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))) 415-501-490;

(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)) distribution must be made ((within)) over a period ending no later than fifteen years ((of)) after 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))) 415-501-490;

(iv) To the participant's surviving spouse, whether as designated beneficiary, or by default, then ((payment)) distribution must begin prior to the April 1st immediately following ((the 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. ((Payment)) Distribution 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.

(5) Except as provided in subsection (6) of this section, periodic ((payments)) distributions 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 or its designee. 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. 98-20-047, 415-512-110, filed 9/30/98, effective 10/31/98. 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.]


NEW SECTION


The follow sections of the Washington Administrative Code are recodified as follows:

Old WAC Number New WAC Number
415-512-010 415-501-410
415-512-015 415-501-415
415-512-020 415-501-420
415-512-030 415-501-430
415-512-040 415-501-440
415-512-050 415-501-450
415-512-070 415-501-470
415-512-075 415-501-475
415-512-080 415-501-480
415-512-085 415-501-485
415-512-086 415-501-486
415-512-087 415-501-487
415-512-090 415-501-490
415-512-095 415-501-495
415-512-110 415-501-500

OTS-3937.1

UNFORESEEABLE EMERGENCY
AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-524-010
Unforeseeable emergency.

(1) ((Payout)) Distribution request. Notwithstanding any other provisions in plan chapter((s)) 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)) distribute all or a portion of accumulated deferrals. If the ((application for payment)) request is approved by the department, ((payment)) distribution 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)) distribution 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)) distribution of accumulated deferrals due to an unforeseeable emergency shall follow the procedure established in WAC 415-08-015.

(3) Mandatory suspension. Unforeseeable emergency requests received by the department, whether approved or denied, will cause a mandatory suspension of the participant as established in WAC 415-501-470.

(4) Pursuant to WAC 415-501-500, once distributions to a participant begin, the distributions may not be changed except in the event of an unforeseeable emergency and subject to the provisions of this section.

[Statutory Authority: RCW 41.50.050. 98-20-047, 415-524-010, filed 9/30/98, effective 10/31/98. 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.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-524-010 415-501-510

OTS-3938.1

LEAVE OF ABSENCE
NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-528-010 415-501-520

OTS-3939.1

AMENDMENT OR TERMINATION OF PLAN
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-532-010
Termination of plan.

The employer or the department may at any time terminate this plan. Upon such termination, accumulated deferrals will be paid pursuant to ((chapter 415-512)) WAC 415-501-410 through 415-501-500 of the plan. The participants' deferrals will cease.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-532-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-532-020
Amendment of plan.

The department may ((also)) amend the provisions of this plan at any time: Provided, however, That no amendment shall affect the rights of participants or their beneficiaries regarding accumulated deferrals at the time of the amendment.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-532-020, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following sections of the Washington Administrative Code are recodified as follows:


Old WAC Number New WAC Number
415-532-010 415-501-530
415-532-020 415-501-540

OTS-3940.1

RELATIONSHIP TO OTHER PLANS
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-536-010
Retirement and Social Security not reduced.

It is intended that, pursuant to Section 457 of the Internal Revenue Code, the amount of deferred compensation will not be considered as current compensation for purposes of federal income taxation. Such amounts will, however, be included as compensation in determining benefits or rights under the employer's group insurance, other retirement plans and FICA. ((Payments)) Distributions under this plan will supplement retirement and death benefits payable under the employer's group insurance and other retirement plans.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-536-010, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-536-010 415-501-550

OTS-3941.1

TRANSFER IN LIEU OF CASH
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-540-010
Assets in lieu of cash.

Upon the occurrence of any event requiring the ((payment)) distribution of accumulated deferrals under this plan, the department may, in its sole discretion, elect to honor a request from the participant to substitute the transfer in kind and assignment of any asset which the employer has acquired, at fair market value.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-540-010, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-540-010 415-501-560

OTS-3942.1

NONASSIGNABILITY CLAUSE
AMENDATORY SECTION(Amending WSR 98-20-047, filed 9/30/98, effective 10/31/98)

WAC 415-544-010
Accumulated deferrals not assignable.

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)) distributions under the plan. These ((payments)) distributions 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. 98-20-047, 415-544-010, filed 9/30/98, effective 10/31/98. 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.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-544-010 415-501-570

OTS-3943.1

ASSETS
NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-548-010 415-501-580

OTS-3944.1

PARTICIPATION BY DEPARTMENT OFFICERS AND EMPLOYEES AND MEMBERS OF THE EMPLOYEE RETIREMENT BENEFITS BOARD
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-552-010
Participation by department officers and employees and members of the employee retirement benefits board.

Department officers and employees and members of the employee retirement benefits board, who are otherwise eligible, may participate in the plan under the same terms and conditions as apply to other participants; but such ((an)) officers, employees, or board members shall not participate in any department or board action uniquely affecting their own participation.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-552-010, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-552-010 415-501-590

OTS-3945.1

EMPLOYER PARTICIPATION
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-556-010
Employer contributions.

The employer may, pursuant to ((a changed or new participation agreement filed by a participant as specified in)) WAC ((415-512-050)) 415-501-450 or ((415-512-070)) 415-501-470, add additional deferred compensation for services to be rendered by the employee to the employer during any calendar month, provided:

(1) The employee has elected to have such additional compensation deferred, invested, and distributed, pursuant to this plan, prior to the calendar month in which the compensation is earned; and

(2) Such additional deferred compensation, when added to all other deferred compensation under the plan, does not exceed the maximum deferral permitted by ((chapter 415-512)) WAC 415-501-410 through 415-501-500.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-556-010, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-556-010 415-501-600

OTS-3946.1

INVESTMENT RESPONSIBILITY
NEW SECTION


The following section of the Washington Administrative Code is recodified as follows:


Old WAC Number New WAC Number
415-560-010 415-501-610

OTS-3947.1

DEPARTMENT POWERS
AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-564-010
Plan prevails.

In the event any form or other document used in administering this plan((, including but not limited to enrollment forms and marketing materials,)) conflicts with the terms of the plan, the terms of the plan shall prevail.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-564-010, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-564-020
Decision binding.

The department is authorized to determine any matters concerning the rights of any participant under this plan and such determination shall be binding on the participant and any beneficiary thereof.

A participant or beneficiary may file a petition for review under chapter 415-04 WAC or an application under WAC 415-08-015(2) for review of a decision to deny an application for distribution pursuant to WAC 415-501-510.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-564-020, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-564-040
Tax status not guaranteed.

The department does not:

(1) Represent or guarantee that any particular federal or state income, payroll, personal property or other tax consequence will occur because of the participant's participation in this plan;

(2) Assume any liability for a participant's compliance with the Internal Revenue Code.

The participant should consult with ((the participant's)) his/her own representative regarding all questions of federal or state income, payroll, personal property or other tax consequences arising from participation in this plan.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-564-040, filed 7/29/96, effective 7/29/96.]


AMENDATORY SECTION(Amending WSR 96-16-020, filed 7/29/96, effective 7/29/96)

WAC 415-564-050
Department may require court order.

The department or the employer, if in doubt concerning the correctness of their action in making a ((payment)) distribution of accumulated deferrals, may suspend ((payment)) distribution until satisfied as to the correctness of the ((payment)) distribution or the person to receive the ((payment)) distribution or to allow the filing in any state court of competent jurisdiction of a civil action seeking a determination of the amounts to be paid and the persons to receive them. The department and the employer shall comply with the final orders of the court in any such suit; and the participant, for the participant and the participant's beneficiary or beneficiaries, consents to be bound thereby. Whenever ((payment)) distribution of accumulated deferrals is suspended pursuant to this section, the time for a participant or beneficiary making any election under WAC ((415-512-090)) 415-501-490 shall not begin until amount(s) and person(s) entitled are determined either by a written agreement of all parties concerned or by a court judgment that has become final.

[Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-564-050, filed 7/29/96, effective 7/29/96.]


NEW SECTION


The following sections of the Washington Administrative Code are recodified as follows:


Old WAC Number New WAC Number
415-564-010 415-501-360
415-564-020 415-501-370
415-564-030 415-501-305
415-564-040 415-501-320
415-564-050 415-501-380
415-564-060 415-501-390

OTS-3948.1

APPLICABLE LAW
NEW SECTION


The following sections of the Washington Administrative Code are recodified as follows:


Old WAC Number New WAC Number
415-568-010 415-501-710
415-568-020 415-501-720

Washington State Code Reviser's Office