WSR 02-03-120

PERMANENT RULES

DEPARTMENT OF

RETIREMENT SYSTEMS

[ Filed January 23, 2002, 8:03 a.m. , effective March 1, 2002 ]

     Date of Adoption: January 18, 2002.

     Purpose: These rule changes are necessary to implement the Public Employees' Retirement System Plan 3. DRS is also converting as much language as possible to "Plain English." Some changes to the Teachers' Retirement System (TRS) and School Employees' Retirement System (SERS), and other DRS WACs are also being changed, as necessary, to fully implement Plan 3.

     Citation of Existing Rules Affected by this Order:

WAC # WAC Title Statutory Authority (RCWs) Amended or New?
415-02-130 Will I receive retirement and account information? 41.50.065 Amended
415-10-010 Can I purchase service credit after the statutory deadline?, and 415-10-030 Calculation of cost to purchase service credit. 41.50.165 Amended
415-10-020 Definitions and 415-108-340 Actuarial tables, schedules, and factors. Chapter 41.45 RCW Amended
415-10-080 If I purchase service credit under RCW 41.50.165, can I receive a refund of my payments? 41.26.540, 41.32.498, 41.40.730, 41.40.830, 41.50.160, 41.50.165, 41.50.175 Amended
415-10-100 Can a Plan 3 member purchase service credit? 41.50.165, 41.50.175 Amended
415-108-315 Can I specify who can receive my benefits if I die in service? 41.40.270, 41.40.700, 41.40.835 Amended
415-108-324 I am married - do I need my spouse's consent on the retirement option I choose? 41.40.188(2), 41.40.660(2), 41.40.845(2) Amended
415-108-425 How do I determine if I have choice rights or transfer rights to PERS Plan 3? 41.40.785 New
415-108-441 Purpose and scope of compensation earnable rules, and 415-108-443 PERS Reportable compensation table. 41.40.010(8), chapter 41.40 RCW Amended
415-108-445 What compensation can be reported?, 415-108-480 Vehicles -- Does the value of my use of an employer vehicle qualify as compensation earnable?, and 415-108-679 Purpose and scope of eligibility rules 41.40.010 Amended
415-108-456 Leave payments earned over time, 415-108-458 Severance pay earned over time, and 415-108-464 Legislative leave. 41.40.010(8) Amended
415-108-465 Is paid leave not earned over time reportable compensation for PERS? 41.40.710 Amended
415-108-466 Do I receive reportable compensation for union leave? 41.40.010, 41.40.175, 41.40.710, 41.40.805 Amended
415-108-491 Salary imputed to periods of unpaid leave. 41.40.038, 41.40.170, 41.40.710, 41.40.805 Amended
415-108-570 As an elected or appointed official, what are my requirements for service credit? 41.40.023 Amended
415-108-640 Effect of meeting union verification requirements. 41.40.010 (4)(a), 41.40.057, 41.40.363 Amended
415-108-690 How is my membership eligibility evaluated? 41.40.010, 41.40.023 Amended
415-108-720 Participation -- Can I be excluded from participating in membership even if I am employed in an eligible position? 41.40.023, 41.40.150, 41.40.690 Amended
415-108-727 Can I transfer service credit earned as a cadet in the public employees' retirement system to the Washington state patrol retirement system? 41.40.092 New
415-108-815 What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment? 41.40.815 New
415-108-830 Actuarial recomputation of a Plan 2 or 3 retirement allowance upon retirement following reemployment. 41.40.620, 41.40.690 Amended
415-108-980 Will I receive a transfer payment when I transfer to Plan 3? 41.32.8401, 41.35.630, 41.40.795 New
415-110-815 What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment? 41.35.670 New
415-110-910 Conversion of service from PERS to SERS. 41.35.005 through 41.35.030, 41.40.070 Amended
415-111-100 To whom does this chapter apply? Chapter 41.34 RCW Amended
415-111-110 Member and employer responsibility. 41.50.112, 41.50.145, chapter 41.34 RCW Amended
415-111-310 Defined contribution account distribution (withdrawal). 41.34.070 Amended
415-111-400 Optional service credit purchase rules. 41.32.810, 41.32.865, 41.35.470, 41.35.650, 41.40.710, 41.40.805 New
415-111-410 Submitting a beneficiary designation for Plan 3 members. 41.40.835, 41.40.845 New
415-111-440 What is gainsharing? Chapter 41.31A RCW New
415-111-450 How does a court-ordered division of property affect my Plan 3 account? 41.50.670 through 41.50.720 New
415-112-250 Can I receive service credit for leave with pay? 41.32.267, 41.32.810, 41.32.850 Amended
415-112-400 When does the employer deduct salary for retirement contributions? 41.32.270 Amended
415-112-412 Are nonmoney payments from my employer considered compensation earnable? 41.32.010 (10)(b) Amended
415-112-413 Vehicles -- Does the value of my use of an employer vehicle qualify as earnable compensation? 41.32.010(10), IRC Section 61 Amended
415-112-725 Married member's benefit selection -- Spousal consent required. 41.32.530(2), 41.32.785(2), 41.32.851(2) Amended
415-113-0303 Dual member system -- Definitions and system acronyms. 41.54.010 Amended
415-113-041 Am I a dual member? 41.54.010, 41.54.061 Amended
415-113-042 What can terminate my status as a dual member? 41.54.010, 41.54.030 Amended
415-113-065 Can I substitute salary from one system to another?, and 415-113-070 If I retire as a dual member, must I receive benefits from both systems immediately? 41.54.030 Amended
415-113-090 What is the maximum retirement benefit that I may receive under chapter 41.54 RCW? 41.54.070 Amended
415-113-200 SERS and PERS concurrent employment. Chapters 41.32, 41.34, 41.35, 41.40, and 41.50 RCW Amended
415-200-030 Plan 3 external administrators. 41.50.088 Amended

     Repealed: WAC 415-10-110 and 415-113-0310.

     Statutory Authority for Adoption: RCW 41.50.050(5).

     Other Authority: See Citation of Existing Rules above.

      Adopted under notice filed as WSR 01-18-072 on September 4, 2001; WSR 01-20-037 on September 26, 2001; WSR 01-21-070 on September [October] 18, 2001, and WSR 01-23-051 on November 20, 2001.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 8, Amended 41, Repealed 2.

     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 0, Amended 0, Repealed 2.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 8, Amended 41, Repealed 2.

     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: March 1, 2002.

January 18, 2002

John Charles

Director

OTS-5184.1


AMENDATORY SECTION(Amending WSR 00-10-016, filed 4/21/00, effective 5/22/00)

WAC 415-02-130   ((Members)) Will I receive retirement and account information ((annually.))?   (1) DRS provides ((information in an annual)) statements to all members who are currently employed and are being reported, and to inactive members who provide a mailing address.

     (2) If you are a member of Plan 1 or 2, you will receive annual statements. The statements include, but are not limited to, the following information:

     (a) Service credit;

     (b) Contributions; ((and))

     (c) Interest; and

     (d) Various retirement information.

     (((2) The annual statement is based on information provided to the department by the employer as of a certain date. At the time the department compiles the annual statement, it may not have all the information necessary to make a final computation of any data reported. Information in the annual statement is subject to correction.)) (3) For a member of Plan 3, you will receive two types of statements.

     (a) The defined benefit portion of your plan will provide an annual statement of your accumulated service credit and various retirement information.

     (b) The defined contribution portion of your plan will provide annual and quarterly statements. The statements include, but are not limited to, contributions and account activity.

     (4) Statements are based on information provided to the department by your employer and are subject to correction.

[Statutory Authority: RCW 41.50.050. 00-10-016, § 415-02-130, filed 4/21/00, effective 5/22/00.]

OTS-4925.2


AMENDATORY SECTION(Amending WSR 00-22-049, filed 10/27/00, effective 11/27/00)

WAC 415-10-020   Definitions.   As used in this chapter:

     (1) (("))Average earnings((")) means:

     (a) In PERS Plan 1, TRS Plan 1 or WSPRS Plan 1: The average of your two highest consecutive years of compensation as of the date of your service credit purchase ((if you are purchasing service credit in PERS Plan 1, TRS Plan 1 or WSPRS;)).

     (b) In Plan 2 or Plan 3: The average of your five highest consecutive years of compensation as of the date of your service credit purchase ((if you are purchasing service credit in Plan 2 or Plan 3)).

     (c) In LEOFF Plan 1: The basic salary attached to your position at the date of your service credit purchase ((if you are purchasing service credit in LEOFF Plan 1)).

     (2) Factors:

     (a) "Factor 1" means the actuarial cost factor calculated by the state actuary and adopted by the department. The actual factor used varies depending upon the time between the date of payment and the projected date of retirement. Generally, the longer the gap between date of payment and date of retirement the lower the factor.

     (((3))) (b) "Factor 2" is the actuarial factor calculated by the state actuary based upon demographic differences between the membership of the different retirement systems. Those factors are: .00788 (PERS Plan 1); .00698 (TRS Plan 1); and .00908 (WSPRS Plan 1).

     (((4))) (c) "Factor 3" means the interest factor calculated by the state actuary and adopted by the department. This factor is used only when the service credit purchase lowers the projected retirement age and is based upon the higher cost to the system of the earlier retirement.

     (((5) ")) (3) LEOFF((")) means the law enforcement officers' and fire fighters' retirement system established under chapter 41.26 RCW.

     (((6) ")) (4) PERS((")) means the public employees' retirement system established under chapter 41.40 RCW.

     (((7) "Plan 1" means the retirement system plan that includes persons who established membership before October 1, 1977. PERS and LEOFF are divided into Plan 1 and Plan 2. TRS is divided into Plan 1, Plan 2 and Plan 3. WSPRS has only one plan.

     (8) "Plan 2" means the retirement system plan that includes persons who established membership on or after October 1, 1977. PERS and LEOFF are divided into Plan 1 and Plan 2. TRS is divided into Plan 1, Plan 2 and Plan 3. SERS is divided into Plan 2 and Plan 3. WSPRS has only one plan.

     (9) "Plan 3" means the teachers' retirement system Plan 3 established by RCW 41.32.831 and the school employees' retirement system Plan 3 established by RCW 41.35.600.

     (10) ")) (5) SERS means the school employees' retirement system established under chapter 41.35 RCW.

     (6) Service credit being purchased((")) means the number of service credit months or service credit years you are purchasing.

     (((11) ")) (7) TRS((")) means the teachers' retirement system established under chapter((s)) 41.32 ((and 41.34)) RCW.

     (((12) ")) (8) WSPRS((")) means the Washington state patrol retirement system established under chapter 43.43 RCW.

     (((13) ")) (9) Years of earlier retirement((")) equals the number of years or fractions of years you will be able to retire earlier as a result of your purchase of service credit.

     (((14) ")) (10) Years of service((")) equals the total anticipated years of service you will have accrued at retirement, including the additional service credit you purchase under this section.

     (((15) "SERS" means the school employees' retirement system established under chapters 41.34 and 41.35 RCW.))

[Statutory Authority: Chapter 41.50 RCW. 00-22-049, § 415-10-020, filed 10/27/00, effective 11/27/00. Statutory Authority: RCW 41.50.050 and 41.50.165. 97-01-014, § 415-10-020, filed 12/6/96, effective 1/6/97.]

OTS-5185.3


AMENDATORY SECTION(Amending WSR 00-22-049, filed 10/27/00, effective 11/27/00)

WAC 415-10-010   Can I purchase service credit after the statutory deadline?   RCW 41.50.165 generally allows ((the member)) you to purchase service credit that ((he or she)) you failed to establish or reestablish within the statutory deadline.

     (1) You must pay the actuarial value of the increase to your retirement ((allowance)) benefit. The actuarial value of the increase to ((the member's)) your benefit means the cost to the retirement system trust fund of:

     (a) Including the additional service credit in ((the member's)) your retirement ((allowance)) benefit calculation; and

     (b) ((Commencing the member's)) Beginning your retirement ((allowance)) benefit at an earlier age, if applicable. This second factor ((will not apply if the member's retirement system is LEOFF 1, LEOFF 2, PERS 2, or TRS 2, because length of service is not a factor in determining eligibility to retire in those systems)) applies only to PERS Plan 1, TRS Plan 1, and WSPRS Plans 1 and 2.

     (2) The valuation is based upon economic assumptions. The cost to the retirement system trust fund for the increased value to ((the member's)) your benefit is calculated based upon interest rate assumptions adopted by the pension funding council and actuarial factors adopted or approved by the state actuary.

[Statutory Authority: Chapter 41.50 RCW. 00-22-049, § 415-10-010, filed 10/27/00, effective 11/27/00. Statutory Authority: RCW 41.50.050 and 41.50.165. 97-01-014, § 415-10-010, filed 12/6/96, effective 1/6/97.]


AMENDATORY SECTION(Amending WSR 00-22-049, filed 10/27/00, effective 11/27/00)

WAC 415-10-030   Calculation of cost to purchase service credit ((in LEOFF Plan 1, LEOFF Plan 2, PERS Plan 2, TRS Plan 2, or SERS Plan 2)) in certain plans.   If you are a member of LEOFF Plan 1 or 2, ((LEOFF Plan 2,)) PERS Plan 2 or 3, TRS Plan 2 or 3, ((TRS Plan 3,)) or SERS Plan 2 or ((SERS Plan)) 3, the department will calculate the actuarial value of the service credit you purchase under RCW 41.50.165(2) using the following formula:

Average Earnings ((•)) x Service Credit Being Purchased ((•)) x Factor 1

= Cost to purchase service credit


[Statutory Authority: Chapter 41.50 RCW. 00-22-049, § 415-10-030, filed 10/27/00, effective 11/27/00. Statutory Authority: RCW 41.50.050 and 41.50.165. 97-01-014, § 415-10-030, filed 12/6/96, effective 1/6/97.]


AMENDATORY SECTION(Amending WSR 00-22-049, filed 10/27/00, effective 11/27/00)

WAC 415-10-080   If I purchase service credit under RCW 41.50.165, can I receive a refund of my payments?   (1) You may ((not)) receive a refund ((unless)) only after you separate from service and ((withdraw)) apply for withdrawal of your contributions. ((Except as provided under subsections (2) and (3) of this section,)) Your payments to purchase service credit under RCW 41.50.165(2) qualify as a part of your accumulated contributions. ((As with other accumulated contributions, you may not receive a refund of your payments unless you separate from service and withdraw all your contributions.)) There are additional restrictions for TRS Plan 1, LEOFF Plan 2 and members of the Plan 3 systems as listed in subsections (2), (3), and (4) of this section.

     (2) ((Additional)) Restrictions for TRS Plan 1 members. ((If you are a TRS 1 member)) At the time of retirement, RCW 41.32.498(2) prohibits you from withdrawing payments made to purchase service credit under RCW 41.50.165(2) ((at the time of retirement)).

     (3) ((Additional)) Restrictions for LEOFF Plan 2 members. ((If you are a LEOFF Plan 2 member,)) Payments made to purchase service credit under RCW 41.50.165(2) and interest on those payments ((may)) will be refunded at one hundred percent. ((However, such)) Those payments ((may)) will not be included when calculating the one hundred fifty percent refund of contributions under RCW 41.26.540 (1)(b).

     (4) Restrictions for Plan 3 members of TRS, SERS and PERS. When you apply for service credit under RCW 41.50.165(2), one-half of the amount due will go into your defined benefit plan and one-half will go into your defined contribution plan. As a member of any Plan 3 system, you may apply for a refund of your contributions from the defined contribution portion of your account upon separation from employment. Your refund will be based on the market value of your contributions, including earnings and losses, at the time you withdraw. The defined benefit portion will be paid when you are eligible to receive benefits.


     Example 1 (Market has gains):


     Joe restores 5 years of service credit at a total cost of $10,000.00. One-half, or $5,000.00, goes into Joe's defined contribution plan member account, and the other $5,000.00 goes into the pension trust fund for his defined benefit plan. Joe separates two years later and applies for the withdrawal of his defined contribution account. While Joe was in service the market experienced gains. The value of Joe's defined contribution account is now $6,000.00. Joe receives $6,000.00 (minus applicable taxes and penalties). The defined benefit portion is not refundable but Joe will receive a one percent defined benefit allowance when he is eligible.


     Example 2 (Market has losses):


     Joe restores 5 years of service credit at a total cost of $10,000.00. One-half, or $5,000.00, goes into Joe's defined contribution plan member account, and the other $5,000.00 goes into the pension trust fund for his defined benefit plan. Joe separates two years later and applies for the withdrawal of his defined contribution account. While Joe was in service the market suffered a loss. The value of Joe's defined contribution account is now $4,000.00. Joe receives $4,000.00 (minus applicable taxes and penalties). The defined benefit portion is not refundable but Joe will receive a one percent defined benefit allowance when he is eligible.

[Statutory Authority: Chapter 41.50 RCW. 00-22-049, § 415-10-080, filed 10/27/00, effective 11/27/00. Statutory Authority: RCW 41.50.050 and 41.50.165. 97-01-014, § 415-10-080, filed 12/6/96, effective 1/6/97.]


AMENDATORY SECTION(Amending WSR 00-22-049, filed 10/27/00, effective 11/27/00)

WAC 415-10-100   ((Can I purchase TRS Plan 2 credit in TRS Plan 3?)) Can a Plan 3 member purchase service credit?   ((Yes.)) (1) Transferring purchased ((TRS)) Plan 2 credit under RCW 41.50.165(2) into ((TRS)) Plan 3. If you purchase ((TRS)) Plan 2 service credit under this chapter and later ((elect to)) enter ((TRS)) Plan 3, that credit will also transfer to ((TRS)) Plan 3.

     (a) Fifty percent of the money you paid to purchase the service credit will be credited to the ((TRS)) Plan 3 defined contribution account ((established under chapter 41.34 RCW)).

     (b) The other fifty percent will be credited to the ((TRS)) Plan 3 defined benefit ((portion)) plan established under RCW 41.32.831 for TRS Plan 3, RCW 41.35.600 for SERS Plan 3, and RCW 41.40.780 for PERS Plan 3.

     (2) Purchasing ((TRS)) Plan 2 service credit after transferring to ((TRS)) Plan 3. You may purchase service credit initially available under ((TRS)) Plan 2 after you transfer to ((TRS)) Plan 3. The service will be credited in ((TRS)) Plan 3. If you purchase Plan 2 service credit under this chapter, fifty percent of the money you pay to purchase the service credit will be credited to ((the TRS)) your Plan 3 defined contribution account ((established under chapter 41.34 RCW)). The other fifty percent will be credited to the ((TRS)) Plan 3 defined benefit portion established under RCW 41.32.831 for TRS Plan 3, RCW 42.35.600 for SERS Plan 3 and RCW 41.40.780 for PERS Plan 3.

     (3) Not applicable for service earned after transferring to ((TRS)) Plan 3 ((cannot be purchased)). Service ((earned)) you earn as a Plan 3 member is automatically recredited if ((the member)) you reenter((s)) membership and earn((s)) at least twelve service credit months. Plan 3 does not have any deadlines on establishing optional service. Because there are no deadlines for establishing or reestablishing service credit there is no provision for purchasing service credit earned in Plan 3 under RCW 41.50.165.

[Statutory Authority: Chapter 41.50 RCW. 00-22-049, § 415-10-100, filed 10/27/00, effective 11/27/00. Statutory Authority: RCW 41.50.050 and 41.50.165. 97-01-014, § 415-10-100, filed 12/6/96, effective 1/6/97.]


REPEALER

     The following section of the Washington Administrative Code is repealed:
WAC 415-10-110 Can I purchase SERS Plan 2 credit in SERS Plan 3?

OTS-5183.3


AMENDATORY SECTION(Amending WSR 00-10-015, filed 4/21/00, effective 5/22/00)

WAC 415-108-315   ((Designation of beneficiaries -- Death benefit if a member dies before retirement.)) Can I specify who can receive my benefits if I die in service?   (1) ((As a member,)) You have the right to designate a beneficiary or beneficiaries to receive a benefit ((in the event of your death)) if you die while you are an active member. You may change your beneficiary designation at any time by filing a change of beneficiary form with the department.

     (2) As a member you may name:

     (a) An organization or person, including your unborn or later adopted children. Unborn or later adopted children will not be included unless you specifically designate them as beneficiaries on the form. You must state the date of birth for any living person you name as a beneficiary;

     (b) Your estate; and/or

     (c) A trust ((in existence at the time of death)). Before making a distribution to any trust the department must receive:

     (i) A copy of the trust document;

     (ii) The name, address, and telephone number of the current trustee; and

     (iii) The tax identification number((;

     (d) A trust to be established under your last will)).

     (3) You may name contingent beneficiaries in addition to primary beneficiaries.

     (4) If you are a member of Plan 3, you may name the same or different beneficiaries for your defined benefit and defined contribution accounts.


     Examples:


     EXAMPLE ONE.

     Facts


     John, a member, completes a beneficiary designation form.


     In the place on the form reserved for persons, he names his daughter Ann. He checks the box to indicate that Ann is a primary beneficiary.


     In the place on the form reserved for trust/organizational beneficiaries, he lists the "Barbara Trust." His daughter Barbara is the trust beneficiary. He checks the box to indicate that the trust is a primary beneficiary.


     Result


     Subject to applicable statute, at John's death, the department will consider both the Barbara Trust and daughter Ann as primary beneficiaries. The department will require the name of the trustee, the tax identification number, a copy of the trust and other information specified in this rule before distribution to the trust.


     EXAMPLE TWO.

     Facts


     John, a member, completes a beneficiary designation form.


     In the place on the form reserved for persons, he names his daughter Ann. He checks the box to indicate that Ann is a primary beneficiary.


     In the place on the form reserved for trust/organizational beneficiaries, he lists his daughter Barbara personally ((()) i.e., no trust name is provided(())). ((He checks the box labeled "primary beneficiary." John misunderstands the form and rather than provide the names of the trustee or trust administrator, John writes the word "both" in the blank provided.)) John checks the corresponding box to indicate a primary beneficiary designation. At John's death, the department learns that John has created no trusts.


     Result


     ((At John's death, the department learns that John has created no trusts. Subject to existing statute, if the department receives no notice of competing claims to John's death benefit, the department will distribute the death benefit to Ann.)) Because John has created no trust, the designation in the trust/organizational location on the form is void. Subject to existing law, the department will issue the death benefit to Ann unless it receives a notice of a competing claim. If the department receives notice of competing claims, a court resolution may be required.

[Statutory Authority: RCW 41.50.050. 00-10-015, § 415-108-315, filed 4/21/00, effective 5/22/00.]


AMENDATORY SECTION(Amending WSR 99-14-008, filed 6/24/99, effective 7/25/99)

WAC 415-108-324   ((Married member's benefit selection -- Spousal consent required.)) I am married - do I need my spouse's consent on the retirement option I choose?   (1) ((The member,)) If married, you must provide ((the)) your spouse's written consent to the option you selected under WAC 415-108-326. If, as a married member ((does)), you do not provide spousal consent, the department will pay ((the retired member)) you as a retiree, a joint and one-half survivor benefit allowance and record ((the member's)) your spouse as the survivor in compliance with ((chapter 41.40 RCW and RCW 41.40.660(2))) RCW 41.40.188 (2)(a), 41.40.660 (2)(a), and 41.40.845 (2)(a).

     (2) Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an ex-spouse under RCW 41.50.790.

     (3) "Spousal consent" means that ((the married member's)) your spouse consents to the retirement option you selected ((by the member)). ((The)) Your spouse's notarized signature on a completed retirement application constitutes spousal consent.

[Statutory Authority: RCW 41.50.050. 99-14-008, § 415-108-324, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660. 96-01-047, § 415-108-324, filed 12/14/95, effective 1/14/96. Statutory Authority: RCW 34.05.050 and 1990 c 249. 91-03-015, § 415-108-324, filed 1/7/91, effective 2/7/91.]


AMENDATORY SECTION(Amending WSR 96-03-100, filed 1/19/96, effective 2/19/96)

WAC 415-108-340   Actuarial tables, schedules, and factors.   This ((chapter)) section contains the tables, schedules, and factors ((adopted by the director of the department of retirement systems)) for calculating optional retirement allowances and postretirement adjustments of members of the Washington state public employees' retirement system (PERS). These tables, schedules, and factors were adopted by the director upon the recommendation of the state actuary ((based on the actuary's)) after investigation into the mortality, service, compensation, and other experience of the PERS members and beneficiaries ((of public employees' retirement system. The tables, schedules, and factors contained in this chapter shall govern the retirement allowances only of members retiring during the period from January 1, 1996, until such time as these tables, schedules, and factors are amended by the director following the next actuarial investigation conducted by the state actuary. The retirement allowances calculated at the time of retirement of members retiring before January 1, 1996, shall continue to be governed by the tables, schedules, and factors in effect when each member retires. Any new tables, schedules, and factors adopted by the director in the future shall govern retirement allowances calculated at the time of retirement only of members retiring after the adoption of such new tables, schedules, and factors)).

     (1) These tables, schedules and factors may be amended from time to time, based upon subsequent actuarial investigation.

     (2) The department will use the tables, schedules and factors in effect upon the member's retirement to calculate the member's retirement allowance. Accordingly, these values apply to the calculation of retirement allowances for those who retire on or after January 1, 1996 (until subsequent amendment).

     (3) The department will use these tables, schedules and factors to calculate postretirement adjustments that become effective on or after January 1, 1996, even though the member's retirement allowance was initially calculated using a prior set of tables, schedules and factors.


PUBLIC EMPLOYEES RETIREMENT SYSTEM

PLAN 1

Early Retirement Factors

by Year and Month
0 0 1.0000
1 .9915
2 .9830
3 .9746
4 .9661
5 .9576
6 .9491
7 .9407
8 .9322
9 .9237
10 .9152
11 .9068
1 0 .8983
1 .8908
2 .8834
3 .8759
4 .8685
5 .8610
6 .8536
7 .8461
8 .8387
9 .8312
10 .8238
11 .8163
2 0 .8089
1 .8023
2 .7957
3 .7892
4 .7826
5 .7760
6 .7694
7 .7629
8 .7563
9 .7497
10 .7431
11 .7366
3 0 .7300
1 .7242
2 .7183
3 .7125
4 .7067
5 .7009
6 .6951
7 .6892
8 .6834
9 .6776
10 .6718
11 .6660
4 0 .6601
1 .6550
2 .6498
3 .6446
4 .6395
5 .6343
6 .6291
7 .6240
8 .6188
9 .6136
10 .6085
11 .6033
5 0 .5981
1 .5935
2 .5889
3 .5843
4 .5797
5 .5751
6 .5705
7 .5659
8 .5613
9 .5567
10 .5521
11 .5475
6 0 .5429
1 .5388
2 .5347
3 .5306
4 .5265
5 .5224
6 .5182
7 .5141
8 .5100
9 .5059
10 .5018
11 .4977
7 0 .4936
1 .4899
2 .4862
3 .4825
4 .4789
5 .4752
6 .4715
7 .4678
8 .4642
9 .4605
10 .4568
11 .4531
8 0 .4494
1 .4461
2 .4428
3 .4395
4 .4362
5 .4329
6 .4296
7 .4263
8 .4230
9 .4197
10 .4164
11 .4131
9 0 .4098
1 .4068
2 .4039
3 .4009
4 .3979
5 .3950
6 .3920
7 .3890
8 .3860
9 .3831
10 .3801
11 .3771
10 0 .3742
1 .3715
2 .3688
3 .3661
4 .3635
5 .3608
6 .3581
7 .3554
8 .3528
9 .3501
10 .3474
11 .3447
11 0 .3420
1 .3396
2 .3372
3 .3348
4 .3324
5 .3300
6 .3275
7 .3251
8 .3227
9 .3203
10 .3179
11 .3154
12 0 .3130
1 .3108
2 .3087
3 .3065
4 .3043
5 .3021
6 .2999
7 .2977
8 .2955
9 .2933
10 .2912
11 .2890
13 0 .2868
1 .2848
2 .2828
3 .2808
4 .2789
5 .2769
6 .2749
7 .2729
8 .2709
9 .2689
10 .2670
11 .2650
14 0 .2630
1 .2612
2 .2594
3 .2576
4 .2558
5 .2540
6 .2522
7 .2504
8 .2486
9 .2468
10 .2450
11 .2432
15 0 .2414
1 .2398
2 .2381
3 .2365
4 .2348
5 .2332
6 .2316
7 .2299
8 .2283
9 .2267
10 .2250
11 .2234
16 0 .2218
1 .2203
2 .2188
3 .2173
4 .2158
5 .2143
6 .2128
7 .2113
8 .2098
9 .2084
10 .2069
11 .2054
17 0 .2039
1 .2025
2 .2012
3 .1998
4 .1985
5 .1971
6 .1957
7 .1944
8 .1930
9 .1917
10 .1903
11 .1890
18 0 .1876
1 .1864
2 .1851
3 .1839
4 .1826
5 .1814
6 .1802
7 .1789
8 .1777
9 .1764
10 .1752
11 .1740
19 0 .1727
1 .1716
2 .1705
3 .1693
4 .1682
5 .1671
6 .1659
7 .1648
8 .1637
9 .1625
10 .1614
11 .1603
20 0 .1591
1 .1581
2 .1571
3 .1560
4 .1550
5 .1540
6 .1529
7 .1519
8 .1509
9 .1498
10 .1488
11 .1478
21 0 .1467
1 .1458
2 .1448
3 .1439
4 .1429
5 .1420
6 .1410
7 .1401
8 .1391
9 .1382
10 .1372
11 .1363
22 0 .1353
1 .1345
2 .1336
3 .1327
4 .1319
5 .1310
6 .1301
7 .1293
8 .1284
9 .1275
10 .1267
11 .1258
23 0 .1249
1 .1241
2 .1233
3 .1225
4 .1217
5 .1209
6 .1201
7 .1193
8 .1185
9 .1177
10 .1169
11 .1161
24 0 .1153
1 .1146
2 .1139
3 .1132
4 .1124
5 .1117
6 .1110
7 .1102
8 .1095
9 .1088
10 .1080
11 .1073
25 0 .1066
1 .1059
2 .1052
3 .1046
4 .1039
5 .1032
6 .1025
7 .1019
8 .1012
9 .1005
10 .0998
11 .0992
26 0 .0985
1 .0979
2 .0973
3 .0966
4 .0960
5 .0954
6 .0948
7 .0942
8 .0936
9 .0929
10 .0923
11 .0917
27 0 .0911
1 .0905
2 .0899
3 .0894
4 .0888
5 .0882
6 .0877
7 .0871
8 .0865
9 .0860
10 .0854
11 .0848
28 0 .0842
1 .0837
2 .0832
3 .0827
4 .0822
5 .0816
6 .0811
7 .0806
8 .0801
9 .0795
10 .0790
11 .0785
29 0 .0780
1 .0775
2 .0770
3 .0765
4 .0760
5 .0755
6 .0751
7 .0746
8 .0741
9 .0736
10 .0731
11 .0726
30 0 .0722
1 .0717
2 .0713
3 .0708
4 .0704
5 .0699
6 .0695
7 .0690
8 .0686
9 .0682
10 .0677
11 .0673
31 0 .0668
1 .0664
2 .0660
3 .0656
4 .0652
5 .0648
6 .0644
7 .0639
8 .0635
9 .0631
10 .0627
11 .0623
32 0 .0619
1 .0615
2 .0611
3 .0608
4 .0604
5 .0600
6 .0596
7 .0592
8 .0589
9 .0585
10 .0581
11 .0577
33 0 .0573
1 .0570
2 .0566
3 .0563
4 .0559
5 .0556
6 .0552
7 .0549
8 .0545
9 .0542
10 .0538
11 .0535
34 0 .0531
1 .0528
2 .0525
3 .0522
4 .0518
5 .0515
6 .0512
7 .0509
8 .0506
9 .0502
10 .0499
11 .0496
35 or more .0493

PUBLIC EMPLOYEES RETIREMENT SYSTEM

((Plan II)) Plans 2 and 3 Option 1

Monthly Benefit per $1.00

of Accumulation

20 .0039357
21 .0039525
22 .0039702
23 .0039887
24 .0040081
25 .0040286
26 .0040500
27 .0040726
28 .0040963
29 .0041213
30 .0041476
31 .0041753
32 .0042044
33 .0042351
34 .0042675
35 .0043015
36 .0043375
37 .0043756
38 .0044157
39 .0044581
40 .0045029
41 .0045502
42 .0046001
43 .0046528
44 .0047084
45 .0047670
46 .0048287
47 .0048939
48 .0049626
49 .0050352
50 .0051120
51 .0051933
52 .0052795
53 .0053712
54 .0054687
55 .0055727
56 .0056837
57 .0058025
58 .0059296
59 .0060657
60 .0062116
61 .0063676
62 .0065347
63 .0067134
64 .0069044
65 .0071085
66 .0073263
67 .0075587
68 .0078066
69 .0080711
70 .0083537
71 .0086558
72 .0089785
73 .0093230
74 .0096898
75 .0100792
76 .0104910
77 .0109250
78 .0113811
79 .0118589
80 .0123587
81 .0128793
82 .0134243
83 .0139934
84 .0145880
85 .0152103
86 .0158600
87 .0165374
88 .0172413
89 .0179682
90 .0187162
91 .0194835
92 .0202654
93 .0210569
94 .0218459
95 .0226265
96 .0234038
97 .0241752
98 .0249356
99 .0256785

Public Employees Retirement System PERS I Optional COLA* Public Employees Retirement System Plan 1 Option 1 Monthly Benefit per $1.00 of Accumulation

Age
20 0.6369 20 .0061792
21 0.6386 21 .0061891
22 0.6404 22 .0061997
23 0.6422 23 .0062111
24 0.6441 24 .0062232
25 0.6460 25 .0062362
26 0.6480 26 .0062501
27 0.6501 27 .0062650
28 0.6522 28 .0062809
29 0.6544 29 .0062979
30 0.6567 30 .0063162
31 0.6590 31 .0063357
32 0.6614 32 .0063566
33 0.6639 33 .0063790
34 0.6665 34 .0064030
35 0.6691 35 .0064286
36 0.6718 36 .0064561
37 0.6747 37 .0064856
38 0.6775 38 .0065173
39 0.6805 39 .0065512
40 0.6836 40 .0065875
41 0.6867 41 .0066263
42 0.6899 42 .0066677
43 0.6932 43 .0067119
44 0.6966 44 .0067590
45 0.7001 45 .0068091
46 0.7036 46 .0068624
47 0.7073 47 .0069190
48 0.7111 48 .0069792
49 0.7149 49 .0070432
50 0.7188 50 .0071114
51 0.7229 51 .0071843
52 0.7270 52 .0072621
53 0.7312 53 .0073455
54 0.7355 54 .0074351
55 0.7399 55 .0075313
56 0.7444 56 .0076350
57 0.7490 57 .0077467
58 0.7537 58 .0078672
59 0.7585 59 .0079972
60 0.7633 60 .0081375
61 0.7682 61 .0082885
62 0.7733 62 .0084509
63 0.7783 63 .0086255
64 0.7835 64 .0088128
65 0.7887 65 .0090135
66 0.7939 66 .0092282
67 0.7992 67 .0094577
68 0.8046 68 .0097029
69 0.8099 69 .0099651
70 0.8154 70 .0102454
71 0.8208 71 .0105455
72 0.8263 72 .0108665
73 0.8317 73 .0112093
74 0.8372 74 .0115744
75 0.8426 75 .0119617
76 0.8480 76 .0123709
77 0.8534 77 .0128014
78 0.8584 78 .0132528
79 0.8641 79 .0137246
80 0.8693 80 .0142169
81 0.8745 81 .0147281
82 0.8796 82 .0152621
83 0.8846 83 .0158184
84 0.8896 84 .0163986
85 0.8945 85 .0170045
86 0.8993 86 .0176361
87 0.9040 87 .0182936
88 0.9086 88 .0189757
89 0.9131 89 .0196789
90 0.9174 90 .0204015
91 0.9216 91 .0211420
92 0.9255 92 .0218957
93 0.9294 93 .0226575
94 0.9329 94 .0234160
95 0.9363 95 .0241655
96 0.9395 96 .0249116
97 0.9424 97 .0256520
98 0.9452 98 .0263822
99 0.9477 99 .0270961

PERS I Survivor Option Factors


Member Younger

Age Difference OPTION II (100%) OPTION IV

(66 2/3%)

 OPTION III (50%)

20

 0.948 0.965 0.973
-19 0.945 0.963 0.972
-18 0.940 0.959 0.969
-17 0.936 0.956 0.967
-16 0.933 0.954 0.965
-15 0.929 0.951 0.963
-14 0.925 0.949 0.961
-13 0.921 0.946 0.959
-12 0.916 0.943 0.956
-11 0.910 0.938 0.953
-10 0.906 0.935 0.950
-9 0.900 0.931 0.948
-8 0.895 0.928 0.945
-7 0.889 0.923 0.941
-6 0.882 0.918 0.937
-5 0.876 0.914 0.934
-4 0.868 0.908 0.930
-3 0.860 0.902 0.925
-2 0.849 0.894 0.918
-1 0.836 0.884 0.911

Member Older

Age

Difference

 OPTION II (100%) OPTION IV

(66 2/3%)

 OPTION III (50%)
0 .822 0.874 0.902
1 0.808 0.863 0.894
2 0.796 0.854 0.886
3 0.787 0.848 0.881
4 0.782 0.844 0.878
5 0.778 0.840 0.875
6 0.773 0.837 0.872
7 0.766 0.831 0.868
8 0.757 0.824 0.862
9 0.746 0.815 0.854
10 0.736 0.807 0.848
11 0.729 0.801 0.843
12 0.724 0.798 0.840
13 0.720 0.794 0.837
14 0.715 0.790 0.834
15 0.711 0.787 0.832
16 0.708 0.784 0.829
17 0.704 0.781 0.827
18 0.702 0.779 0.825
19 0.698 0.776 0.822
20 0.695 0.774 0.820
21 0.692 0.772 0.818
22 0.689 0.769 0.816
23 0.686 0.767 0.814
24 0.683 0.764 0.812
25 0.681 0.763 0.811
26 0.679 0.761 0.809
27 0.677 0.759 0.808
28 0.675 0.758 0.806
29 0.673 0.756 0.805
30 0.671 0.754 0.804
31 0.669 0.753 0.802
32 0.668 0.752 0.801
33 0.667 0.750 0.800
34 0.666 0.749 0.799
35 0.664 0.747 0.798
36 0.663 0.747 0.797
37 0.662 0.746 0.796
38 0.661 0.745 0.796
39 0.660 0.744 0.795
40 0.659 0.743 0.794
Age difference = member's age minus beneficiary's age

PERS ((II)) Plans 2 and 3 Survivor Option Factors


Member Younger

Age

Difference

 OPTION II (100%) OPTION IV

(66 2/3%)

 OPTION III (50%)
-20 .928 0.951 0.962
-19 0.925 0.949 0.961
-18 0.922 0.946 0.959
-17 0.919 0.945 0.958
-16 0.916 0.942 0.956
-15 0.912 0.940 0.954
-14 0.908 0.937 0.952
-13 0.904 0.933 0.949
-12 0.898 0.930 0.946
-11 0.892 0.925 0.943
-10 0.885 0.920 0.939
-9 0.879 0.916 0.935
-8 0.873 0.911 0.932
-7 0.865 0.906 0.927
-6 0.857 0.900 0.923
-5 0.849 0.894 0.918
-4 0.839 0.887 0.912
-3 0.828 0.878 0.906
-2 0.813 0.867 0.897
-1 0.797 0.855 0.887

Member Older

Age

Difference

 OPTION II

(100%)

 OPTION IV

(66 2/3%)

 OPTION III

(50%)
0 0.779 0.841 0.876
1 0.763 0.829 0.866
2 0.748 0.817 0.856
3 0.735 0.807 0.848
4 0.725 0.798 0.841
5 0.716 0.791 0.835
6 0.708 0.785 0.830
7 0.698 0.777 0.823
8 0.687 0.767 0.815
9 0.674 0.757 0.806
10 0.662 0.747 0.797
11 0.653 0.739 0.791
12 0.646 0.733 0.786
13 0.640 0.728 0.781
14 0.634 0.722 0.776
15 0.628 0.717 0.772
16 0.622 0.712 0.767
17 0.616 0.707 0.763
18 0.611 0.702 0.759
19 0.606 0.698 0.755
20 0.602 0.694 0.751
21 0.596 0.689 0.747
22 0.591 0.684 0.743
23 0.587 0.681 0.740
24 0.582 0.676 0.736
25 0.577 0.672 0.732
26 0.573 0.668 0.729
27 0.569 0.665 0.726
28 0.565 0.661 0.722
29 0.562 0.658 0.720
30 0.558 0.655 0.717
31 0.555 0.652 0.714
32 0.552 0.649 0.712
33 0.549 0.647 0.709
34 0.546 0.644 0.707
35 0.543 0.641 0.705
36 0.540 0.638 0.702
37 0.538 0.637 0.700
38 0.535 0.634 0.698
39 0.533 0.632 0.696
40 0.531 0.630 0.695
Age difference = member's age minus beneficiary's age

PUBLIC EMPLOYEES RETIREMENT SYSTEM

PLANS 2 AND 3

Early Retirement Factors

by Year and Month
0 0 1.0000
1 .9910
2 .9821
3 .9731
4 .9641
5 .9551
6 .9462
7 .9372
8 .9282
9 .9193
10 .9103
11 .9013
1 0 .8923
1 .8845
2 .8767
3 .8688
4 .8610
5 .8531
6 .8453
7 .8374
8 .8296
9 .8217
10 .8139
11 .8061
2 0 .7982
1 .7913
2 .7844
3 .7776
4 .7707
5 .7638
6 .7569
7 .7500
8 .7431
9 .7363
10 .7294
11 .7225
3 0 .7156
1 .7096
2 .7035
3 .6975
4 .6914
5 .6853
6 .6793
7 .6732
8 .6672
9 .6611
10 .6551
11 .6490
4 0 .6429
1 .6376
2 .6322
3 .6269
4 .6215
5 .6162
6 .6109
7 .6055
8 .6002
9 .5948
10 .5895
11 .5841
5 0 .5788
1 .5740
2 .5693
3 .5646
4 .5598
5 .5551
6 .5504
7 .5456
8 .5409
9 .5362
10 .5314
11 .5267
6 0 .5220
1 .5178
2 .5136
3 .5094
4 .5052
5 .5010
6 .4968
7 .4926
8 .4884
9 .4842
10 .4800
11 .4758
7 0 .4716
1 .4678
2 .4641
3 .4603
4 .4566
5 .4529
6 .4491
7 .4454
8 .4416
9 .4379
10 .4342
11 .4304
8 0 .4267
1 .4234
2 .4200
3 .4167
4 .4134
5 .4100
6 .4067
7 .4033
8 .4000
9 .3967
10 .3933
11 .3900
9 0 .3867
1 .3837
2 .3807
3 .3777
4 .3747
5 .3718
6 .3688
7 .3658
8 .3628
9 .3598
10 .3569
11 .3539
10 0 .3509
1 .3482
2 .3456
3 .3429
4 .3402
5 .3375
6 .3349
7 .3322
8 .3295
9 .3269
10 .3242
11 .3215
11 0 .3188
1 .3165
2 .3141
3 .3117
4 .3093
5 .3069
6 .3045
7 .3021
8 .2997
9 .2973
10 .2949
11 .2925
12 0 .2901
1 .2879
2 .2858
3 .2836
4 .2815
5 .2793
6 .2771
7 .2750
8 .2728
9 .2707
10 .2685
11 .2664
13 0 .2642
1 .2623
2 .2603
3 .2584
4 .2564
5 .2545
6 .2526
7 .2506
8 .2487
9 .2467
10 .2448
11 .2429
14 0 .2409
1 .2392
2 .2374
3 .2357
4 .2339
5 .2322
6 .2304
7 .2287
8 .2269
9 .2252
10 .2234
11 .2216
15 0 .2199
1 .2183
2 .2167
3 .2151
4 .2136
5 .2120
6 .2104
7 .2088
8 .2072
9 .2057
10 .2041
11 .2025
16 0 .2009
1 .1995
2 .1980
3 .1966
4 .1952
5 .1937
6 .1923
7 .1909
8 .1894
9 .1880
10 .1866
11 .1851
17 0 .1837
1 .1824
2 .1811
3 .1798
4 .1785
5 .1772
6 .1759
7 .1746
8 .1733
9 .1720
10 .1707
11 .1694
18 0 .1681
1 .1670
2 .1658
3 .1646
4 .1634
5 .1623
6 .1611
7 .1599
8 .1587
9 .1575
10 .1564
11 .1552
19 0 .1540
1 .1529
2 .1519
3 .1508
4 .1497
5 .1487
6 .1476
7 .1465
8 .1455
9 .1444
10 .1433
11 .1422
20 0 .1412
1 .1402
2 .1392
3 .1383
4 .1373
5 .1363
6 .1353
7 .1344
8 .1334
9 .1324
10 .1315
11 .1305
21 0 .1295
1 .1286
2 .1277
3 .1269
4 .1260
5 .1251
6 .1242
7 .1233
8 .1224
9 .1215
10 .1207
11 .1198
22 0 .1189
1 .1181
2 .1173
3 .1165
4 .1157
5 .1149
6 .1140
7 .1132
8 .1124
9 .1116
10 .1108
11 .1100
23 0 .1092
1 .1085
2 .1077
3 .1070
4 .1063
5 .1055
6 .1048
7 .1041
8 .1033
9 .1026
10 .1018
11 .1011
24 0 .1004
1 .0997
2 .0990
3 .0984
4 .0977
5 .0970
6 .0963
7 .0957
8 .0950
9 .0943
10 .0937
11 .0930
25 0 .0923
1 .0917
2 .0911
3 .0905
4 .0898
5 .0892
6 .0886
7 .0880
8 .0874
9 .0868
10 .0862
11 .0856
26 0 .0849
1 .0844
2 .0838
3 .0833
4 .0827
5 .0821
6 .0816
7 .0810
8 .0804
9 .0799
10 .0793
11 .0788
27 0 .0782
1 .0777
2 .0772
3 .0767
4 .0761
5 .0756
6 .0751
7 .0746
8 .0741
9 .0736
10 .0731
11 .0725
28 0 .0720
1 .0716
2 .0711
3 .0706
4 .0701
5 .0697
6 .0692
7 .0687
8 .0683
9 .0678
10 .0673
11 .0668
29 0 .0664
1 .0659
2 .0655
3 .0651
4 .0646
5 .0642
6 .0638
7 .0634
8 .0629
9 .0625
10 .0621
11 .0616
30 0 .0612
1 .0608
2 .0604
3 .0600
4 .0596
5 .0592
6 .0588
7 .0584
8 .0580
9 .0576
10 .0572
11 .0568
31 0 .0564
1 .0561
2 .0557
3 .0553
4 .0550
5 .0546
6 .0543
7 .0539
8 .0535
9 .0532
10 .0528
11 .0524
32 0 .0521
1 .0517
2 .0514
3 .0511
4 .0507
5 .0504
6 .0501
7 .0497
8 .0494
9 .0491
10 .0487
11 .0484
33 0 .0481
1 .0478
2 .0475
3 .0471
4 .0468
5 .0465
6 .0462
7 .0459
8 .0456
9 .0453
10 .0450
11 .0447
34 0 .0444
1 .0441
2 .0438
3 .0435
4 .0433
5 .0430
6 .0427
7 .0424
8 .0421
9 .0418
10 .0416
11 .0413
35 0 .0410
1 .0407
2 .0405
3 .0402
4 .0400
5 .0397
6 .0394
7 .0392
8 .0389
9 .0387
10 .0384
11 .0381
36 0 .0379
1 .0376
2 .0374
3 .0372
4 .0369
5 .0367
6 .0364
7 .0362
8 .0360
9 .0357
10 .0355
11 .0352
37 0 .0350
1 .0348
2 .0346
3 .0343
4 .0341
5 .0339
6 .0337
7 .0335
8 .0332
9 .0330
10 .0328
11 .0326
38 0 .0324
1 .0322
2 .0320
3 .0318
4 .0316
5 .0313
6 .0311
7 .0309
8 .0307
9 .0305
10 .0303
11 .0301
39 0 .0299
1 .0297
2 .0296
3 .0294
4 .0292
5 .0290
6 .0288
7 .0286
8 .0284
9 .0282
10 .0281
11 .0279
40 0 .0277
1 .0275
2 .0273
3 .0272
4 .0270
5 .0268
6 .0266
7 .0265
8 .0263
9 .0261
10 .0260
11 .0258
41 0 .0256
1 .0255
2 .0253
3 .0251
4 .0250
5 .0248
6 .0247
7 .0245
8 .0243
9 .0242
10 .0240
11 .0239
42 0 .0237
1 .0236
2 .0234
3 .0233
4 .0231
5 .0230
6 .0228
7 .0227
8 .0225
9 .0224
10 .0222
11 .0221
43 0 .0219
1 .0218
2 .0217
3 .0215
4 .0214
5 .0213
6 .0211
7 .0210
8 .0209
9 .0207
10 .0206
11 .0205
44 0 .0203
1 .0202
2 .0201
3 .0199
4 .0198
5 .0197
6 .0196
7 .0194
8 .0193
9 .0192
10 .0191
11 .0189
45 or more .0188

[Statutory Authority: RCW 41.50.050. 96-03-100, § 415-108-340, filed 1/19/96, effective 2/19/96. Statutory Authority: RCW 41.50.050, 41.40.165, 41.40.020 and 41.40.022. 91-02-018, § 415-108-340, filed 12/21/90, effective 1/21/91.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-441   Purpose and scope of compensation earnable rules.   WAC 415-108-443 through 415-108-488 codify the department's ((existing)) interpretation of statutes and ((existing)) administrative practice regarding classification of payments as compensation earnable in PERS Plan ((I and PERS Plan II)) 1, 2, or 3. ((The department has applied and will apply)) These rules will be used to determine the proper characterization of payments occurring prior to and after the effective dates of these sections.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-441, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-443   PERS reportable compensation table.   The following table ((is provided as a quick reference guide to)) will help you ((characterize)) determine whether certain types of payments are reportable compensation under Plan ((I and Plan II)) 1, 2, or 3. Be sure to ((turn to)) read the referenced rule to ensure that you have correctly identified the payment in question. The department determines compensation earnable based upon the nature of the payment, not the name applied ((to it,)). See WAC 415-108-445.


Type of Payment PERS ((I)) 1 Reportable

Compensation?

 PERS ((II)) 2 or 3 Reportable

Compensation?
Annual Leave Cash Outs Yes - WAC 415-108-456 No - WAC 415-108-456
Assault Pay (State Emp.) Yes - WAC 415-108-468 Yes - WAC 415-108-468
Base Rate Yes - WAC 415-108-451 Yes - WAC 415-108-451
Car Allowances No - WAC 415-108-4851 No - WAC 415-108-485
Cafeteria Plans Yes - WAC 415-108-455 Yes - WAC 415-108-455
Deferred Wages Yes - WAC 415-108-459 Yes - WAC 415-108-459
Disability Payments No - WAC 415-108-477 No - WAC 415-108-477
Disability: Salary lost while on disability leave Yes - WAC 415-108-468 Yes - WAC 415-108-468
RCW 41.40.038 RCW 41.40.038
Employer Provided Vehicle No - WAC 415-108-4802 No - WAC 415-108-480
Employer taxes/contributions No - WAC 415-108-459 No - WAC 415-108-459
Fringe Benefits No - WAC 415-108-475 No - WAC 415-108-475
Illegal Payments No - WAC 415-108-482 No - WAC 415-108-482
Legislative Leave Yes - WAC 415-108-464 Yes - WAC 415-108-464
Longevity/Education

Attainment Pay

 Yes - WAC 415-108-451 Yes - WAC 415-108-451
Nonmoney Maintenance Yes - WAC 415-108-4703 No - WAC 415-108-470
Optional Payments No - WAC 415-108-483 No - WAC 415-108-483
Payments in Lieu of

Excluded Items

 No - WAC 415-108-463 No - WAC 415-108-463
Performance Bonuses Yes - WAC 415-108-453 Yes - WAC 415-108-453

     1A portion of the value of an employer car allowance may be reportable, see WAC 415-108-485.


     2A portion of the value of an employer provided vehicle may be reportable in Plan I only, see WAC 415-108-480.


     3A portion of the value of nonmoney maintenance provided may be reportable in Plan I only, see WAC 415-108-470.


Type of Payment PERS ((I)) 1 Reportable

Compensation?

 PERS ((II)) 2 or 3 Reportable

Compensation?
Retroactive Salary Increase Yes - WAC 415-108-457 Yes - WAC 415-108-457
Reimbursements No - WAC 415-108-484 No - WAC 415-108-484
Reinstatement Payments Yes - WAC 415-108-467 Yes - WAC 415-108-467
Retirement or Termination

Bonuses

 No - WAC 415-108-487 No - WAC 415-108-487
Severance Pay - Earned

Over Time

 Yes - WAC 415-108-458 No - WAC 415-108-458
Severance Pay - Not Earned

Over Time

 No - WAC 415-108-488 No - WAC 415-108-488
Shared Leave - State Emp. Yes - WAC 415-108-468 Yes - WAC 415-108-468
Shared Leave - Local

Government Employees

 No - WAC 415-108-468 No - WAC 415-108-468
Sick Leave Cash Outs - State

Employees

 No - WAC 415-108-456 No - WAC 415-108-456
Sick Leave Cash Out - Local

Government Employees

 Yes - WAC 415-108-456 No - WAC 415-108-456
Standby Pay Yes - WAC 415-108-469 Yes - WAC 415-108-469
Time Off with Pay Yes - WAC 415-108-456 Yes - WAC 415-108-456
WAC 415-108-465 WAC 415-108-465
Union Leave4 Yes - WAC 415-108-466 Yes - WAC 415-108-466
Worker's Compensation No - WAC 415-108-479 No - WAC 415-108-479

     4Only specific types of union leave are reportable, see WAC 415-108-466.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-443, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-456   Leave payments earned over time.   (1) Sick and annual leave usage. ((Sick leave and annual leave is accumulated over time and paid to a person during a period of excused absence. Leave accrues at a prescribed rate, usually a certain number of hours per month. The employee earns a leave day by rendering service during the month the leave accrued. When the employee uses his or her accrued leave by taking a scheduled work day off with pay, the payment is deferred compensation for services previously rendered. The payment is a salary or wage earned for services rendered and is reportable.))

     (a) Leave accrues at a prescribed rate, usually a certain number of hours per month.

     (b) You earn a leave day by providing service during the month the leave accrued.

     (c) Sick leave and annual leave are accumulated over time and paid to you during a period of excused absence.

     (d) When you use your accrued leave by taking a scheduled work day off with pay, the payment is deferred compensation for services previously provided.

     (e) The payment is a salary or wage earned for services provided and is reportable.

     (2) Annual leave cash outs. Annual leave cash outs, like payments for leave usage, are deferred compensation earned for services previously ((rendered)) provided. Whether, and to what extent an annual leave cash out qualifies as reportable compensation depends upon ((which)) the PERS plan ((the member)) to which you belong((s to)) and the type of employer.

     (a) Plans 2 and 3: Annual leave cash outs are not reportable compensation ((for PERS Plan II members)). Although the payments are for services ((rendered)) provided, they are excluded from the definition of compensation earnable by statute((,)). See RCW 41.40.010 (8)(b).

     (b) Plan 1, state government employees: A cash out of up to thirty days of annual leave for state government employees is reportable compensation ((for PERS Plan I,)). See RCW 43.01.040. A cash out in excess of thirty days of annual leave:

     (i) Qualifies as reportable compensation if ((it)) the leave is authorized by a letter of necessity under RCW 43.01.040. Annual leave qualifies as authorized under a letter of necessity only if the leave was earned after the letter of necessity was issued;

     (ii) Does not qualify as reportable compensation if ((it)) the leave is earned between the date that ((the member)) you accrued thirty days of annual leave and ((the member's)) your anniversary date under RCW 43.01.044.

     (c) Plan 1 employees not covered by (2)(b): All annual leave cash outs received by PERS Plan ((I)) 1 members who are not state employees qualify as reportable compensation.

     (3) Sick leave cash outs. Sick leave cash outs are deferred compensation for services previously ((rendered)) provided.

     (a) Sick leave cash outs are excluded from the definition of compensation earnable for PERS Plan ((II)) 2 or 3 members by statute((,)). See RCW 41.40.010 (8)(b).

     (b) Sick leave cash outs are reportable compensation for PERS Plan ((I)) 1 members other than state, school district, and educational service district employees.

     (c) Sick leave cash outs are excluded from reportable compensation for:

     (i) State employees by RCW 41.04.340;

     (ii) School district employees by RCW 28A.400.210; and

     (iii) Educational service district employees by RCW 28A.310.490.

     See RCW 41.40.010 (8)(a).

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-456, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-458   Severance pay earned over time.   (1) ((Plan I.)) PERS Plan 1: Severance pay ((must be)) earned over time ((in the same manner as annual leave or sick leave in order to be deferred compensation for services previously rendered and to be reportable in Plan I)) is reportable compensation. Conversely, severance pay ((is)) not earned over time ((if the employment contract(s) or compensation policies in effect at the beginning of a given period of employment specify that a certain amount of severance pay will be earned during that period in consideration for services rendered)) is not reportable compensation (see WAC 415-108-488). The difference is that severance pay earned over time is deferred compensation for services previously provided.

     Severance pay is earned over time if the employment contract(s) or compensation policies in effect at the beginning of a given period of employment specify that a certain amount of severance pay will be earned during that period in consideration for services provided.


Example: Mr. Jones is a PERS Plan ((I)) 1 member employed as a city manager. Since the beginning of his term of employment with the city, his contract has specified that he will earn one week of severance pay for every year of his employment. The earned severance pay will be paid at the time of his separation. His severance pay is reportable compensation. When Mr. Jones retires, the two weeks severance pay that he earned during his two highest paid years (i.e., one week per year for two years) will be included in his PERS Plan ((I)) 1 retirement calculation.

To the extent that severance pay qualifies as reportable compensation and is earned within ((the member's)) your average final compensation period, the severance pay is excess compensation((,)). See RCW 41.50.150.

     (2) PERS Plans ((II.)) 2 and 3: All forms of severance pay are excluded from earnable compensation ((for Plans II by)). See RCW 41.40.010 (8)(b).

     (((3) Severance pay that is not earned over time is not earned for services rendered and is not reportable in Plan I or II, see WAC 415-108-488.))

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-458, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-464   Legislative leave.   If ((a PERS member)) you take((s a)) leave without pay from an eligible position to serve in the legislature, ((the member)) you may ((elect)) choose to participate in PERS as a legislator.

     (1) Plan ((I. The salary the employee would have earned from their employer is reportable compensation if the required member contribution is paid by the member and the required employer contribution is paid by the member or the employer.)) 1: Your reportable compensation is the salary you would have earned from your employer. You must pay employee contributions on this amount. Either you or your employer must pay employer contributions on the amount.

     (2) Plan ((II. The employee)) 2 or 3: You may choose ((between:

(a) The)) your reportable compensation ((he or she)) to be:

     (a) The reportable compensation you would have earned ((had the member not served in the legislature)) from your employer; or

     (b) ((The)) Your actual reportable compensation for your legislative and nonlegislative ((public employment and the legislative)) service combined.

     If ((the member selects option)) you choose (2)(a) of this subsection((, he or she is responsible for paying the additional employer and employee contributions to the extent the reportable compensation reported is higher than it would have been under (b) of this subsection)) and your reportable compensation is higher than it would have been under (2)(b) of this subsection, you must pay both employee and employer contributions on the excess amount.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-464, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-465   Is paid leave not earned over time((.)) reportable compensation for PERS?   ((If paid leave is not based upon earned leave accumulated over time, the payment is not a deferred payment for services previously rendered. Further, the member on leave is not currently rendering services in exchange for the payment. However,)) RCW 41.40.175 and 41.40.710 identify payments received from the employer while on paid leave as reportable for PERS. Contributions are due on these payments to the extent they meet the following conditions:

     (1) The payment is equal to the salary ((for the position that the person is on leave from;)) that you normally earn in your position; and

     (2) The payment is actually from the employer. Payments from an employer that are conditioned upon reimbursement from a third party are payments from the third party. Because the payments are not from the employer, they are not reportable compensation. The only exception is union leave paid by the employer subject to reimbursement from the union under the conditions specified in RCW 41.40.175 (Plan ((I)) 1) ((and)), RCW 41.40.710 (Plan ((II)) 2), RCW 41.40.805 (Plan 3), and WAC 415-108-466.

Example: Joe injures himself off the job and collects labor and industries payments instead of compensation from his employer. Because the payments are not from his employer, they are not reportable compensation.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-465, filed 4/17/98, effective 5/18/98.]

OTS-5337.2


NEW SECTION
WAC 415-108-425   How do I determine if I have choice rights or transfer rights to PERS Plan 3?   (1) Definitions:

     (a) "Concurrently employed" means you are employed at the same time, in eligible positions, by a Phase 1 employer and by a Phase 2 employer.

     (b) "Exercising choice rights" means choosing Plan 2 or Plan 3 or defaulting into Plan 3.

     (c) "Phase 1 employer" means state agencies and institutes of higher education.

     (d) "Phase 2 employer" means all other employers.

     (e) "Phase 1 transfer period" is the period from March 1, 2002, through and including August 31, 2002.

     (f) "Phase 2 transfer period" is the period from September 1, 2002, through and including May 31, 2003.

     (2) What determines if I have "choice rights" or "transfer rights"? Your current employment status and your employment history will be used to determine if you have choice rights or transfer rights. If your employment status changes, your rights must be reevaluated. A change in your employment status, such as separating from employment or becoming reemployed, may change your rights.

     (3) What are "choice rights" and how are they applied? "Choice rights" refers to your right, within a ninety-day period, to make an irrevocable choice to become a member of Plan 2 or Plan 3.

     (a) You will be reported in Plan 2 until you exercise choice rights.

     (b) You must make a choice within ninety days of your first day of employment in an eligible position.

     (c) You will be defaulted into Plan 3 if you continue employment past the ninety-day choice period without making a choice.

     (d) You may exercise choice rights only once.

     (4) Do I have "choice rights"?

     (a) You have choice rights if your initial PERS membership began on or after March 1, 2002, with a Phase 1 employer in an eligible position.

     (i) If you separate from employment and did not exercise your choice rights, you retain choice rights if you are reemployed in an eligible position with a Phase 1 employer.

     (ii) If you separate from employment and did not exercise your choice rights, and you are not employed by a Phase 2 employer during Phase 2, you retain choice rights if you begin another period of employment in an eligible position with a Phase 2 employer after May 31, 2003.

     (b) You have choice rights if your initial PERS membership began on or after September 1, 2002, with a Phase 2 employer in an eligible position. If you separate from employment and did not exercise your choice rights, you retain choice rights if you begin another period of employment in an eligible position with a Phase 1 or Phase 2 employer.

     (5) What are "transfer rights" and how are they applied? "Transfer rights" refers to your right as a Plan 2 member to transfer into Plan 3 during an applicable transfer period to your employment type.

     (a) You are not required to exercise transfer rights. If you have transfer rights, you will remain in Plan 2 unless you decide to transfer to Plan 3.

     (b) If you do not transfer to Plan 3 during the Phase 1 or the Phase 2 transfer periods, you will not qualify to receive the additional transfer payment under RCW 41.40.795 or retroactive gainsharing payment under RCW 41.31A.040.

     (6) Do I have transfer rights?

     (a) You have transfer rights if you:

     (i) Are a Plan 2 member;

     (ii) Are employed in an eligible position by a Phase 1 employer during the Phase 1 transfer period; and

     (iii) Were not eligible for choice rights under subsection (4)(a) of this section.

     (b) You have transfer rights if you:

     (i) Are a Plan 2 member;

     (ii) Are employed in an eligible position by a Phase 2 employer during the Phase 2 transfer period; and

     (iii) Were not eligible for choice rights under subsection (4)(b) of this section.

     (7) What are "January transfer rights" and how are they applied? "January transfer rights" refers to a Plan 2 member's right to transfer to Plan 3 during any January after the close of a transfer period.

     (a) If you are employed by a Phase 1 employer, in an eligible position, the first January you can transfer is January 2003.

     (b) If you are employed by a Phase 2 employer, in an eligible position, the first January you can transfer is January 2004.

     (c) You must earn service credit in the January in which you transfer.

     (8) Do I have January transfer rights?

     (a) You have January transfer rights if you were eligible for transfer rights and did not transfer to PERS Plan 3 during the transfer period that applied to you.

     (b)     You have January transfer rights if you:

     (i) Were employed in an eligible position with a Phase 1 employer before the Phase 1 transfer period, or were employed in an eligible position by a Phase 2 employer before the Phase 2 transfer period;

     (ii) Were not employed by a Phase 1 employer during the Phase 1 transfer period;

     (iii) Were not employed by a Phase 2 employer during the Phase 2 transfer period; and

     (iv) Are employed by a Phase 1 employer in an eligible position that you began after the Phase 1 transfer period ended, or are employed by a Phase 2 employer in an eligible position that you began after the Phase 2 transfer period ended.

     (9) What happens after I become a Plan 3 member? Once you choose Plan 3 or default to Plan 3 or transfer to Plan 3, you will remain a Plan 3 member. You will not have any additional transfer rights or choice rights to exercise.

     (10) What rules apply to me if I am concurrently employed?If you are, or become concurrently employed during the Phase 1 transfer period in an eligible position, you will have transfer rights but must wait until the Phase 2 transfer period to transfer. If you separate from one of the employers, your membership rights must be reevaluated.

Examples: The examples are written, for the most part, for a Phase 1 employer. Use the Phase 2 transfer period (September 1, 2002, through and including May 31, 2003) to apply the rules to a Phase 2 employer.
Plan Choice Rights:
     Example 1: Pat starts working for a state agency in an eligible position (Phase 1 employer) as of:
     A. April 1, 2002. Since Pat has not previously been a member of PERS, Pat has ninety days to make a plan choice for Plan 2 or Plan 3. See subsection (3)(b) of this section.
     B. After forty-five days, Pat leaves service without making a choice, and then returns in an eligible position one year later. Pat has a new ninety day period in which to make his plan choice. See subsection (4)(a)(i) of this section.
     C. Pat chooses Plan 3 within his ninety days. Pat is now a Plan 3 member regardless of future employment. See subsection (9) of this section.
     D. Instead of choosing Plan 3, Pat lets his ninety day plan choice period go by with out choosing Plan 2 or Plan 3. Pat is defaulted into Plan 3 and is now a Plan 3 member regardless of future employment. See subsections (3)(c) and (9) of this section.

Transfer Rights:
     Example 2:
     A. Chris has been a Plan 2 member since 1977. Chris is working at a state agency (Phase 1 employer) as of March 1, 2002. Since Chris was a member prior to the start of Plan 3, Chris has the right to transfer to Plan 3 in the transfer period (March 1, 2002, through August 31, 2002). See subsection (6)(a) of this section.
     B. However, Chris did not make a decision to transfer prior to the close of the Phase 1 transfer period. If Chris remains employed for a Phase 1 employer, the right to transfer to Plan 3 is limited to January of each year. See subsection (8)(a) of this section.
     C. In this variation, Chris was a Plan 2 member from March 1, 1987, through February 1, 2002. Chris returns on October 15, 2002, for a state agency (Phase 1 employer). Since Chris returned to service after the transfer period (March 1, 2002, through August 31, 2002), Chris only has the right to transfer to Plan 3 in January of each year. See subsection (8)(b) of this section.

Irrevocable Choice Rule:
     Example 3: Mike starts working for a state agency (Phase 1 employer) as of April 1, 2002. Since Mike has not previously been a member of PERS, he has ninety days to make a plan choice for Plan 2 or Plan 3. Mike chooses Plan 3 within his ninety days. Mike is now a Plan 3 member regardless of future employment. See subsection (9) of this section.
     Example 4: Pat starts working for a state agency (Phase 1 employer) as of April 1, 2002. Since Pat has not previously been a member of PERS, he has ninety days to make a plan choice for Plan 2 or Plan 3. Pat chooses Plan 2 within his ninety days. Pat is now a Plan 2 member who can no longer have a plan choice regardless of future employment. See subsection (3)(d) of this section.

Concurrent Employment in Phase 1 and 2:
     Example 5: Using example 2A, Chris also accepts employment for a county (Phase 2 employer) on April 1, 2002, prior to transferring to Plan 3. Since Chris is concurrently employed at a Phase 1 and a Phase 2 employer, Chris must wait for the Phase 2 window before he can transfer to Plan 3. See subsection (10) of this section.

[]


NEW SECTION
WAC 415-108-980   Will I receive a transfer payment when I transfer to Plan 3?   (1) PERS Plan 3 will be implemented on March 1, 2002. If you transfer from PERS Plan 2 to PERS Plan 3 during your transfer period, and establish any service credit in February 2003, you will receive a transfer payment to be added to your member account on or after June 1, 2003, once the department receives the transfer information from your employer. The transfer period and payment amount you will receive is based upon your employer type and your account balance as of March 1, 2002.

     (a) You will receive a payment of one hundred and ten percent of your transfer basis if you are employed in an eligible position by a Phase 1 employer and you transfer to Plan 3 during the Phase 1 transfer period. State agencies and institutes of higher education are Phase 1 employers.

     (b) You will receive a payment of one hundred and eleven percent of your transfer basis if you are employed in an eligible position by a Phase 2 employer and you transfer to Plan 3 during the Phase 2 transfer period. All other employers are Phase 2 employers.

     (2) Your transfer basis is your total accumulated contributions (and interest) on March 1, 2002, less fifty percent of any contributions you made under RCW 41.50.165(2).

     (3) If you request to transfer but die before payment is made, the transfer payment will be paid immediately to your defined contribution account. These moneys will be distributed when payment is made from your account to your estate, or the person or persons, trust or organization you nominated by the most recent written beneficiary designation filed with the department.


Examples:

Phase 1 Employer (110%) (state agencies and institutes of higher education)

• Al works for a Phase 1 employer and makes $2,000 a month.

• On March 1, 2002, Al's defined benefit (DB) account balance is $10,000.

• On June 1, 2002, Al transfers to PERS Plan 3 and chooses contribution rate option A (5%).

• On June 1, 2002, the department transfers approximately $10,185 to Al's new defined contribution (DC) account. The transfer amount is the sum of:

⧫ Al's $10,000 account balance on March 1, 2002;

⧫ Approximately $50 in contributions between March 1st and June 1st; and

⧫ Approximately $135 in interest in Plan 2 at 5.5% annually, compounded quarterly.

• Al continues working for his Phase 1 employer through June 2003, including the month of February.

• In June 2003, after he receives his transfer payment, Al will have approximately $22,385 in his DC account. Here is how:

⧫ In June 2002, when Al transferred to Plan 3, he started with approximately $10,185 in his DC account.

⧫ He then made twelve monthly contributions of $100 (5% of a $2,000 salary, June 2002 through May 2003) for a total of $1,200.

⧫ In June 2003, he receives a transfer payment of $11,000 (110% of $10,000, his account balance on March 1, 2001).

⧫ The total is approximate because it will depend on earnings or losses on the investments of the original amount transferred the previous year, and the contributions made to date.


Phase 2 Employer (111%) (local government)

• Peggy works for a Phase 2 employer and makes $2,000 a month.

• On March 1, 2002, Peggy's defined benefit (DB) account balance is $10,000.

• On November 1, 2002, Peggy transfers to PERS Plan 3 and chooses contribution rate option A (5%).

• On November 1, 2002, the department transfers approximately $10,560 to Peggy's new defined contribution (DC) account. The transfer amount is the sum of:

⧫ Peggy's $10,000 account balance on March 1, 2002;

⧫ Approximately $140 in contributions between March 1st and November 1st;

⧫ Approximately $420 in interest in Plan 2 at 5.50% annually, compounded quarterly.

• Peggy continues working for her Phase 2 employer through June 2003, including the month of February.

• In June 2003, after she receives her transfer payment, Peggy will have approximately $22,360 in her DC account. Here is how:

⧫ In November 2002, when Peggy transferred to Plan 3, she started with approximately $10,560 in her DC account.

⧫ She then made monthly contributions of $100 (5% of a $2,000 salary) for a total of $700.

⧫ In June 2003, she receives a transfer payment of $11,100 (111% of $10,000, her account balance on March 1, 2001).

⧫ The total is approximate because it will depend on earnings or losses on the investments of the original amount transferred the previous year, and the contributions made to date.


     (4) Terms defined:

     Phase 1 transfer period: WAC 415-108-420.

     Phase 2 transfer period: WAC 415-108-420.

     Service: RCW 41.40.010 (9)(b).

     Transfer basis: RCW 41.40.795 (1)(b).

     Transfer period: RCW 41.40.795 (1)(a).

[]

OTS-4924.4


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-445   What compensation can be reported?   ((In order for payments to be subject to retirement system contributions and included in the calculation of a member's retirement benefit, those payments must meet the definition of compensation earnable in RCW 41.40.010(8).

     (1) Payments for personal services rendered. To determine whether a payment meets this definition and can be reported, ask the following questions:

     (a) Was the payment earned as a salary or wage for personal services rendered during a fiscal year? If the answer is no, the payment is not reportable. If the answer is yes, ask question (b).

     (b) Was the payment paid by an employer to an employee? If the answer is no, the payment is not reportable. If the answer is yes, report the payment.

     (2) Payments included that are not for personal services rendered. The legislature has included certain specific payments within the definition of compensation earnable even though those payments are not for personal services rendered by the employee to the employer. (See WAC 415-108-464 through 415-108-469.)

     (3) Reportable compensation is earned when the service is rendered, rather than when payment is made.


Example:      If a member works during June but does not receive payment for the work until July, the reportable compensation was earned during June and must be reported to the department as June earnings.

     (4) Salary characterizations are based upon the nature of the payment. A payment is reportable compensation if it meets the criteria of subsection (1) or (2) of this section. The name given to the payment or the document authorizing it is not controlling in determining whether the payment is reportable compensation. The department determines whether a payment is reportable compensation by considering:

     (a) What the payment is for; and

     (b) Whether the reason for the payment brings it within the statutory definition of compensation earnable.


Example: A payment conditioned upon retirement is not reportable compensation. Attaching the label "longevity" to the payment does not change the fact that the payment is conditioned on retirement. Such a payment is not for services rendered and will not be counted as reportable compensation despite being identified by the employer as a longevity payment.

     (5) Differences in reportable compensation between plans. WAC 415-108-445 through 415-108-488 define reportable compensation for each of the two PERS plans. "Compensation earnable" is defined in very similar terms for both PERS Plan I and PERS Plan II. The characterization of payments as reportable compensation or not reportable compensation in WAC 415-108-455 through 415-108-488 is the same for both PERS Plan I and PERS Plan II except as specifically noted.)) (1) Compensation earnable:

     (a) Compensation earnable must meet the definition in RCW 41.40.010(8) and:

     (i) Be earned as a salary or wage for personal services provided during a fiscal year and paid by an employer to an employee; or

     (ii) Qualify as compensation earnable under WAC 415-108-464 through 415-108-470.

     (b) The department determines whether payments to an employee are compensation earnable based on the nature, not the name, of the payment. The department considers the reason for the payment and whether the reason brings the payment within the statutory definition of compensation earnable.

Example: "Longevity pay" conditioned on retirement is not for services provided and is therefore not compensation earnable.
     (c) "Compensation earnable" is defined in very similar terms for all three PERS plans. Any differences among plans are specifically noted in WAC 415-108-443 through 415-108-488.

     (2) Reportable compensation:

     (a) Reportable compensation is the compensation paid by an employer to an employee that the employer must report to the department.

     (b) An employer must report all compensation earnable of an employee, as defined by RCW 41.40.010(8) and WAC 415-108-445(1) to the department.

     (c) An employer must report compensation for the month in which it was earned. Compensation is earned when the service is provided, rather than when payment is made.

Example: A member is paid in July for work performed during June. The employer must report the compensation to the department as "June earnings."

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-445, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-466   Do I receive reportable compensation for union leave((.))?   If ((a member)) you take((s)) an authorized leave of absence to serve as an elected official of a labor organization and ((the)) your employer pays ((the member)) you while you are on leave subject to reimbursement from the union, ((the person's)) your pay qualifies as reportable compensation provided that all the conditions of RCW 41.40.175 (Plan ((I)) 1) ((or)), RCW 41.40.710 (Plan ((II)) 2), or RCW 41.40.805 (Plan 3) as appropriate, are met.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-466, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 95-22-006, filed 10/18/95, effective 11/18/95)

WAC 415-108-480   Vehicles--Does the value of my use of an employer vehicle qualify as compensation earnable?   (((1) PERS Plan I members:

     (a) If you use an employer vehicle solely in connection with your employer's business, your use of the vehicle does not qualify as compensation earnable. Use of an employer-provided vehicle only qualifies as compensation earnable to the extent that you use it for personal, rather than business, purposes. Your use of an employer vehicle does not qualify as compensation earnable if:

     (i) You use the vehicle solely in connection with your employer's business; or

     (ii) Your employer has an established policy prohibiting you from using the vehicle for any purpose other than in connection with your employer's business.

     (b) The department presumes that any employer-provided vehicle is used solely in connection with your employer's business and does not qualify as compensation earnable.

     (c) A portion of your use of an employer-provided vehicle may qualify as compensation earnable. In order for any portion of your use of an employer vehicle to qualify as compensation earnable, your employer must either:

     (i) Report your personal use of the vehicle to the Internal Revenue Service (IRS) as income; or

     (ii) Maintain monthly records reflecting your personal use of the vehicle.

     (d) Your personal use of an employer vehicle qualifies as compensation earnable if your employer reports your use to the IRS as taxable income. Your employer may report your personal use of an employer vehicle to the Internal Revenue Service (IRS) as taxable income as provided under the Internal Revenue Code (I.R.C.). See I.R.C. Section 61 and Treas. Reg. Section 1.61-21. If so, the department will consider the amount reported to the IRS as compensation earnable.

     (e) Your personal use of an employer vehicle qualifies as compensation earnable to the extent your employer documents your personal use of the vehicle. If your employer does not report your use of an employer vehicle to the IRS as income, your use of the vehicle may qualify as compensation earnable if your employer maintains monthly contemporaneous records detailing your personal use of the vehicle. Your employer records must reflect all of the following:

     (i) Whether your employer authorized you to have the vehicle for personal use, including commuting;

     (ii) Whether you used the vehicle for commuting and, if so, the distance you normally commuted on a daily basis during the month;

     (iii) The dates, if any, on which you used the vehicle for other personal purposes, including the miles you drove the vehicle on each personal trip and your itinerary for each trip;

     (iv) The total number of miles you drove the vehicle during the month; and

     (v) The percentage of the total miles you drove the car during the month for personal use, including commuting.

     (f) Your employer must report as compensation earnable an amount based on your personal use of the vehicle. If your employer maintains records documenting your personal use of the vehicle as provided in (e) of this subsection, your employer must report to the department as monthly compensation earnable the lesser of the following amounts:
    
(i) Monthly Fair Market Lease Value of the Vehicle
x
Percentage of Personal Use of the Vehicle During the Month;
or
(ii) Miles of Personal Use
x
IRS Mileage Rate

     "IRS mileage rate" means the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle.)) (1) PERS Plan 1 members:

     (a) Use of an employer vehicle for business purposes does not qualify as compensation earnable. If your employer's established policy prohibits the use of an employer vehicle for nonbusiness uses, all use of the vehicle will be deemed business use.

     (b) Use of an employer vehicle for nonbusiness purposes qualifies as compensation earnable if:

     (i) Your employer reports your personal use of the vehicle to the IRS as taxable income under IRC Section 61 and Treas. Reg. Section 1.61-21; or

     (ii) Your employer maintains monthly records of your personal use. These records must contain:

     (A) Your employer's authorization of your personal use;

     (B) The distance normally commuted each day during the month, if you use the vehicle to commute;

     (C) The dates, mileage, and itinerary of each personal trip other than a commute trip;

     (D) Your total mileage for the month; and

     (E) The ratio of personal mileage to total mileage, expressed as a percent.

     (c) The department presumes that your use of an employer vehicle is solely for business purposes. If you used an employer vehicle for personal use, your employer must report the value of this use as compensation earnable on a monthly basis. Monthly compensation earnable is the lesser of the following:

     (i) Fair Market Lease Value x Percentage of Personal Use

     (ii) Miles of Personal Use x IRS Mileage Rate.

     The IRS Mileage Rate is the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle.

     (2) PERS Plan ((II)) 2 and 3 members. If you are a ((PERS Plan II)) member of PERS Plan 2 or 3, you are not entitled to count any of the value of an employer-provided vehicle as compensation earnable.

[Statutory Authority: RCW 41.50.050. 95-22-006, § 415-108-480, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.40.010(8) and 41.40.020. 87-17-061 (Order DRS 87-08), § 415-108-480, filed 8/19/87.]


AMENDATORY SECTION(Amending WSR 95-16-053, filed 7/25/95, effective 8/25/95)

WAC 415-108-679   Purpose and scope of eligibility rules.   WAC 415-108-680 through 415-108-728 codify the department's existing interpretation of statutes ((and existing administrative practice)) regarding eligibility for membership in ((PERS Plan I and Plan II. The department has applied and will apply these rules to determine eligibility for service occurring prior to effective dates of these sections)) all three PERS plans.

[Statutory Authority: RCW 41.50.050. 95-16-053, § 415-108-679, filed 7/25/95, effective 8/25/95.]

OTS-5230.4


AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-491   Salary imputed to periods of unpaid leave.   In some circumstances specified in statute, a member may ((elect)) choose to establish service credit for periods of unpaid leave. The salary imputed to a member for purposes of calculating contributions owing for such periods of leave is not reportable compensation. Depending on the type of leave, the imputed compensation may or may not be included as average final compensation in calculating a member's retirement allowance.

     (1) Authorized unpaid leave. RCW 41.40.710 provides Plan ((II)) 2 members with an option to establish service credit for periods of unpaid leave. RCW 41.40.805 provides Plan 3 members with an option to establish service credit for periods of unpaid leave. RCW 41.40.038 provides members with an option to establish service credit for periods of disability covered by industrial insurance. Salary imputed to members in order to calculate contributions for such periods is not reportable compensation and can not be included as average final compensation in calculating a member's retirement allowance.

     (2) Military leave. For Plan 2 and Plan 3, salary imputed to a member for purposes of calculating contributions owing for periods of interrupted military service is not reportable compensation. Federal law requires that if a member ((elects)) chooses to purchase credit for such periods of military service, and that period falls in the member's average final compensation period, the member is entitled to have the imputed salary he or she would have earned during the period of absence used in the calculation of his or her average final compensation.

[Statutory Authority: RCW 41.50.050. 98-09-059, § 415-108-491, filed 4/17/98, effective 5/18/98.]


AMENDATORY SECTION(Amending WSR 94-12-014, filed 5/23/94, effective 6/23/94)

WAC 415-108-570   ((Elected and appointed officials -- )) As an elected or appointed official, what are my requirements for service credit((.))?   (1)(a) ((Plan I)) As a Plan 1 elected ((officials and)) or appointed official((s)), you may receive one month of service credit for each month during which ((they)) you earn compensation pursuant to ((their)) your elected or appointed position((s)).

     (b) ((Plan I)) If you are a Plan 1 member((s)) who ((were)) was appointed by the governor prior to July 1, 1976, to serve as a member((s)) of any committee, board or commission, you may receive one month of service credit for each month during which ((they)) you earn compensation pursuant to ((their)) your appointed positions.

     (c) ((Plan I)) If you are a Plan 1 member((s)) who ((were)) was appointed or reappointed by the governor on or after July 1, 1976, to serve as a member((s)) of any committee, board or commission, you may receive one month of service credit for each month during which ((they)) you are compensated for at least seventy total hours of work.

     (d) ((Plan I)) If you are a Plan 1 member((s)) who ((serve)) served in a governor-appointed position((s)) as a member((s)) of any committee, board or commission on or after September 1, 1991, you may receive one-quarter month of service credit for each month during which ((they)) you are compensated for less than seventy total hours of work.

     (2)(a) ((Plan II)) If you are a Plan 2 or Plan 3 member((s)) who ((were)) was elected to office by statewide election, you may receive one month of service credit for each month during which ((they)) you earn compensation pursuant to ((their)) your elected position((s)).

     (b) Except for Plan ((II)) 2 or Plan 3 elected officials covered under (a) of this subsection, ((Plan II members who were)) if you are elected to office or appointed by the governor to a position((s)) prior to September 1, 1991, you may receive service credit only for months during which ((they)) you are compensated:

     (i) In excess of ninety times the state hourly minimum wage in effect at the time ((they render)) you provide the service; and

     (ii) For ninety or more total hours of work.

     (c) On or after September 1, 1991, except for Plan ((II)) 2 or Plan 3 elected officials covered under (a) of this subsection, ((Plan II members who)) if you were elected to office or appointed by the governor to a position((s)), you may earn:

     (i) One month of service credit for each month during which ((they)) you are compensated:

     (A) For ninety or more total hours of work; and

     (B) In excess of ninety times the state hourly minimum wage in effect at the time ((they render)) you provide the service; or

     (ii) One-half month of service credit for each month during which ((they)) you are compensated:

     (A) For less than ninety hours but equal to or more than seventy total hours of work; and

     (B) In excess of ninety times the state hourly minimum wage in effect at the time ((they render)) you provide the service; or

     (iii) One-quarter month of service credit for each month during which ((they)) you are compensated:

     (A) For less than seventy total hours of work; and

     (B) In excess of ninety times the state hourly minimum wage in effect at the time ((they render)) you provide the service.

     (3) This section codifies the department's long-standing administrative practice in relation to elected and appointed officials. The department will apply this section to service by elected and appointed officials which occurred prior to the effective date of this section.

[Statutory Authority: RCW 41.50.050. 94-12-014, § 415-108-570, filed 5/23/94, effective 6/23/94.]


AMENDATORY SECTION(Amending WSR 93-11-077, filed 5/18/93, effective 6/18/93)

WAC 415-108-640   Effect of meeting union verification requirements.   (1) Plan ((I)) 1 union employer status applies only to the level of union organization that meets the requirements of WAC 415-108-620(1). Therefore, if only a single union lodge of a union with multiple lodges has been verified to meet the requirements of WAC 415-108-620(1), only that union lodge is a Plan ((I)) 1 union employer.

     (2) ((Plan I union employers employing persons who have previously established Plan I membership must report those persons for participation in the retirement system if those persons opt into membership under RCW 41.40.023.)) Plan 1 members who are employed by union employers shall have an irrevocable option to reenter membership. You lose this option if you do not reenter PERS Plan 1 when you begin working in an eligible position with the union employer. The union employer must notify you, as its new employee, of the option to reenter Plan 1. Failure of the union employer to notify you shall not prevent your loss of the right to participate in Plan 1 under this section. Union employers and their Plan 1 employees who choose to reenter membership will be subject to the same statutory and regulatory requirements as other Plan 1 nonstate agency employers and employees.

     (3) ((Plan I members who are employed by union employers shall have an irrevocable election to reenter membership. If this option is not exercised when the employee first enters an eligible position with the union employer, it is waived. The union employer has the duty to notify new employees of the option to enter Plan I. Failure of the union employer to provide notification shall not obviate a person's waiver of the right to participate in Plan I under this section. Union employers and their Plan I employees who opt into membership will be subject to the same statutory and regulatory requirements as other Plan I nonstate agency employers and employees.)) Plan 1 union employers employing persons who have previously established Plan 1 membership must report you for participation in the retirement system if you choose to reenter membership under RCW 41.40.023.

     (4) Union employers shall ((elicit)) have all new employees state on a written form ((from all new employees)) whether ((the employee has)) they have ever been a Plan ((I)) 1 member.

     (5) ((A union employer may not report employees for participation in Plan II.

     (6)))(a) Upon first establishing union employer status the union must pay the ((prior service liability)) required retroactive contributions and interest as determined by the department under RCW 41.40.363 or ((41.40.045)) 41.40.057, as applicable for union elective officials and employees who ((opt into membership)) choose to become a member under RCW 41.40.023 and are eligible for Plan ((I)) 1.

     (b) If employer and employee contributions have been ((erroneously)) submitted in error and the union subsequently establishes retroactive union employer status for the period in question, the contributions on deposit with the retirement system will be considered ((ratified)) valid to the extent that the periods of erroneous contributions coincide with periods for which the union has established union employer status.

     (((7))) (6) Notwithstanding any provisions of WAC 415-108-620 Plan ((I)) 1 retirees who enter into employment with a union employer in an eligible position are subject to the provisions of RCW 41.40.150 (5)(a).

     (7) A union employer may not report employees for participation in Plan 2 or Plan 3.

[Statutory Authority: RCW 41.50.050(5) and 41.40.010 (4)(a). 93-11-077, § 415-108-640, filed 5/18/93, effective 6/18/93.]


AMENDATORY SECTION(Amending WSR 95-16-053, filed 7/25/95, effective 8/25/95)

WAC 415-108-690   How is my membership eligibility evaluated?   (1) Your eligibility to participate as a member of PERS is based on your position.

     In evaluating whether your position is eligible for membership, your employer will determine only whether the position meets the criteria of an eligible position under RCW 41.40.010(25) and WAC 415-108-680(1). Your employer will not consider your membership status or individual circumstances unless you:

     (a) Leave employment in an eligible position to serve in a project position (See WAC 415-108-680(2)); or

     (b) Work in both a PERS and TRS position during the same school year (See WAC 415-108-728).

     (2) Your employer will evaluate your position's eligibility for a particular year at the beginning of the year. This is normally a calendar year unless your employer has determined and supports a different twelve-month period for its year.

     (3) Your employer or the department may reclassify your position's eligibility based upon your actual work history. If your employer declares your position to be ineligible at the beginning of a year and by the end of the year, you have actually worked five or more months of seventy or more hours, your employer will, at that time, review your position's eligibility. If at the end of the first year:

     (a) Your employer believes your position meets the requirements for an eligible position and declares the position as eligible, you will enter membership and your employer will report you to the department effective from the date your employer declares the position as eligible; or

     (b) Your employer believes that the position will not meet the criteria for an eligible position during the next year, your employer may continue to define your position as ineligible. However, if during the next year the position actually requires you to again work seventy or more hours each month for at least five months, the department will declare your position as eligible. You will enter membership in the retirement system.

     (i) Except as provided in (b)(ii) of this subsection, your employer will report you to the department effective from the first month of the first year in which your position required you to work for seventy or more hours.

     (ii) If:

     (A) Your employer has monitored the work history of your position for PERS eligibility;

     (B) Has notified you in writing when you entered the position that the position was not considered eligible; and

     (C) The months of employment in a twelve-month period required by the position are determined by the occurrence or nonoccurrence of natural disasters such as forest fires;

You will enter membership prospectively.

     (4) The department will not reclassify your position's eligibility until history of the position shows that it meets the criteria for an eligible or ineligible position.

     (a) If your employer has declared your position ineligible, the department will not reclassify your position as eligible until history of the position shows a period of two consecutive years of at least five months of seventy or more hours of compensated employment each month.

     (b) If your employer has declared your position ineligible, the position must continue to fail to meet the requirements of an eligible position or reclassification of your position will occur as stated in subsection (3)(b) of this section.

     (5) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.40.010.

     (b) "Employer" - RCW 41.40.010.

     (c) "Ineligible position" - RCW 41.40.010.

     (d) "Membership" - RCW 41.40.023.

     (e) "Project position" - WAC ((415-108-0103)) 415-108-010.

     (f) "Report" - WAC ((415-108-0104)) 415-108-010.

     (g) "Year" - WAC ((415-108-0108)) 415-108-010.

[Statutory Authority: RCW 41.50.050. 95-16-053, § 415-108-690, filed 7/25/95, effective 8/25/95.]


AMENDATORY SECTION(Amending WSR 95-16-053, filed 7/25/95, effective 8/25/95)

WAC 415-108-720   Participation -- Can I be excluded from participating in membership even if I am employed in an eligible position?   (1) You may be exempt from participating in membership even if you meet eligibility criteria. Even if you are employed in an eligible position you are exempt from participating in PERS if your individual circumstances qualify you for one of the exceptions to membership under RCW 41.40.023.

     (2) If you work for a PERS employer after you retire, you are subject to post-retirement employment restrictions even if you are excluded from participating in membership. If you become employed in an eligible position after you retire, you are subject to the post-retirement employment restrictions under RCW 41.40.150, 41.40.690, and ((41.40.690)) 41.40.850 even if you are excluded from membership.

     (3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.40.010.

     (b) "Employer" - RCW 41.40.010.

     (c) "Ineligible position" - RCW 41.40.010.

     (d) "Membership" - RCW 41.40.023.

[Statutory Authority: RCW 41.50.050. 95-16-053, § 415-108-720, filed 7/25/95, effective 8/25/95.]


AMENDATORY SECTION(Amending WSR 97-19-035, filed 9/9/97, effective 9/9/97)

WAC 415-108-830   Actuarial recomputation of a Plan 2 or Plan 3 retirement allowance upon retirement following reemployment.   (1) ((The purpose of)) This rule ((is to)) establishes a method to actuarially recompute the retirement allowance of a Plan ((II)) 2 or Plan 3 member who retires, reenters employment causing ((his or her)) the retirement allowance to be suspended, and then retires again. The actuarially recomputed retirement allowance shall:

     (a) Include service credit the member earned following reestablishment of membership if any; and

     (b) Account for the actuarial reduction applied to the member's initial retirement if the member initially retired prior to age sixty-five.

     (2) If a Plan ((II)) 2 or Plan 3 retiree reenters membership, upon the individual's next retirement, the department shall reinstate and actuarially recompute the individual's retirement allowance pursuant to RCW 41.40.690 as follows:

     (a) If the member first retired before age sixty-five, the department shall:

     (i) Calculate the retirement allowance pursuant to RCW 41.40.620 using the retiree's total years of career service, including service earned prior to initial retirement and service earned after reentering membership;

     (ii) Actuarially reduce the member's retirement allowance based on the present value of the retirement allowance payments the individual received during the initial retirement; and

     (iii) Calculate any survivor option selected by the retiree based upon the monthly retirement allowance calculated pursuant to (a)(i) and (ii) of this subsection.

     (b) If the member initially retired at or after age sixty-five, the department shall recompute the member's retirement allowance pursuant to RCW 41.40.620 and include any additional service credit earned and any applicable increase in the member's average final compensation resulting from the member's reentry into membership. Under no circumstances shall a retiree receive a retirement allowance creditable to a month during which that individual earned service credit.

     (3) If a Plan 2 or Plan 3 retiree's retirement allowance is suspended under RCW 41.40.690 or RCW 41.40.850 due to reemployment but the retiree does not reenter membership, upon the retiree's separation from such employment, the retiree shall receive an actuarially recomputed retirement allowance equal to the sum of:

     (a) The amount of the monthly suspended retirement allowance; plus

     (b) An actuarially computed increase based upon the retirement allowance payments the member did not receive due to reemployment. The retiree may elect to receive the actuarially computed increase in either:

     (i) An amount amortized over the expected term of the recomputed retirement allowance; or

     (ii) A lump sum payment equal to the suspended retirement allowance plus interest.

[Recodified as § 415-108-830. 97-19-035, filed 9/9/97, effective 9/9/97. Statutory Authority: RCW 41.50.050. 94-09-040, § 415-108-580, filed 4/19/94, effective 5/20/94.]

OTS-5243.1


NEW SECTION
WAC 415-108-727   Can I transfer service credit earned as a cadet in the public employees' retirement system to the Washington state patrol retirement system?   (1) A Plan 1 or Plan 2 member may transfer cadet service under RCW 41.40.092.

     (2) A person who becomes a PERS Plan 3 member cannot transfer service credit earned as a cadet in PERS, regardless of when the credit was earned.

[]

OTS-5244.1


NEW SECTION

WAC 415-108-815   What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?   (1) The minimum dollar limit under RCW 41.40.815 for determining if a lump sum payment may be received instead of a monthly benefit is increased to $119.41 as of March 1, 2002.

     (2) The limit established in subsection (1) of this section will be increased each January 1st by three percent beginning January 1, 2003.

[]

OTS-5247.1


NEW SECTION

WAC 415-110-815   What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?   (1) The minimum dollar limit under RCW 41.35.670 for determining if a lump sum payment may be received instead of a monthly benefit is increased to $119.41 as of March 1, 2002.

     (2) The limit established in subsection (1) of this section will be increased each January 1st by three percent beginning January 1, 2003.

[]

OTS-5227.2


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-110-910   Conversion of service from PERS to SERS.   (1) You will be converted from ((PERS to SERS)) the public employees' retirement system (PERS) to the school employees' retirement system (SERS) if:

     (a) You were employed with a school district or educational service district in an eligible position as of September 1, 2000;

     (b) You participated and then separated in PERS prior to September 1, 2000, and became reemployed in an eligible position at a school district or educational service district after September 1, 2000;

     (c) You are a participating member in PERS and move to a SERS employer after September 1, 2000;

     (d) You retired out of PERS Plan 2 and:

     (i) Returned to PERS covered employment and became an active PERS ((membership)) member; and

     (ii) Were a member as of September 1, 2000, at a school district or educational service district; or

     (((d))) (e) You retired out of PERS Plan 2 and:

     (i) Returned to PERS covered employment and became an active PERS ((membership)) member;

     (ii) Separated from your PERS position; and

     (iii) Become employed in an eligible SERS position prior to applying for reretirement in PERS.

     (2) What happens to my existing PERS service and account history when I am converted from PERS to SERS membership? All of your PERS service and account history with any PERS employer will be moved to SERS.

     (3) How many times will my PERS service be moved to SERS? Your PERS service shall be moved to SERS only once pursuant to subsection (1) of this section. After you have been converted from PERS to SERS, subsequent reenrollment(s) into SERS shall not cause any additional conversions of any PERS service. Any future eligible employment in PERS shall be reported into PERS and any future eligible employment in SERS shall be reported into SERS.


Example: Employed in PERS prior to conversion. Joe has 15 years of service in PERS. He has been employed by a school district for the last 5 years. Joe previously was employed by a county for 10 years.
Conversion from PERS to SERS. Since Joe is employed with the school district on September 1, 2000, his PERS service is moved to SERS service. Both his 5 years of service with the school district and his 10 years of service with the county are moved to SERS. Joe's PERS account now has zero service credit and contributions; Joe's SERS account now has 15 years of service credit and contributions.
Return to PERS service. After another year of service with the school district, Joe separates employment with 16 years of credit in SERS and returns to employment with the county. Joe's 16 years of service remains in SERS and he begins to accrue service in PERS, starting from zero, for his new employment with the county.
Return to SERS employment. Joe works for the county for 5 years. He now has 5 years of service credit in PERS and he still has 16 years of service credit in SERS. Joe separates employment from the county and goes back to work in a SERS covered position with an educational service district. Joe's PERS employer will stop reporting him and the educational service district will begin reporting Joe into SERS. He will begin accumulating service in SERS starting at 16 years. The 5 years of service that Joe rendered at the county stays in PERS.

     (4) If I am a PERS Plan 2 retiree and become employed in an eligible SERS position, will my service be converted from PERS to SERS? Except as allowed in subsection (1)(((c))) (d) and (((d))) (e) of this section, a PERS Plan 2 retiree will not have any of ((their)) his or her service, account or retirement history converted to SERS.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-110-910, filed 12/12/00, effective 1/12/01.]

OTS-4926.1


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-111-100   ((Application of chapter.)) To whom does this chapter apply?   This chapter applies only to members of Plan 3 retirement systems created under chapters 41.32 (TRS) ((and)), 41.35 (SERS) and 41.40 (PERS) RCW.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-111-100, filed 12/12/00, effective 1/12/01.]

OTS-5189.2


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-111-110   Member and employer responsibility.   (1) What am I responsible for as a Plan 3 member? As a Plan 3 member your responsibilities include, but are not limited to:

     (a) Adhering to ((published)) time frames;

     (b) Making investment decisions for your defined contribution account;

     (c) Reviewing account information provided on statements, such as quarterly statements, and notifying the correct organization of any errors;

     (d) Filling out the correct form for a requested action;

     (e) Correctly completing the appropriate form for a requested action and submitting the form to the correct organization as directed on each form; and

     (f) Monitoring to ensure contributions do not exceed Internal Revenue Code limits (see WAC 415-111-111).

     (2) What can happen if I do not fulfill my Plan 3 responsibilities? If you do not fulfill your responsibilities, the consequences may include, but are not limited to:

     (a) You may not qualify for certain benefits, such as the transfer payment;

     (b) You may have a delay in the correction of errors on your account;

     (c) You may have a delay in the processing of your request for a defined contribution withdrawal; or

     (d) You may have a delay in the investment of your account as directed.

     (3) What responsibilities do employers have? Employers' responsibilities include, but are not limited to:

     (a) Adhering to Plan 3 administrative requirements, including the respective roles of employers and employees, communicated to employers by the department in written materials and formal training((.));

     (b) Maintaining a supply of Plan 3 forms;

     (c) ((Submitting contributions to the department as soon as possible and at least in accordance with chapter 41.50 RCW;

     (d))) Reporting an employee's Plan 3 transfer ((election)) decision as soon as possible after receipt of the appropriate form from the employee;

     (((e))) (d) Submitting to DRS the form on which the member made ((their)) the Plan 3 transfer ((election)) decision as soon as possible after receipt of the appropriate form;

     (((f))) (e) Reporting an employee's contribution rate ((election)) decision as soon as possible after receipt of the appropriate form from the employee;

     (((g))) (f) Reporting an employee's investment program ((election)) as soon as possible after receipt of the appropriate form from the employee; ((and

     (h))) (g) Monitoring to ensure that a member's contributions do not exceed Internal Revenue Code limits (see WAC 415-111-111); and

     (h) Submitting contributions to the department as soon as reasonable and at least in accordance with RCW 41.50.120, "reasonableness" will be based on the facts and circumstances.


     Example


     Assume the following:

     &sqbul; An employer has one payroll system;

     &sqbul; Payroll checks are issued semimonthly;

     &sqbul; At the same time checks are cut, the payroll department produces a data tape of employee contributions that has to be checked for accuracy, and checking the tape takes four days;

     &sqbul; Once the accuracy of the data tape is confirmed, a check for the aggregate amount of employee contributions is sent by the employer to DRS; and

     &sqbul; The entire process, from the cutting of payroll checks to the cutting of the aggregate employee contribution check takes eight days.

     In this situation, eight days is a "reasonable" period of time.

     (4) What can happen if my employer does not fulfill ((their)) its responsibilities?

     (a) If your employer does not fulfill ((their)) its responsibilities, the consequences may include, but are not limited to:

     (((a))) (i) Your employer may have to make your member account whole;

     (((b))) (ii) Your employer may be subject to penalties assessed by the department; or

     (((c))) (iii) Your employer may be subject to penalties assessed by the Internal Revenue Service.

     (b) If the department determines that an employer has erred in its administrative role, such that an employee incurs an investment loss, the department will determine the amount of loss and bill the employer.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-111-110, filed 12/12/00, effective 1/12/01.]

OTS-5245.2


NEW SECTION

WAC 415-111-400   Optional service credit purchase rules.   (1) Statutory deadline dates.

     (a) When you are purchasing service credit available from participation as a former member of Plan 2, you will be subject to the statutory deadline date as if you were in Plan 2. The transfer of membership from Plan 2 to Plan 3 will not change a statutory deadline date for purchasing service credit while you were a member of Plan 2.

     (b) When you are a Plan 3 member purchasing Plan 3 service credit, you are not subject to a statutory deadline date.

     (2) Interest on purchase cost. When purchasing service credit as a Plan 3 member, you will not be required to pay interest on member contributions. When paying employer contributions, you will be required to pay interest on those contributions.

     (3) Allocation of purchase money.

     (a) Member contributions will be applied to your defined contribution account when paid. Paid member contributions are not refundable, except as a withdrawal of defined contributions under RCW 41.34.070 and WAC 415-111-310.

     (b) Employer contributions and interest on employer contributions that you pay will be allocated to the fund described in RCW 41.50.075(3) and shall not be refundable.

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OTS-5338.2


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-111-310   Defined contribution ((withdrawal)) account distribution (withdrawal).   (1) How do I ((withdraw)) receive a distribution (withdrawal) of funds from my defined contribution account? Except as otherwise allowed by RCW 41.34.070, ((you must meet the following criteria to withdraw)) before you can receive a distribution of funds from your defined contribution account:

     (a) You must separate from all eligible employment;

     (b) The department must receive the notice of separation ((must be received by the department)) from your employer(s) through the retirement transmittal system; and

     (c) You must submit the appropriate, completed form ((for)) requesting a defined contribution ((withdrawal. Pursuant to WAC 415-111-110, you bear the responsibility for completing and submitting the form)) distribution to the department's designated recordkeeper as directed on the form. See WAC 415-111-110.

     (2) Can I still receive my defined contribution ((withdrawal)) distribution if I ((return)) have returned to work before receiving my ((withdrawal)) funds? If you ((have made a request for payment and meet all of the criteria in subsection (1) of this section, you may)) return to work in an eligible position ((and still take payment of the requested defined contribution withdrawal)) after all the criteria in subsection (1) of this section are met, you may receive distribution from your defined contribution account.

     (3) What are my options for distributing my defined contribution funds? You have the following options for distributions from your Plan 3 defined contribution account. Options for both the WSIB and the SELF-directed investment programs are combined where applicable.

     (a) Lump sum cash distribution. In either program, you may request the entire amount of your funds in a single lump-sum payment.

     (b) Direct rollover. In either program, you may have some or all of your funds rolled over to an eligible retirement plan or individual retirement account (IRA). If you choose a partial rollover, the remaining funds that were not rolled over will be distributed to you as a lump sum, unless you create a personal payment schedule under (d) of this subsection.

     (c) Scheduled payments. In either program, subject to the distribution requirements of IRC section 401 (a)(9), you may request that your funds be distributed in equal payments over a specified period of time, or that a specific dollar amount be paid on a monthly basis until the account is exhausted. You may also request equal payments over your lifetime or the lifetimes of you and your beneficiary. Scheduled payments for the WSIB program are made monthly only. Scheduled payments for the SELF-directed program are made monthly, quarterly, semi-annually and annually. Both programs have a minimum payment requirement of one hundred dollars per month.

     (d) Personalized payment plan. In either program, you may create a personalized payment plan using any part of one or more of the distribution options provided in (a), (b), and (c) of this subsection (see examples below).

     (e) Annuity purchase. For the SELF-directed program only, you may request to have your funds used to purchase an annuity from an insurance company which pays a benefit for your lifetime or the lifetimes of you and your beneficiary.

     (4) Market fluctuations. Your defined contribution account is subject to actual investment earnings (both gains and losses). These gains or losses will be used to adjust the value of your account. The defined contribution payment plans are subject to the same market fluctuations. As a result, the funding of your selected payment plan may last longer than anticipated due to market gains, or end earlier than anticipated due to market losses.

     EXAMPLE (WSIB - Partial rollover with payments until account exhausted):

     Pat has $10,000 in the WSIB investment program. Pat wants to rollover $2,000 of the total to an IRA, but does not want to receive the remainder of the account in a lump sum payment as provided by the partial direct rollover option. Pat selects the personalized payment schedule option and requests to do a partial rollover of $2,000 and receive the remaining $8,000 in equal monthly payments until the account is exhausted.

     EXAMPLE (Self - Partial rollover with payments for fixed period):

     Chris has $10,000 in the self-directed investment program. Chris wants to rollover $3,000 of the total to an IRA, but does not want to receive the remainder of the account in a lump sum payment as provided by the partial direct rollover option. Chris selects the personalized payment schedule option and requests to do a partial rollover of $3,000 and receive the remaining $7,000 in quarterly payments of $250 over the next 7 years (28 quarters).


Summary of Distribution Options
SELF WSIB
Lump Sum Cash Distribution Direct Rollover Lump Sum Cash Distribution Direct Rollover
-entire account -entire account
-partial amount -partial amount
-remaining funds can be distributed in a lump-sum payment or by a personalized payment schedule (see below). -remaining funds can be distributed in a lump-sum payment or by a personalized payment schedule (see below).
Scheduled Payments Scheduled Payments
-equal payments -equal payments
-monthly, quarterly, semi-annual or annual -monthly payments only
-specified period of time, or -specified period of time, or
-until the account is exhausted -until the account is exhausted
-payments can be combined life expectancy of you and a beneficiary. -payments can be combined life expectancy of you and a beneficiary.
Annuity Purchase Not available for WSIB program
-purchase an annuity from an insurance company
-set up to pay benefits for
-your lifetime, or
-lifetimes of you and your beneficiary
In addition to the above, you may set up: In addition to the above, you may set up:
Personalized Payment Plan Personalized Payment Plan
-customized for your needs -customized for your needs
-available for options above. -available for options above.

     (5) Minimum required distribution. Beginning on April 1 of the calendar year following the year in which you turn age 70 1/2, you are required to withdraw a minimum amount from your defined contributions annually. If you are still working at age 70 1/2, distribution will be required to begin immediately upon retirement.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-111-310, filed 12/12/00, effective 1/12/01.]


NEW SECTION
WAC 415-111-440   Gainsharing.   (1) What is gainsharing?

     (a) When the average of investment returns on the net assets held in the Plan 2 and 3 pension funds exceeds ten percent over a four-year period, the amount in excess of ten percent is called extraordinary gains.

     (b) A portion of the extraordinary gains is paid to qualified Plan 3 members, retirees and designated survivors and is called gainsharing. The amount a person receives is calculated based on total service credit.

     (c) Gainsharing payments are made in January of even-numbered years.

     (d) Gainsharing is based on fiscal years (July 1 - June 30). If the retirement fund does not earn in excess of ten percent over the four-year period, there is no gainsharing payment.

     (e) A gainsharing payment is credited to an investment program according to the investment allocations that you have on file. Gainsharing payments appear on your first quarter statement in even-numbered years.

     (2) Are my survivors eligible for my gainshare payments if I die?

     (a) If you die in-service and your surviving spouse or eligible child or children choose to receive a monthly retirement allowance, they will be eligible to receive gainsharing payments. If you do not have a surviving spouse or minor child or children, your account will no longer receive gainsharing payments.

     (b) If you die as the beneficiary receiving a survivorship benefit from a death-in-service member with gainsharing payments, your gainsharing payments will continue to your minor child or children until they reach the age of majority or die. If you do not have any minor children, your account will no longer receive gainsharing payments.

     (c) If you die after retirement and you chose a survivorship benefit, the gainsharing payment will continue to your survivor. If you did not choose a survivorship benefit, your account will no longer receive gainsharing payments.

     (3) What happens if I die before the first payment is made? If you have qualified for a gainsharing payment, but die prior to the payment being made, the payment will be paid to your estate, or the person or persons, trust, or organization you nominated by the most recent written designation filed with the department.

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NEW SECTION
WAC 415-111-450   How does a court-ordered division of property affect my Plan 3 account?   (1) The department will honor orders that provide for a property division of your retirement benefit only if the order:

     (a) Is entered by a court of competent jurisdiction;

     (b) Is filed with the department within ninety days of the order's entry by the court;

     (c) Establishes the right of a separated or former spouse to a portion of your retirement benefit;

     (d) Provides the name, address, date of birth, and Social Security number of the separated or former spouse; and

     (e) Incorporates the following statutory language in RCW 41.50.670(2) in which the first paragraph pertains to your defined benefit account and the second paragraph pertains to your defined contribution account (emphasis added):

     If . . . . . . (the obligor) receives periodic retirement payments as defined in RCW 41.50.500, the department of retirement systems shall pay to . . . . . . (the obligee) . . . . . . dollars from such payments or . . . . . . percent of such payments. If the obligor's debt is expressed as a percentage of his or her periodic retirement payment and the obligee does not have a survivorship interest in the obligor's benefit, the amount received by the obligee shall be the percentage of the periodic retirement payment that the obligor would have received had he or she selected a standard allowance.

     If . . . . . . . . (the obligor) requests or has requested a withdrawal of accumulated contributions as defined in RCW 41.50.500, or becomes eligible for a lump sum death benefit, the department of retirement systems shall pay to . . . . . . . . (the obligee) . . . . . . . . dollars plus interest at the rate paid by the department of retirement systems on member contributions. Such interest to accrue from the date of this order's entry with the court of record.

     (2) Periodic retirement payments under RCW 41.50.670(2) (paragraph 1). If the property division order requires the department to pay a portion of your "periodic retirement payments" to your separated or former spouse, the department will pay the required portion (if any) out of your periodic defined benefit payments.

     (a) If you die before periodic retirement payments begin, the department's obligation to pay a portion of your periodic payments to your separated or former spouse ceases.

     (b) If your separated or former spouse dies before your periodic retirement payments begin, the department will pay you the full amount of your periodic retirement allowance.

     (3) Distribution (withdrawal) of accumulated contributions or lump sum death benefit under RCW 41.50.670(2) (paragraph 2). If the property division order requires the department to pay a portion of a distribution of "accumulated contributions" or a portion of a "lump sum death benefit" to your spouse or former spouse, the department will pay the required portion (if any) out of your defined contribution member account, subject to the provisions in this rule.

     (4) Provisions for management of accounts:

     (a) When the property division order is filed with the department, the department will create a separate account and transfer the amount specified in the order from your defined contribution member account into the new account.

     (b) Your separated or former spouse assumes the responsibility to manage the separate account, consistent with the requirements in subsection (6) of this section, but may not contribute to the account.

     (c) You retain the responsibility to manage the funds remaining in your defined contribution account, and may continue to contribute to the account.

     (d) If your separated or former spouse dies before you request a distribution, the money in the separate account will be transferred back into your defined contribution account.

     (5) Distribution provisions.

     (a) When you request a distribution from your defined contribution account:

     (i) The money in your defined contribution account will be disbursed to you pursuant to your distribution choice.

     (ii) Your separated or former spouse (if living) must begin distribution(s) from the separate account pursuant to the distribution options in WAC 415-111-310. (However, if your separated or former spouse has died prior to your request for distribution, the money in the separate account will have been transferred back into your defined contribution account under subsection (4)(d).)

     (iii) If you die before the money in your defined contribution account is fully disbursed, the balance of the account will be paid to your designated beneficiary(ies).

     (iv) If your separated or former spouse dies before the money in the separate account is fully disbursed, the balance of the separate account will be paid to the beneficiary(ies) designated by your separated or former spouse for the separate account.

     (b) If you die before receiving a distribution from your defined contribution account:

     (i) Your beneficiary(ies) must apply for the lump sum death benefit from your defined contribution account; and

     (ii) The money in your defined contribution account must be paid to at least one of your designated beneficiary(ies); then

     (iii) Your separated or former spouse (if living) must begin distribution(s) from the separate account pursuant to the distribution options in WAC 415-111-310. (However, if your separated or former spouse has predeceased you, the money in the separate account will have been transferred back into your defined contribution account under subsection (4)(d).)

     (6) In managing the separate account pursuant to subsection (4)(b) of this section, your separated or former spouse may:

     (a) Transfer money between investment programs (state-managed or self-directed); and

     (b) Transfer money among the investment options in the self-directed program (SELF).

     (7) If you and your former spouse filed a property division order with the department while you were a member of Plan 2 and you later transfer to Plan 3, at the time of your transfer, the department will create a separate account. The department will comply with the property division order as provided in this rule.

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OTS-5246.1


NEW SECTION

WAC 415-111-410   Submitting a beneficiary designation for Plan 3 members.   (1) You may designate or change a beneficiary for your defined contribution account at any time. When received by the department, the most recent beneficiary designation supercedes all prior beneficiaries and will be used for your Plan 3 defined contribution account.

     (2) If you designate a beneficiary as a Plan 2 member and move to Plan 3, the Plan 2 beneficiary designation will be used as your Plan 3 defined contribution account beneficiary.

     (3) The beneficiary you designate for your defined contribution account can be different from the beneficiary you designate when you apply for your defined benefit retirement.

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OTS-5229.3


AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-250   Can I receive service credit ((allowed)) for leave with pay((.))?   ((If a)) (1) Plan ((I member is)) 1 members: If you are otherwise eligible, you will receive service credit ((shall be allowed)) for any time ((subsequent to)) on or after July 1, 1960, during which ((a member is)) you were on official leave from ((his)) your position, provided ((he is still)) that you were listed as employed by ((his)) your employer and ((is)) were receiving compensation for the time of ((his)) your leave.

     (2) Plan ((II)) 2 members: You may receive ((such)) service credit in accordance with ((chapter 295, Laws of 1977 ex. sess. as now or hereafter amended)) RCW 41.32.810(1).

     (3) Plan 3 members: You may receive service credit in accordance with RCW 41.32.865(1).

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), § 415-112-250, filed 2/15/78. Formerly WAC 462-20-030.]


AMENDATORY SECTION(Amending WSR 99-14-008, filed 6/24/99, effective 7/25/99)

WAC 415-112-400   ((Salary deductions required by employer.)) When does the employer deduct salary for retirement contributions?   If the teacher or member is entitled to have salary deducted for retirement contributions, the employer must make the deductions when the teacher or member starts work.

     (1) Plan 1.

     (a) The employer must deduct salary for retirement contributions for a teacher who has not been a member if:

     (i) ((They are)) The teacher is employed full time (at least four-fifths of a school day or full time assignment); and

     (ii) ((Their)) The teacher's employment contract calls for at least ninety days of employment in a school year.

     (b) The employer must also deduct the salary of each teacher who is a member employed full time if their employment contract calls for at least twenty days of employment in a school year.

     (c) If a teacher who is not a member is employed for less than ninety days in a school year, ((they)) the teacher will fail to establish membership. The employer must refund ((their)) the teacher's salary deductions for retirement when ((they)) he or she terminates employment as a teacher. The ((nonmember)) member must file a refund application with the department before ((they)) he or she can receive the refund.

     (d) If a member is employed by an employer for less than twenty days in a school year, the employer must refund all salary deductions for retirement based on service during that year at the time the member terminates for the year. The ((nonmember)) member must file a refund application with the department before ((they)) he or she can receive the refund.

     (2) Plan 2 and Plan 3((.

     (a))): The employer must deduct ((salary for retirement)) contributions for a teacher if((:

     (i) They work at least eight hundred ten hours for nine or more months between September and August of the following year; and

     (ii) Their employment contract calls for at least ninety days of employment in a school year.

     (b) If a teacher who is not a member is employed for less than ninety days in a school year, they will fail to establish membership. The employer must refund their salary deductions for retirement when they terminate employment as a teacher. The nonmember must file a refund application with the department before they can receive the refund)) the teacher is employed in an eligible position.

[Statutory Authority: RCW 41.50.050. 99-14-008, § 415-112-400, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 41.50.050(6). 79-10-024 (Order 79-02), § 415-112-400, filed 9/10/79. Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), § 415-112-400, filed 2/15/78. Formerly WAC 462-24-010.]


AMENDATORY SECTION(Amending WSR 95-22-006, filed 10/18/95, effective 11/18/95)

WAC 415-112-412   ((Nonmoney maintenance compensation.)) Are nonmoney payments from my employer ((in any form other than money)) considered compensation earnable?   (1) TRS Plan ((I)) 1 members((.)):

     (a) If your employer provides you with materials in lieu of reimbursement for your business expenses, the value of the materials is not earnable compensation.

     (i) The value of employer-provided materials is not earnable compensation if you use the materials solely in connection with your employer's business.

     (ii) "Materials" includes, but is not limited to, living quarters, food, board, equipment, clothing, laundry, transportation, fuel, and utilities:


Example: An employer provides an employee with uniforms which the employee must wear in performing services for his employer. Because the uniforms are to be used solely in connection with the employer's business, they do not qualify as nonmoney maintenance compensation. Therefore, the value of the uniforms is not earnable compensation.

     (b) The department presumes that your employer provides you materials solely in lieu of reimbursement for business expenses. Unless you or your employer can show by corroborating evidence that your employer provided you materials in whole or in part as payment for your personal expenses, as opposed to business expenses, the value of the materials is not earnable compensation.

     (c) If your employer provides you with materials for your personal use, the value of that use is nonmoney maintenance compensation and is included in your earnable compensation.

     (i) "Nonmoney maintenance compensation" means the fair market value of materials legally ((furnished)) provided by your employer to you or your dependents for personal use.

     (ii) Nonmoney maintenance compensation does not include any form of compensation other than cash that is excludable from taxation under provisions of the Internal Revenue Code. This applies regardless of whether you or your employer reported the compensation to the Internal Revenue Service as taxable income.

     (d) Your use of employer-provided materials will qualify as nonmoney maintenance compensation if your employer substantiates that they were provided to you as payment for personal services. In order for employer-provided materials to qualify as nonmoney maintenance compensation, your employer must:

     (i) Establish and regularly update a written schedule reflecting the monthly fair market value of each item of employer-provided materials claimed as nonmoney maintenance compensation. Typically, the fair market value would be the cost of the item if it were acquired in a purchase or lease transaction;

     (ii) Report the fair market value of employer-provided materials as nonmoney maintenance compensation to the department as earnable compensation. If you pay any amount to your employer in order to own or use the materials, your employer must report as earnable compensation the amount by which the fair market value of the materials exceeds the amount of your payment;

     (iii) Substantiate by adequate records, or by other sufficient corroborating evidence the following:

     (A) That the fair market value of each item of nonmoney maintenance compensation as reported to the department is accurate;

     (B) That each item of nonmoney maintenance compensation is provided to you for your personal use as payment for your services to the employer; and

     (C) That each item of nonmoney maintenance compensation is includable in your taxable income for federal income tax purposes.


Example: An employer leases an apartment for $700.00 per month. The employer charges an employee $300.00 per month to use the apartment for temporary living quarters. Because the employee uses the apartment for personal, rather than business, purposes, the amount by which the lease value exceeds the employee's payment is nonmoney maintenance compensation. The employer must report $400.00 per month to the department as earnable compensation for the employee.

     (e) How to corroborate that your use of employer-provided materials qualifies as nonmoney maintenance compensation. In addition to the records required under (d) of this subsection, you may provide the department with any ((oral or written)) evidence which you or your employer believe ((corroborates)) confirms that your use of employer-provided materials qualifies as earnable compensation. However, ((oral)) verbal evidence alone has considerably less value than written evidence. Written evidence prepared at or near the time your employer provides you with the item of compensation is generally much stronger than ((oral)) verbal evidence or written evidence created years later.

     (2) TRS Plan ((II)) 2 and Plan 3 members. If you are a TRS Plan ((II)) 2 or Plan 3 member, you are not entitled to count the value of any nonmoney maintenance compensation you receive from your employer as earnable compensation.

[Statutory Authority: RCW 41.50.050. 95-22-006, § 415-112-412, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.32.010(11) and 41.32.160. 87-17-060 (Order DRS 87-07), § 415-112-412, filed 8/19/87.]


AMENDATORY SECTION(Amending WSR 95-22-006, filed 10/18/95, effective 11/18/95)

WAC 415-112-413   Vehicles -- Does the value of my use of an employer vehicle qualify as earnable compensation?   (1) TRS Plan ((I)) 1 members:

     (((a) If you use an employer vehicle solely in connection with your employer's business, your use of the vehicle does not qualify as earnable compensation. Use of an employer-provided vehicle only qualifies as earnable compensation to the extent that you use it for personal, rather than business, purposes. Your use of an employer vehicle does not qualify as earnable compensation if:

     (i) You use the vehicle solely in connection with your employer's business; or

     (ii) Your employer has an established policy prohibiting you from using the vehicle for any purpose other than in connection with your employer's business.

     (b) The department presumes that any employer-provided vehicle is used solely in connection with your employer's business and does not qualify as earnable compensation.

     (c) A portion of your use of an employer-provided vehicle may qualify as earnable compensation. In order for any portion of your use of an employer vehicle to qualify as earnable compensation, your employer must either:

     (i) Report your personal use of the vehicle to the Internal Revenue Service (IRS) as income; or

     (ii) Maintain monthly records reflecting your personal use of the vehicle.

     (d) Your personal use of an employer vehicle qualifies as earnable compensation if your employer reports your use to the IRS as taxable income. Your employer may report your personal use of an employer vehicle to the Internal Revenue Service (IRS) as taxable income as provided under the Internal Revenue Code (I.R.C.). See I.R.C. Section 61 and Treas. Reg. Section 1.61-21. If so, the department will consider the amount reported to the IRS as earnable compensation.

     (e) Your personal use of an employer vehicle qualifies as earnable compensation to the extent your employer documents your personal use of the vehicle. If your employer does not report your use of an employer vehicle to the IRS as income, your use of the vehicle may qualify as earnable compensation if your employer maintains monthly contemporaneous records detailing your personal use of the vehicle. Your employer records must reflect all of the following:

     (i) Whether your employer authorized you to use the vehicle for personal use, including commuting;

     (ii) Whether you used the vehicle for commuting and, if so, the distance you normally commuted on a daily basis during the month;

     (iii) The dates, if any, on which you used the vehicle for other personal purposes, including the miles you drove the vehicle on each personal trip and your itinerary for each trip;

     (iv) The total number of miles you drove the vehicle during the month; and

     (v) The percentage of the total miles you drove the vehicle during the month for personal use, including commuting.

     (f) Your employer must report as earnable compensation an amount based on your personal use of the vehicle. If your employer maintains records documenting your personal use of the vehicle as provided in (e) of this subsection, your employer must report to the department as monthly earnable compensation the lesser of the following amounts;


(((i) Monthly Fair Market Lease Value of the Vehicle
x
Percentage of Personal Use of the Vehicle During the Month;
or
Miles of Personal Use
x
IRS Mileage Rate))
     (ii) "IRS mileage rate" means the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle.))

     (a) Use of an employer vehicle for business purposes does not qualify as compensation earnable. If your employer's established policy prohibits the use of an employer vehicle for nonbusiness uses, all use of the vehicle will be deemed business use.

     (b) Use of an employer vehicle for nonbusiness purposes qualifies as compensation earnable if:

     (i) Your employer reports the value of this use as compensation earnable on a monthly basis. Monthly compensation earnable is the lesser of the following:

     (A) Fair Market Lease Value x Percentage of Personal Use; or

     (B) Miles of Personal Use x IRS Mileage Rate. The IRS Mileage Rate is the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle; and

     (ii) Your employer reports your personal use of the vehicle to the IRS as taxable income under IRC Section 61 and Treas. Reg. Section 1.61-21; or

     (iii) Your employer maintains monthly records of your personal use.

     These records must contain:

     (A) Your employer's authorization of your personal use;

     (B) The distance normally commuted each day during the month, if you use the vehicle to commute;

     (C) The dates, mileage, and itinerary of each personal trip other than a commute trip; and

     (D) Your total mileage for the month.

     (E) The ratio of personal mileage to total mileage, expressed as a percent.

     (c) The department presumes that your use of an employer vehicle is solely for business purposes.

     (2) TRS Plan ((II)) 2 and Plan 3 members. If you are a ((TRS Plan II)) member of TRS Plan 2 or Plan 3, you are not entitled to count any of the value of an employer-provided vehicle as earnable compensation.

[Statutory Authority: RCW 41.50.050. 95-22-006, § 415-112-413, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.32.010(11) and 41.32.160. 87-17-060 (Order DRS 87-07), § 415-112-413, filed 8/19/87.]


AMENDATORY SECTION(Amending WSR 99-14-008, filed 6/24/99, effective 7/25/99)

WAC 415-112-725   Married member's benefit selection -- Spousal consent required.   (1) ((A member,)) If married, you must provide ((the)) your spouse's written consent to the option you selected under WAC 415-112-727. If, as a married member ((does)) you do not provide spousal consent, the department will pay ((the retired member)) you, as a retiree, a joint and ((fifty percent)) one-half survivor benefit allowance and record ((the member's)) your spouse as the survivor, in compliance with RCW 41.32.530(2) ((and)), 41.32.785(2), and 41.32.851(2).

     (2) ((Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an ex-spouse under RCW 41.50.790.)) The department will comply with a dissolution order, consistent with the terms of RCW 41.50.790, that requires it to pay an ex-spouse of a Plan 1 or Plan 2 member, whether or not the member's spouse has consented.

     (3) "Spousal consent" means that ((the married member's)) your spouse consents to the retirement option selected by ((the member)) you. ((The)) Your spouse's notarized signature on a completed retirement application constitutes spousal consent.

[Statutory Authority: RCW 41.50.050. 99-14-008, § 415-112-725, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660. 96-01-047, § 415-112-725, filed 12/14/95, effective 1/14/96. Statutory Authority: RCW 34.05.050 and 1990 c 249. 91-03-016, § 415-112-725, filed 1/7/91, effective 2/7/91.]

OTS-5228.2


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-0303   Dual member system -- Definition and system acronyms.   "Dual member system" ((means)) is defined as the state and city retirement systems admitted to participate under chapter 41.54 RCW. These systems are:

     (((1) PERS Plans 1 and 2;

     (2) TRS Plans 1, 2 and 3;

     (3) LEOFF Plan 2;

     (4) WSPRS;

     (5) Statewide city employees' retirement system;

     (6) The first class city retirement systems; and

     (7) SERS Plans 2 and 3.)) (1) First class city retirement systems of Seattle, Tacoma and Spokane;

     (2) Law enforcement officers' and fire fighters' (LEOFF) retirement system Plan 2;

     (3) Public employees' retirement system (PERS) Plan 1, Plan 2 and Plan 3;

     (4) School employees' retirement system (SERS) Plan 2 and Plan 3;

     (5) Statewide cities employees' retirement system (SCERS);

     (6) Teachers' retirement system (TRS) Plan 1, Plan 2 and Plan 3; and

     (7) Washington state patrol retirement system (WSPRS) Plan 1 and Plan 2.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-0303, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-0303, filed 10/29/99, effective 11/29/99; 95-03-001, § 415-113-0303, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-041   Am I a dual member?   You must meet all of the following criteria to be a dual member:

     (1) You must be a participating member of a dual member system. You must be a current member participant in at least one ((dual member system)) of the systems listed in WAC 415-113-030 to be a dual member. You may have established dual member status if you are or were a member participant ((of a dual member)) in one of those systems on or after:

     (a) July 1, 1988, for current or former members of all plans of PERS, SERS, TRS, SCERS or WSPRS;

     (b) July 25, 1993, for current or former members of LEOFF Plan 2; or

     (c) January 1, 1994, for current or former members of a first class city retirement system;

     (2) You must also be a former or current member of ((another dual member)) at least one other system listed in WAC 415-113-0303.

     (3) You must not have been retired for service from a retirement system. You are not a dual member if you have ever been retired for service from any retirement system administered by the department of retirement systems or a first class city retirement system.

     (4) ((You must not be in receipt of a disability benefit from a dual member system.)) If you are receiving a disability retirement allowance or disability leave benefits from a dual member system or LEOFF Plan 1, you cannot be a dual member.

     (a) If you have received a lump sum disability benefit from PERS Plan 2 or 3, SERS Plan 2 or 3, TRS Plan 2 or 3 or LEOFF Plan 2 you are in receipt of a disability benefit unless the department has found that you are no longer disabled.

     (b) You are not receiving a disability retirement allowance or disability leave benefits if you:

     (i) Previously received disability benefits and the department has subsequently found that you are no longer disabled, and has terminated your disability benefit; or

     (ii) Retired for disability from service from WSPRS Plan 1 or 2.


Example 1: A former PERS Plan 1 member who has never been retired and becomes a member participant in TRS Plan 2 through employment with a TRS employer becomes a dual member.

     (5) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Dual member" - RCW 41.54.010(4).

     (b) "Dual member system" - WAC 415-113-0303.

     (c) "Member participant" - WAC 415-113-0305.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-041, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-041, filed 10/29/99, effective 11/29/99; 95-03-001, § 415-113-041, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-042   ((Can I)) What can terminate my status as a dual member?   ((Termination of dual member status -- Reestablishing dual member status.)) (1) If you ((are not a)) terminate your status as a participating member, you ((are not)) also terminate your status as a dual member. If you are no longer a member participant in any dual member system, you are no longer a dual member. If you later become a member of a dual member system, you again become a dual member.


Example 2: Upon separation from TRS Plan 2 eligible employment, the person in Example 1 ((in)) (see WAC 415-113-041) is no longer a member of TRS Plan 2 nor a dual member.

     (2) If you retire, you are no longer a dual member. ((Upon retirement)) When you retire from any or all dual member systems, ((a person is)) you are no longer a dual member except for the purpose of receiving a deferred retirement allowance under RCW 41.54.030(3) and WAC 415-113-070.

     (3) If you ((are not a)) terminate dual ((member)) membership, you may still be eligible ((for)) to receive a multiple system benefit((. If you are no longer a dual member you may still be able to receive a multiple system benefit)) if otherwise eligible. The accrual date of your retirement allowance will vary depending upon the provisions of the particular system. You can find the accrual dates of different dual member systems in the following provisions:

     (((a) PERS 1: RCW 41.40.193;

     (b) PERS 2: RCW 41.40.680;

     (c) TRS 1: WAC 415-112-520;

     (d) TRS 2: RCW 41.32.795;

     (e) TRS 3: RCW 41.32.855;

     (f) LEOFF 2: RCW 41.26.490;

     (g) SERS 2: RCW 41.35.450;

     (h) SERS 3: RCW 41.35.640.))

     (a) LEOFF 2: RCW 41.26.490;

     (b) PERS 1: RCW 41.40.193;

     (c) PERS 2: RCW 41.40.680;

     (d) PERS 3: RCW 41.40.801;

     (e) SERS 2; RCW 41.35.450;

     (f) SERS 3: RCW 41.35.640;

     (g) TRS 1: WAC 415-112-520;

     (h) TRS 2: RCW 41.32.795;

     (i) TRS 3: RCW 41.32.855.

     (4) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Dual member" - RCW 41.54.010(4), WAC 415-113-041.

     (b) "Dual member system" - WAC 415-113-0303.

     (c) "Member participant" - WAC 415-113-0305.

     (d) "Multiple system benefit" - WAC 415-113-0306.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-042, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-042, filed 10/29/99, effective 11/29/99; 95-03-001, § 415-113-042, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-065   Can I substitute salary from one system to another?   (1) You can substitute base salary between systems.

     (a) If you ((elect)) choose to retire with a multiple system benefit, you may substitute your base salary under one dual member system for your includable compensation in a second dual member system for purposes of computing a retirement allowance from the second system. Using the substituted salary, the department will compute your average compensation under each system's own requirements.


Example 6: At retirement, ((a person)) Sandy is a member participant in PERS Plan 2 and has prior creditable service in TRS Plan 1. ((Assume the multiple system retiree)) She earned her highest compensation during her PERS Plan 2 service. ((The retiree's)) Sandy's PERS Plan 2 retirement allowance will be based on her PERS Plan 2 average compensation. For purposes of computing her TRS average compensation and retirement allowance, ((she)) Sandy may substitute her PERS Plan 2 base salary earned over two consecutive fiscal years for her earnable compensation in TRS.
Example 7: At retirement, ((a person)) Pat is a member participant in TRS Plan 1 and has prior creditable service in PERS Plan 1. ((Assume the multiple system retiree)) He earned his highest compensation during his membership in TRS Plan 1 and received a sick-leave cashout. ((The retiree)) Pat may substitute his base salary earned while a member in TRS Plan 1 for his PERS Plan 1 compensation earnable. However, because ((he)) Pat may substitute only his base salary from TRS Plan 1 for his compensation earnable in PERS, his PERS average compensation will not include ((any)) the cashout payments from his TRS employer.

     (b) If you do not have sufficient service credit months in one dual member system to complete an average compensation period under that system, the department will substitute the appropriate number of months of base salary from another system to complete the average compensation period.


Example 8: ((A person who)) Tim has creditable service in TRS Plan 1 and PERS Plan 2. He retires at age sixty-five ((having accrued)) after accruing twenty-four months of service in PERS Plan 2. Under PERS Plan 2, a member's average compensation period is the member's highest consecutive sixty-month period of compensation. To compute ((the multiple system retiree's)) Tim's PERS Plan 2 retirement allowance, the department will substitute ((her)) his highest consecutive thirty-six service credit months of TRS base salary to complete the PERS sixty-month average compensation period.

     (2) Adjusted full-time salary is not base salary. A multiple system retiree's adjusted full-time salary under RCW 41.32.345 shall not constitute base salary for purposes of computing the retiree's multiple system benefit.

     (3) Includable compensation defined. For purposes of this chapter, "includable compensation" means:

     (a) Earnable compensation under TRS Plan 1, 2 or 3 as defined in RCW 41.32.010(10);

     (b) Compensation earnable under PERS Plan 1 ((or)), 2 or 3 as defined in RCW 41.40.010(8);

     (c) Basic salary under LEOFF Plan 2 as defined in RCW 41.26.030 (13)(b);

     (d) Monthly salary under WSPRS Plan 1 or 2 as ((used)) defined in RCW 43.43.120(((15))) (23) and WAC 415-103-010; and

     (e) Compensation earnable under SERS Plan 2 or 3 as defined in RCW 41.35.010(6).

     (4) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Average compensation" - WAC 415-113-0302.

     (b) "Base salary" - RCW 41.54.010(1).

     (c) "Dual member system" - WAC 415-113-0303.

     (d) "Member participant" - WAC 415-113-0305.

     (e) "Multiple system benefit" - WAC 415-113-0306.

     (f) "Multiple system retiree" - WAC 415-113-0308.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-065, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-065, filed 10/29/99, effective 11/29/99; 95-03-001, § 415-113-065, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-070   ((Can I defer my retirement allowance from a system if I retire with a multiple system benefit?)) If I retire as a dual member, must I receive benefits from both systems immediately?   (((1) You may defer receipt of your retirement allowance. If, by combining creditable service, you qualify to retire in one system but not in a second system, you must either:

     (a) Receive an actuarially reduced retirement allowance from the second system; or

     (b) Defer retirement in the second system until a later date of your choice. If you choose to begin receiving a retirement allowance from your second system before you are fully eligible, the benefit will be actuarially reduced.

     (i) If you elect to defer retirement in the second system, you retain dual member status for the sole purpose of receiving a deferred multiple system benefit;

     (ii) If you retire from all systems but elect to defer retirement in one dual member system under RCW 41.54.030(3), you may not subsequently withdraw accumulated contributions from that system.

     (c) An actuarial reduction under (a) or (b) of this subsection, if applicable, will account for the difference between your age at the time you begin receiving the retirement allowance and the earliest age where you would be fully eligible based upon your combined service. "Fully eligible" means a person who has enough combined service to qualify for a retirement allowance from a dual member system without receiving a reduction for:

     (i) Early retirement from a Plan 2 or Plan 3 system under RCW 41.40.630(2), 41.35.420(2), 41.35.680(2), 41.32.765(2), 41.32.875(2), 41.26.430(2); or

     (ii) Early retirement from a Plan 3 system under RCW 41.32.875(2); or

     (iii) Retirement as a nonmember participant from WSPRS under RCW 43.43.280(2).

     (2) If you defer your retirement allowance and later reenter membership, you are no longer a dual member. If, after deferring retirement, you enter membership in a dual member system, your dual member status terminates. Once your dual member status terminates:

     (a) You may only retire under the deferred system if eligible based solely upon that system's retirement eligibility criteria; and

     (b) Your retirement allowance under the deferred system will be based solely upon service actually established in that system.)) (1) If you qualify to retire in one system but not the second system, you may nonetheless choose to retire from both systems and receive a multiple system benefit.

     (2) If you retire with a multiple system benefit, before you have become eligible in a second system(s), you must either:

     (a) Take an actuarial reduction in the retirement allowance you receive from the second system(s); or

     (b) Defer receipt of your retirement allowance in the second system(s) under RCW 41.554.030(3).

     (3) If you take an actuarial reduction under subsection (2)(a) of this section, the reduction will account for the difference between your age at the time you begin to receive the retirement allowance and the earliest age when you would be fully eligible based on your combined service. You are "fully eligible" when you meet the age and service qualifications for retirement for each system.

     (4) If you defer receipt of your retirement allowance under subsection (2)(b) of this section:

     (a) You will retain dual member status for the sole purpose of receiving a deferred retirement allowance from the second system(s); and

     (b) You may not subsequently withdraw accumulated contributions from the second system(s).


Example 9: A sixty-two year old dual member of PERS Plan 1 and TRS Plan 2 retires. He ((elects)) chooses to receive PERS Plan 1 benefits but defers receipt of a TRS Plan 2 retirement allowance. If he becomes reemployed in a TRS Plan 2 eligible position, he will reenter TRS Plan 2 membership if otherwise eligible and terminate his dual member status, but he will continue to receive his PERS Plan 1 retirement allowance until he works more than the work-limit in a calendar year under WAC 415-108-710. The member's eligibility to retire from TRS Plan 2 will be based solely on his accrued service credit in TRS Plan 2 and his TRS Plan 2 retirement allowance will be based solely on his compensation while he was a member participant in TRS Plan 2.
Example 10: Assume the retiree in Example 9 above became reemployed in a PERS position rather than a TRS Plan 2 position. He could work in this position up to the work-limit in a calendar year under WAC 415-108-710 without having his PERS retirement allowance suspended. If the retiree works over the work-limit:
• The department would suspend his retirement allowance until the next calendar year. He would remain a dual member. He would be able to retire in TRS 2 if otherwise eligible;
• The retiree could ((elect)) choose to reenter PERS Plan 1 membership at any time, if otherwise eligible, and terminate his dual member status. His ((election)) choice for membership is not retroactive. The effect on the person's right to a TRS Plan 2 benefit is the same as in Example 9. See WAC 415-108-710.

     (((3))) (5) If you defer your retirement allowance and die before you begin receiving the allowance, your survivor may receive a continuing benefit. If you defer receipt of your retirement allowance from a system and die before you ((elect)) choose to begin receiving the allowance:

     (a) Your surviving spouse, if any, must ((elect)) choose to receive either:

     (i) A joint and one hundred percent survivor option from the deferred system. If your surviving spouse selects this option, your base salary under one system may be substituted for your includable compensation in the deferred system to compute the survivor retirement allowance from the deferred system; or

     (ii) A refund of your accumulated contributions from the deferred system.

     (b) If you do not have a surviving spouse, the department will pay your accumulated contributions from the deferred system to:

     (i) Your designated beneficiary or beneficiaries; or

     (ii) Your estate, if there are no living beneficiaries.

     (((4))) (6) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Dual member system" - ((RCW 41.32.010(4), WAC 415-113-041)) WAC 415-113-0303.

     (b) (("Member participant" - WAC 415-113-0305.

     (c))) "Includable compensation" - WAC 415-113-065(3).

     (c) "Member participant" - WAC 415-113-0305.

     (d) "Multiple system participant" - WAC 415-113-0307.

     (e) "Nonmember participant" - WAC 415-113-0309.

     (f) "System" - RCW 41.54.010(6).

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-070, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-070, filed 10/29/99, effective 11/29/99; 96-20-004, § 415-113-070, filed 9/19/96, effective 10/20/96; 95-03-001, § 415-113-070, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 99-22-043, filed 10/29/99, effective 11/29/99)

WAC 415-113-090   What is the maximum retirement benefit that I may receive under chapter 41.54 RCW?   (1) ((Your benefit may not exceed the highest benefit limit under any one system.)) Your multiple system benefit may not exceed the highest maximum benefit which you would be permitted to receive under any one of the dual member systems from which you are retiring if all of your service had been provided in one system. See RCW 41.54.070.

     (2) The department will compute your maximum multiple system benefit in the following order:

     (a) Calculate the maximum benefit you could receive under each system. The department will compute your maximum benefit according to the benefit limitation provisions of each system as if you had earned your total career service and compensation in that system. In computing your maximum benefit under each system, the department will:

     (i) Apply the provisions of each system governing the calculation of your average compensation in that system; and

     (ii) Assume you earned all of your career service with your last employer for purposes of determining any limitations on the inclusion of leave cashouts in your average compensation.


Example 18: A multiple system retiree retires from TRS Plan 1 state employment with prior creditable PERS Plan 1 service. His ((state)) PERS employer pays him an accrued sick leave cashout at termination. Because a sick leave cashout from a state agency employer is not includable as TRS earnable compensation, the department will not include the cashout in the retiree's average compensation for purposes of computing either his PERS Plan 1 or TRS Plan 1 maximum benefit.
Example 19: A multiple system retiree retires from PERS Plan 1 local government employment and receives a sick leave cashout. Because a sick leave cashout from a local government employer may be included as earnable compensation, the department will include the sick leave cashout to compute the retiree's maximum benefits under both PERS Plan 1 and TRS Plan 1.

     (b) Determine your retirement allowances from each system. After computing your maximum benefit, the department will determine the retirement allowances to which you are entitled ((to)) from each system under chapter 41.54 RCW before making any reduction under RCW 41.54.070. If applicable, the department will then reduce the amount of your retirement allowances provided by either of the dual member systems for:

     (i) Your status as a nonmember participant of WSPRS Plan 1 or 2 pursuant to RCW 43.43.280(2); or

     (ii) Your ((election)) choice to retire early from a Plan 2 system under RCW 41.40.630(2), 41.32.765(2), 41.35.420(2), and 41.26.430(2) or Plan 3 system under RCW 41.32.875(2), 41.35.680(2), and 41.40.820(2).

     (c) Compute your total multiple system benefit. Upon computing your retirement allowances from each system and making any applicable reductions under (b) of this subsection, the department will add the systems' allowances to compute your total multiple system benefit.

     (d) Compare your total multiple system benefit with your maximum benefit and, if necessary, proportionately reduce your retirement allowances. The department will then compare your total multiple system benefit with your maximum benefit calculated in (a) of this subsection. If your total multiple system benefit exceeds your maximum benefit, the department will proportionately reduce your retirement allowances provided by each system as follows:

     (i) Calculate what proportion your total multiple system benefit is provided by each system separately; and

     (ii) Proportionately reduce the benefit provided by each system to account for the excess of your total multiple system benefit over your maximum benefit.


Example 20: A person with twenty-nine years of prior service in TRS Plan 1 and one year of subsequent service in PERS Plan 2 retires from both systems at age sixty-five. The retiree's TRS Plan 1 average compensation is thirty thousand dollars. The TRS Plan 1 maximum benefit is sixty percent of average compensation. The retiree's maximum TRS benefit is eighteen thousand dollars or one thousand five hundred dollars per month. The retiree's PERS Plan 2 average compensation is twenty-eight thousand dollars. The retiree's maximum PERS 2 benefit is sixteen thousand eight hundred dollars or one thousand four hundred dollars per month. The retiree's maximum benefit is the higher of the two amounts, one thousand five hundred dollars per month.
Assume the retiree's accrued service is such that her actual TRS Plan 1 monthly benefit is one thousand four hundred fifty dollars and her PERS Plan 2 monthly benefit is one hundred dollars. The retiree's total multiple system benefit is the sum of her TRS Plan 1 and PERS Plan 2 benefits, or one thousand five hundred fifty dollars. Because the retiree's total multiple system benefit exceeds her maximum benefit by fifty dollars, the department would proportionately reduce her TRS Plan 1 and PERS Plan 2 benefits. Her TRS Plan 1 benefit is 29/30 of her total service or ninety-seven percent, and her PERS Plan 2 benefit is 1/30 of total service, or three percent. The department would reduce her TRS Plan 1 benefit by ninety-seven percent of the overage, or forty-eight dollars and fifty cents (50 x.97) and her PERS Plan 2 benefit by three percent of the overage, or one dollar and fifty cents (50 x.03).

     (3) If you select a benefit payment option, the department will reduce your multiple system benefit to account as appropriate. After making any applicable maximum benefit reductions, the department will further reduce your benefit if you ((elect)) choose:

     (a) To withdraw your accumulated contributions at the time you retire from TRS Plan 1;

     (b) A survivor benefit option; or

     (c) A cost-of-living adjustment (COLA) option.

     (4) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Average compensation" - WAC 415-113-0302.

     (b) "Dual member" - RCW 41.54.010(4), WAC 415-113-041.

     (c) "Dual member system" - WAC 415-113-0303.

     (d) "First class city system" - WAC 415-113-0304.

     (e) "Member participant" - WAC 415-113-0305.

     (f) "Multiple system benefit" - WAC 415-113-0306.

     (g) "Multiple system retiree" - WAC 415-113-0308.

     (h) "Nonmember participant" - WAC 415-113-0309.

[Statutory Authority: RCW 41.50.050. 99-22-043, § 415-113-090, filed 10/29/99, effective 11/29/99; 96-20-004, § 415-113-090, filed 9/19/96, effective 10/20/96; 95-03-001, § 415-113-090, filed 1/4/95, effective 2/4/95.]


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-200   SERS and PERS concurrent employment.   For the purposes of this section and pursuant to RCW 41.35.005, 41.35.010, 41.40.010, and 41.54.100, "concurrent employment" refers to ((an individual who is employed simultaneously)) simultaneous employment in an eligible SERS Plan 2 or Plan 3 position and an eligible PERS Plan 2 or Plan 3 position.

     If a member has been concurrently employed at any time, this section governs the calculation of service credit, average final compensation, and retirement benefits attributable to all periods of PERS employment, SERS employment, and concurrent employment.

     (1) Can I participate in SERS and PERS at the same time? Yes, you may participate in SERS and PERS at the same time when employed concurrently in a PERS eligible position and a SERS eligible position. Your SERS employer will report your SERS eligible service in SERS. Your PERS employer will report your PERS eligible service in PERS.

     (2) Will the factors used to calculate my defined benefit be different because of concurrent employment in SERS and PERS? No, the department will calculate your service credit and average final compensation as if all of your employment was reported in one system. These two factors are used to calculate your defined benefit.

     (3) Will the amount of my benefit be different because of concurrent employment?

     (a) If you are concurrently employed in SERS Plan 2 and PERS Plan 2, the amount of your benefit from SERS and PERS combined will be the same as if all of your service had been reported and you received a benefit in one system, because:

     (i) SERS Plan 2 and PERS Plan 2 both use identical two-percent benefit formulas; and

     (ii) Your total service credit and average final compensation will not be different than if all of your service had been reported in one system pursuant to subsection (2) of this section.

     (b) If you are concurrently employed in SERS Plan 3 and PERS Plan 2, the amount of your benefit may be ((greater or less)) larger or smaller than if all of your service had been reported in one system:

     (i) SERS Plan 3 uses a one-percent defined benefit formula and has a defined contribution component. You are responsible for the investment of your defined contribution component, which is subject to investment gains or losses; therefore, the dollar value of your total benefit may be greater or less than what you would have received if all of your service had been reported in one defined benefit system.

     (ii) The allocation of your service credit while concurrently employed, as described in subsection (4) of this section, may also affect the dollar value of your benefit.

     (4) How is my service credit granted while concurrently employed? As a concurrently employed member, you are entitled to exactly the same amount of service credit for your SERS and PERS service combined that you would have received had all of your service been reported in one system.

     To calculate your service credit the department will:

     (a) Combine your SERS and PERS service to determine the amount of service credit you would have earned had all of your service been reported in one system.

     (b) Calculate and grant service credit in SERS based only on your reported SERS service.

     (c) Calculate and grant service credit in PERS by subtracting the amount of service credit granted for SERS in (b) of this subsection from the amount of service credit calculated in (a) of this subsection that you would have earned had all of your service been reported in one system (see example 1):

     (i) For any month ((that)) in which you receive one month of service credit in SERS for a calendar month of employment, you will not receive any PERS service credit in that month.

     (ii) The combined service credit in SERS and PERS may not exceed one month of service for a calendar month of employment.

     (d) Adjust the SERS service credit at the conclusion of each school year in accordance with the provisions of RCW 41.35.180. This adjustment may cause changes in the combined SERS/PERS service credit and/or changes in the PERS service credit. (See example 2).


Example 1: Monthly computation of concurrent employment service credit.
Part-time SERS and part-time PERS.
(a) During a month, a member works 80 hours at a school district and 100 hours at a county. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .5 service credit in SERS based on the 80 hours of service reported in SERS and will receive .5 service credit in PERS based on subtracting the .50 service credit in SERS from the maximum of 1.00 service credit.
(b) During a month, a member works 65 hours at a school district and 30 hours at a county. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .25 service credit in SERS based on the 65 hours of service reported in SERS and will receive .75 service credit in PERS based on subtracting the .25 service credit in SERS from the maximum of 1.00 service credit.
Full-time SERS and part-time PERS.
During a month, a member works 172 hours for an educational service district and works 30 hours for a state agency. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted one month of service credit in SERS based on the 172 hours of service reported in SERS and will receive 0.0 service credit in PERS (even though they worked 30 hours) based on subtracting the 1.00 service credit in SERS from the maximum of 1.00 service credit.
Part-time SERS and full-time PERS.
During a month, a member works 40 hours for a school district and 180 hours for a city. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .25 service credit in SERS based on the 40 hours of service reported in SERS and will receive .75 service credit in PERS based on subtracting the .25 service credit in SERS from the maximum of 1.00 service credit.
Example 2: Application of the educational service credit rules and the effects on concurrent employment service credit computation.
During September, October, and November a member works 60 hours, 30 hours, and 70 hours in SERS and works 90 hours, 30 hours, and 60 hours in PERS, respectively. Based on these hours, the member would have been granted .25, .25, and .50 service credits in SERS and .75, 0.0, and .50 in PERS. The member's service credit calculated on a monthly basis through November is shown in Table 1 below.
At the end of the school year, the educational service credit rules (RCW 41.35.180) are applied. The application of these rules may cause one or more months of SERS service credit to change. A change in the SERS service credit for any given month may cause the combined SERS/PERS service credit to change. See Table 2, second line. The PERS service credit would then need to be recalculated for any month that the SERS service credit changed.
The members service for the entire school year is shown in Table 2 below. Applying the educational service credit rules, the member is now entitled to six service credit months in SERS for the school year (.50 in each month of September through August) based on working a total of 750 hours for the year. Thus, the service credit in September would be changed to .50 service credit in SERS and .50 credit in PERS. The service credit in October would be changed to .50 service credit in SERS and would remain at 0.0 service credit in PERS. November's service credit calculation is not affected by the application of the educational service credit rules.

Table 1: Month by Month Determination

HOURS SERVICE CREDIT
Combined PERS/SERS SERS PERS Combined

PERS/SERS

 SERS PERS
Sept 150 60 90 1 0.25 0.75
Oct 60 30 30 .25 .25 0.00
Nov 130 70 60 1 0.50 0.50

Table 2: After RCW 41.35.180 Adjustment

HOURS SERVICE CREDIT
Combined PERS/SERS SERS PERS Combined

PERS/SERS

 SERS PERS
Sept 150 60 90 1 0.5 0.5
Oct 60 30 30 0.5 0.5 0
Nov 130 70 60 1 0.5 0.5
Dec 120 60 60 1 0.5 0.5
Jan 140 70 70 1 0.5 0.5
Feb 160 90 70 1 0.5 0.5
Mar 130 60 70 1 0.5 0.5
Apr 140 70 70 1 0.5 0.5
May 130 70 60 1 0.5 0.5
Jun 130 70 60 1 0.5 0.5
Jul 80 40 40 0.5 0.5 0
Aug 120 60 60 1 0.5 0.5
750 11 6 5

     (5) How is my average final compensation calculated if I have been concurrently employed? Your average final compensation will be calculated by combining all compensation earnable and service credit from all periods of SERS employment, PERS employment, and concurrent employment and then determining your highest consecutive sixty service credit months prior to your retirement, termination, or death. If an authorized leave occurs during the highest consecutive sixty service credit months, amounts earned during the period of leave will not be used in the calculation of average final compensation, except under RCW 41.40.710(2), 41.35.470(2) or 41.35.650(2).

     (6) How is my defined benefit in each system calculated? A retirement allowance will be calculated using the appropriate formula for each system and plan as described in chapters 41.40 and 41.35 RCW, except that:

     (a) The PERS service credit granted under subsection (4) of this section will be used in the PERS calculation and the SERS service credit granted under subsection (4) of this section will be used in the SERS calculation; and

     (b) The average final compensation calculated under subsection (5) of this section will be used as the average final compensation for both PERS and SERS.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-113-200, filed 12/12/00, effective 1/12/01.]


REPEALER

     The following section of the Washington Administrative Code is repealed:
WAC 415-113-0310 System acronyms -- Definition.

OTS-5231.1


AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-200-030   Plan 3 external administrators.   The employee retirement benefits board may obtain external investment management services to assist with the provision of self-direct investment options. External administrator and investment management services will be obtained through competitive procurement processes to ensure the teachers' retirement system Plan 3 ((and)), school employees' retirement system Plan 3 and the public employees' retirement system Plan 3 members receive quality services and competitive pricing. The department of retirement systems may select external administrators to assist with the administration of the defined contribution portion of ((the teachers' retirement system plan III established under chapter 41.34 RCW and the school employees' retirement system plan 3 established under chapter 41.35 RCW)) Plan 3 systems.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-200-030, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.088 and 41.32.060. 97-16-039, § 415-200-030, filed 7/30/97, effective 7/30/97.]

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