Effective Date of Rule: Thirty-one days after filing.

     Purpose: To clarify that the department has the right to limit the number of times a Plan 3 member changes investment options and to impose other restrictions if necessary to protect the performance results of the funds.

     Citation of Existing Rules Affected by this Order: Amending WAC 415-111-230.

     Statutory Authority for Adoption: RCW 41.50.050(5).

     Other Authority: Chapter 41.34 RCW.

      Adopted under notice filed as WSR 05-24-048 on December 1, 2005.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.

     Date Adopted: January 11, 2006.

S. J. Matheson

Director

OTS-8463.2

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

WAC 415-111-230   Self-directed investment program allocation.   This section applies only to members who elect the self-directed investment program pursuant to WAC 415-111-210.

     (1) What is an allocation? An allocation is a set of instructions ((defining which self-directed)) identifying your choice of investment program funds ((you wish your money to be invested in)) and the percentage of your money you want to invest in each fund. The amount you allocate to each fund must be designated as a whole percentage((. The sum of the percentages that you allocate)), and the total must equal one-hundred percent.

Example:

Martha has elected the self-directed program as her investment manager and is contributing $150 per month. Martha decides to invest ((into)) in three different funds with the following amounts: $30 invested in fund #1, $45 invested in fund #2 and $75 invested in fund #3. To accomplish this she must establish the following allocation:

Allocation to fund #1	20%
Allocation to fund #2	30%
Allocation to fund #3	50%
Total Allocation	100%

     (2) How do I establish an allocation? You must establish your allocation by contacting the department's designated recordkeeper. Once established, you may change your allocation ((at any time by contacting the department's designated recordkeeper)) according to the provisions in subsection (5) of this section.

     (3) What happens if I do not ((designate)) establish an allocation? If you do not provide an allocation ((prior to any of your investment money being received by)) before the department's designated recordkeeper begins receiving your investment money, or if you provide an allocation ((where)) but the sum of the allocated portions does not equal one-hundred percent, your investment money will be ((directed into the default fund such that)) invested as follows:

     (a) If ((your)) the total ((allocations do not equal)) of the percentages you have allocated is less than one-hundred percent, (((i))) the department will determine the percentage that is unallocated, and (((ii) direct)) invest the unallocated percentage ((into)) in the default fund.

Example:

Ralph designates the following allocation: 33% fund #1, 33% fund #2, and 33% fund #3. Since the total allocation equals 99%, the unallocated 1% will be ((directed into)) invested in the default fund.

     (b) If the total ((allocations exceed)) of the percentages you have allocated is greater than one-hundred percent, ((the entire allocation)) all of your investment money will be ((directed into)) invested in the default fund.

Example:

Chris designates the following allocations: 38% into fund #1, 40% into fund #2, ((and)) 10% into fund #3, and 15% into fund #4. Since the total allocation equals 103%, all of Chris' investment money will be ((directed into)) invested in the default fund.

     (c) ((If no allocation is provided, the entire allocation will be directed into the default fund: Provided, That if the member)) If you do not provide an allocation, your money will be invested as follows:

     (i) If you previously participated in the self-directed investment program, ((the member's)) your most recent allocation will be used. However, if ((that)) your allocation includes a fund or funds that are no longer available, the portion of your investment money allocated to the unavailable fund(s) will be ((directed into)) invested in the default fund.

     (ii) If you do not meet the conditions in (c)(i) of this subsection, all of your investment money will be invested in the default fund.

Example:

Lew is a new member and elects the self-directed investment program, but does not establish an allocation. All of Lew's investment money will be ((directed into)) invested in the default fund.

Example:	Linda becomes reemployed in an eligible position and elects to participate in the self-directed investment program again, but does not provide an allocation.
	Linda previously participated in the self-directed           investment program and had the following allocation:

10% in Fund #1

10% in Fund #2

30% in Fund #3

25% in Fund #4

25% in Fund #5

((Since)) Because she did not establish a new allocation, her previous allocation will be used. However, fund #2 is no longer available, so that ((part of her allocation will be directed into)) portion of her money will be invested in the default fund. A new allocation will be established for Linda as follows:

10% in Fund #1

10% in Default Fund

30% in Fund #3

25% in Fund #4

25% in Fund #5

     (4) What is the default fund? The default fund for the self-directed investment program is the Money Market Fund.

     (5) ((Can)) May I change my allocation? Once you have established an allocation or been directed into the default fund, you may change your allocation ((at any time)) by contacting the department's designated recordkeeper. However, changes must be consistent with any restrictions on trading imposed by the funds involved, and, if necessary to protect the performance results of the investment program funds, the department may:

     (a) Limit the number of times you change allocations;

     (b) Limit the frequency of the changes;

     (c) Limit the manner of making changes; or

     (d) Impose other restrictions.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, § 415-111-230, filed 12/12/00, effective 1/12/01.]