1566-S2 AMH CARL PRID 23

2SHB 1566 ‑ H AMDS 617 WITHDRAWN 4/13/95

By Representative Carlson

On page 4, after line 14, insert the following:

"(8) "Benefits contribution plan" means a plan whereby state and public employees may agree to a contribution to benefit costs which will allow the employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125 or other sections of the Internal Revenue Code.

(9) "Salary means a state employee's monthly salary or wages.

(10) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the benefits contribution plan.

(11) "Plan year" means the time period established by the authority."

On page 14, after line 15, insert the following:

"NEW SECTION. Sec. 13. A new section is added to chapter 41.05 RCW to read as follows:

(1) The state of Washington may enter into benefits contribution agreements with employees of the state pursuant to the Internal Revenue Code, 26 U.S.C. Sec. 125 for the purpose of making it possible for employees of the state to select on a "before-tax basis" certain taxable and nontaxable benefits pursuant to 26 U.S.C. Sec. 125. The purpose of the benefits contribution plan established in this chapter is to attract and retain individuals in governmental service by permitting them to enter into agreements with the state to provide for benefits pursuant to 26 U.S.C. Sec. 125 and other applicable sections of the Internal Revenue Code.

(2) Nothing in the benefits contribution plan constitutes an employment agreement between the participant and the state, and nothing contained in the participant's benefits contribution agreement, the plan, or RCW 41.05.105 through 41.05.145 gives a participant any right to be retained in state employment.

NEW SECTION. Sec. 14. A new section is added to chapter 41.05 RCW to read as follows:

The authority shall have responsibility for the formulation and adoption of a plan, policies and procedures designed to guide, direct, and administer the benefits contribution plan.

(1) A plan document describing the benefits contribution plan shall be adopted and administered by the authority. The authority shall represent the state in all matters concerning the administration of the plan. The state, through the authority, may engage the services of a professional consultant or administrator on a contractual basis to serve as an agent to assist the authority or perform the administrative functions necessary in carrying out the purposes of this act.

(2) The authority shall formulate and establish policies and procedures for the administration of the benefits contribution plan that are consistent with existing state law, the internal revenue code, and the regulations adopted by the internal revenue service as they may apply to the benefits offered to participants under the plan.

(3) The funds held by the state for the benefits contribution program shall be deposited in the benefits contribution account in the state treasury. Any interest in excess of the amount used to defray the cost of administering the benefits contribution plan shall become a part of the general fund. Unclaimed moneys remaining in the benefits contribution account at the end of a plan year after all timely submitted claims for that plan year have been processed shall become a part of the benefits contribution administrative account. The authority may assess each participant a fee for administering the salary reduction plan. In addition to moneys for initial costs, moneys may be appropriated from the general fund or benefits contribution administrative account for any expense relating to the administration of the benefits contribution plan.

(4) The benefits contribution administrative account is created in the state treasury. The authority may periodically bill agencies for employer savings experienced as the result of benefits contribution program participation by employees. All receipts from the following shall be deposited in the account: (a) charges to agencies for all or a portion of the estimated savings due to reductions in employer contributions under the social security act; (b) charges for other similar savings; (c) unclaimed moneys in the benefits contribution account at the end of the plan year after all timely submitted claims for that plan year have been processed; and (d) fees charged to participants. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for any expense related to the administration of the benefits contribution plan.

(5) Every action taken by the authority in administering sections 13 through 19 of this act shall be presumed to be a fair and reasonable exercise of the authority vested in or the duties imposed upon it. The authority shall be presumed to have exercised reasonable care, diligence, and prudence and to have acted impartially as to all persons interested unless the contrary be proved by clear and convincing affirmative evidence.

NEW SECTION. Sec. 15. A new section is added to chapter 41.05 RCW to read as follows:

(1) Elected officials and all permanent employees of the state are eligible to participate in the benefits contribution plan and contribute amount(s) by agreement with the authority. The authority may adopt rules to permit participation in the plan by temporary employees of the state.

(2) Persons eligible under subsection (1) of this section may enter into benefits contribution agreements with the state.

(3)(a) In the initial year of the benefits contribution plan, and eligible person may become a participant after the adoption of the plan and before its effective date by agreeing to have a portion of his or her gross salary contributed and deposited into a health care and other benefits account to be used for reimbursement of expenses covered by the plan.

(b) After the initial year of the benefits contribution plan, an eligible person may become a participant for a full plan year, with annual benefit selection for each new plan year made before the beginning of the plan year, as determined by the authority, or upon becoming eligible.

(c) Once an eligible person elects to participate and the determination of the amount of gross salary that he or she shall contribute and the benefit for which the funds are to be used during the plan year, the agreement shall be irrevocable and may not be amended during the plan year except as provided in (d) of this subsection. Prior to making an election to participate in the benefit contribution plan, the eligible person shall be informed in writing of all the benefits and contributions that will occur as a result of such election.

(d) The authority shall provide in the benefits contribution plan that a participant may enroll, terminate, or change his or her election after the plan year has begun if there is a significant change in a participant's status, as provided by 26 U.S.C. Sec. 125 and the regulations adopted under that section and defined by the authority.

(4) The authority shall establish as part of the benefits contribution plan the procedures for and effect of withdrawal from the plan by reason of retirement, death, leave of absence, or termination of employment. To the extent possible under federal law, the authority shall protect participants from forfeiture of rights under the plan.

(5) Any contribution under the benefits contribution plan shall continue to be included as regular compensation for the purpose of computing the state retirement and pension benefits earned by the employee.

NEW SECTION. Sec. 16. A new section is added to chapter 41.05 RCW to read as follows:

The benefits contribution account is established in the state treasury. All fees paid to reimburse participants or service providers pursuant to the provisions of sections 13 through 19 of this act shall be paid from the benefit contribution account.

NEW SECTION. Sec. 17. A new section is added to chapter 41.05 RCW to read as follows:

(1) The authority shall keep or cause to be kept full and adequate accounts and records of the assets, obligations, transactions, and affairs of a salary reduction plan created under section 14 of this act.

(2) The authority shall file an annual report of the financial condition, transactions, and affairs of the salary reduction plan under the authority's jurisdiction. A copy of the annual report shall be filed with the speaker of the house of representatives, the president of the senate, the governor, and the state auditor.

NEW SECTION. Sec. 18. A new section is added to chapter 41.05 RCW to read as follows:

(1) The state may terminate the benefits contribution plan at the end of the plan year or upon notification of federal action affecting the status of the plan.

(2) The authority may amend the benefits contribution plan at any time if the amendment does not affect the rights of the participants to receive eligible reimbursement from the participants' benefits contribution accounts.

NEW SECTION. Sec. 19. A new section is added to chapter 41.05 RCW to read as follows:

The authority shall adopt rules necessary to implement sections 13 through 18 of this act.

NEW SECTION. Sec. 20. A new section is added to chapter 41.05 RCW to read as follows:

Health care and other benefits--Benefits contribution plan--Construction of statutes. Sections 13 through 19 of this act shall be construed to effectuate the purposes of 26 U.S.C. Sec. 125 and other applicable sections of the Internal Revenue Code as required."