BILL REQ. #:  H-4040.1 

     AN ACT Relating to providing additional choice between plans 2 and 3 for members of the public employees' retirement system, the teachers' retirement system, and the school employees' retirement system; amending RCW 41.32.835, 41.35.610, and 41.40.785; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 41.32.835 and 2007 c 491 s 3 are each amended to read as follows:
     (1) All teachers who first become employed by an employer in an eligible position on or after July 1, 2007, shall have a period of ninety days to make an irrevocable choice to become a member of plan 2 or plan 3 for the duration of the member's continuous employment relationship with an employer. At the end of ninety days, if the member has not made a choice to become a member of plan 2, he or she becomes a member of plan 3.
     (2) Within ninety days of the date that a member either changes employers or resumes employment after a separation from service from an employer of no fewer than one and one-half months, he or she has the option to irrevocably choose membership in plan 2 or plan 3 for the duration of the member's continuous employment with an employer. For members of plan 3 this ninety-day period runs simultaneously with the ninety-day period provided for choosing a contribution rate provided in RCW 41.34.040(3)(d). At the end of ninety days, if the member has not made a choice to change plans, the member remains a member of plan 2 or plan 3, as established in his or her most recent period of employment with an employer.
     (3) For administrative efficiency, until a member elects to become a member of plan 3, or becomes a member of plan 3 by default under subsection (1) of this section, the member shall be reported to the department in plan 2, with member and employer contributions. Upon becoming a member of plan 3 by election or by default, all service credit shall be transferred to the member's plan 3 defined benefit, and all employee accumulated contributions shall be transferred to the member's plan 3 defined contribution account.
     (((3))) (4) The plan choice provision as set forth in section 3, chapter 491, Laws of 2007 was intended by the legislature as a replacement benefit for gain-sharing. Until there is legal certainty with respect to the repeal of chapter 41.31A RCW, the right to plan choice under this section is noncontractual, and the legislature reserves the right to amend or repeal this section. Legal certainty includes, but is not limited to, the expiration of any: Applicable limitations on actions; and periods of time for seeking appellate review, up to and including reconsideration by the Washington supreme court and the supreme court of the United States. Until that time, all teachers who first become employed by an employer in an eligible position on or after July 1, 2007, may choose either plan 2 or plan 3 under this section. If the repeal of chapter 41.31A RCW is held to be invalid in a final determination of a court of law, and the court orders reinstatement of gain-sharing or other alternate benefits as a remedy, then all teachers who first become employed by an employer in an eligible position on or after the date of such reinstatement shall be members of plan 3.

Sec. 2   RCW 41.35.610 and 2007 c 491 s 7 are each amended to read as follows:
     (1) All classified employees who first become employed by an employer in an eligible position on or after July 1, 2007, shall have a period of ninety days to make an irrevocable choice to become a member of plan 2 or plan 3 for the duration of the member's continuous employment relationship with an employer. At the end of ninety days, if the member has not made a choice to become a member of plan 2, he or she becomes a member of plan 3.
     (2) Within ninety days of the date that a member either changes employers or resumes employment after a separation from service from an employer of no fewer than one and one-half months, he or she has the option to irrevocably choose membership in plan 2 or plan 3 for the duration of the member's continuous employment with an employer. For members of plan 3, this ninety-day period runs simultaneously with the ninety-day period provided for choosing a contribution rate provided in RCW 41.34.040(3)(d). At the end of ninety days, if the member has not made a choice to change plans, the member remains a member of plan 2 or plan 3, as established in his or her most recent period of employment with an employer.
     (3) For administrative efficiency, until a member elects to become a member of plan 3, or becomes a member of plan 3 by default under subsection (1) of this section, the member shall be reported to the department in plan 2, with member and employer contributions. Upon becoming a member of plan 3 by election or by default, all service credit shall be transferred to the member's plan 3 defined benefit, and all employee accumulated contributions shall be transferred to the member's plan 3 defined contribution account.
     (((3))) (4) The plan choice provision as set forth in section 7, chapter 491, Laws of 2007 was intended by the legislature as a replacement benefit for gain-sharing. Until there is legal certainty with respect to the repeal of chapter 41.31A RCW, the right to plan choice under this section is noncontractual, and the legislature reserves the right to amend or repeal this section. Legal certainty includes, but is not limited to, the expiration of any: Applicable limitations on actions; and periods of time for seeking appellate review, up to and including reconsideration by the Washington supreme court and the supreme court of the United States. Until that time, all classified employees who first become employed by an employer in an eligible position on or after July 1, 2007, may choose either plan 2 or plan 3 under this section. If the repeal of chapter 41.31A RCW is held to be invalid in a final determination of a court of law, and the court orders reinstatement of gain-sharing or other alternate benefits as a remedy, then all classified employees who first become employed by an employer in an eligible position on or after the date of such reinstatement shall be members of plan 3.

Sec. 3   RCW 41.40.785 and 2000 c 247 s 302 are each amended to read as follows:
     (1) All employees who first become employed by an employer in an eligible position on or after March 1, 2002, for state agencies or institutes of higher education, or September 1, 2002, for other employers, shall have a period of ninety days to make an irrevocable choice to become a member of plan 2 or plan 3 for the duration of the member's continuous employment relationship with an employer. At the end of ninety days, if the member has not made a choice to become a member of plan 2, he or she becomes a member of plan 3.
     (2) Within ninety days of the date that a member either changes employers or resumes employment after a separation from service from an employer of no fewer than one and one-half months, he or she has the option to irrevocably choose membership in plan 2 or plan 3 for the duration of the member's continuous employment with an employer. For members of plan 3, this ninety-day period runs simultaneously with the ninety-day period provided for choosing a contribution rate provided in RCW 41.34.040(3)(d). At the end of ninety days, if the member has not made a choice to change plans, the member remains a member of plan 2 or plan 3, as established in his or her most recent period of employment with an employer.
     (3) For administrative efficiency, until a member elects to become a member of plan 3, or becomes a member of plan 3 by default pursuant to subsection (1) of this section, the member shall be reported to the department in plan 2, with member and employer contributions. Upon becoming a member of plan 3 by election or by default, all service credit shall be transferred to the member's plan 3 defined benefit, and all employee accumulated contributions shall be transferred to the member's plan 3 defined contribution account.

NEW SECTION.  Sec. 4   If any part of this act is found to be in conflict with a final determination by the federal internal revenue service that is a prescribed condition to favorable tax treatment of one or more of the retirement plans, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the individual members directly affected. This finding does not affect the operation of the remainder of this act in its application to the members concerned. The legislature reserves the right to amend or repeal this act in the future as may be required to comply with a final federal determination that amendment or repeal is necessary to maintain the favorable tax treatment of a plan.