BILL REQ. #: H-3431.1
State of Washington | 63rd Legislature | 2014 Regular Session |
Read first time 01/29/14. Referred to Committee on Appropriations.
AN ACT Relating to state retirement system employer participation in the state's deferred compensation program; and amending RCW 41.50.770 and 41.50.780.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 41.50.770 and 2010 1st sp.s. c 7 s 29 are each amended
to read as follows:
(1) "Employee" as used in this section and RCW 41.50.780 includes
all full-time, part-time, and career seasonal employees of the state,
a county, a municipality, or other political subdivision of the state,
whether or not covered by civil service; elected and appointed
officials of the executive branch of the government, including full-time members of boards, commissions, or committees; justices of the
supreme court and judges of the court of appeals and of the superior
and district courts; and members of the state legislature or of the
legislative authority of any county, city, or town.
(2) The state, through the department, and any county,
municipality, or other political subdivision of the state acting
through its principal supervising official or governing body is
authorized to contract with an employee to defer a portion of that
employee's income, which deferred portion shall in no event exceed the
amount allowable under 26 U.S.C. Sec. 457, and deposit or invest such
deferred portion in a credit union, savings and loan association, bank,
or mutual savings bank or purchase life insurance, shares of an
investment company, or fixed and/or variable annuity contracts from any
insurance company or any investment company licensed to contract
business in this state.
(3) Employees participating in the state deferred compensation plan
administered by the department shall self-direct the investment of the
deferred portion of their income through the selection of investment
options as set forth in subsection (4) of this section.
(4) The department can provide such plans and features as it deems
are in the interests of ((state)) public employees. In addition to the
types of investments described in this section, the state investment
board, with respect to the state deferred compensation plan, shall
invest the deferred portion of an employee's income, without limitation
as to amount, in accordance with RCW 43.84.150, 43.33A.140, and
41.50.780, and pursuant to investment policy established by the state
investment board for the state deferred compensation plans. The state
investment board, after consultation with the director regarding any
recommendations made pursuant to RCW 41.50.088(2), shall provide a set
of options for participants to choose from for investment of the
deferred portion of their income. Any income deferred under such a
plan shall continue to be included as regular compensation, for the
purpose of computing the state or local retirement and pension benefits
earned by any employee.
(5) Coverage of an employee under a deferred compensation plan
under this section shall not render such employee ineligible for
simultaneous membership and participation in any pension system for
public employees.
Sec. 2 RCW 41.50.780 and 2010 1st sp.s. c 7 s 30 are each amended
to read as follows:
(1) The deferred compensation principal account is hereby created
in the state treasury.
(2) The amount of compensation deferred by employees under
agreements entered into under the authority contained in RCW 41.50.770
shall be paid into the deferred compensation principal account and
shall be sufficient to cover costs of administration and staffing in
addition to such other amounts as determined by the department. The
deferred compensation principal account shall be used to carry out the
purposes of RCW 41.50.770. ((All eligible state employees shall be
given the opportunity to participate in agreements entered into by the
department under RCW 41.50.770. State agencies shall cooperate with
the department in providing employees with the opportunity to
participate.))
(3) All participating employers in the retirement systems listed in
RCW 41.50.030 shall participate in any agreements entered into by the
department under RCW 41.50.770, including the making of payments
therefrom to the employees participating in a deferred compensation
plan upon their separation from qualifying service. Any ((county,))
other municipality((,)) or ((other)) subdivision of the state that does
not participate in the retirement systems listed in RCW 41.50.030 may
elect to participate in ((any)) agreements ((entered into by the
department under RCW 41.50.770, including the making of payments
therefrom to the employees participating in a deferred compensation
plan upon their separation from state or other qualifying service)) as
described in this subsection. All employers who are required to or
elect to participate in agreements as described in this subsection
shall cooperate with the department in providing employees with the
information and opportunity to participate. Accordingly, the deferred
compensation principal account shall be considered to be a public
pension or retirement fund within the meaning of Article XXIX, section
1 of the state Constitution, for the purpose of determining eligible
investments and deposits of the moneys therein.
(4) All moneys in the state deferred compensation principal account
and the state deferred compensation administrative account, all
property and rights purchased therewith, and all income attributable
thereto, shall be held in trust by the state investment board, as set
forth under RCW 43.33A.030, for the exclusive benefit of the state
deferred compensation plan's participants and their beneficiaries.
Neither the participant, nor the participant's beneficiary or
beneficiaries, nor any other designee, has any right to commute, sell,
assign, transfer, or otherwise convey the right to receive any payments
under the plan. These payments and right thereto are nonassignable and
nontransferable. Unpaid accumulated deferrals are not subject to
attachment, garnishment, or execution and are not transferable by
operation of law in event of bankruptcy or insolvency, except to the
extent otherwise required by law.
(5) The state investment board has the full power to invest moneys
in the state deferred compensation principal account and the state
deferred compensation administrative account in accordance with RCW
43.84.150, 43.33A.140, and 41.50.770, and cumulative investment
directions received pursuant to RCW 41.50.770. All investment and
operating costs of the state investment board associated with the
investment of the deferred compensation plan assets shall be paid
pursuant to RCW 43.33A.160 and 43.84.160. With the exception of these
expenses, one hundred percent of all earnings from these investments
shall accrue directly to the deferred compensation principal account.
(6)(a) No state board or commission, agency, or any officer,
employee, or member thereof is liable for any loss or deficiency
resulting from participant investments selected pursuant to RCW
41.50.770(3).
(b) Neither the department, nor the director or any employee, nor
the state investment board, nor any officer, employee, or member
thereof is liable for any loss or deficiency resulting from reasonable
efforts to implement investment directions pursuant to RCW
41.50.770(3).
(7) The deferred compensation administrative account is hereby
created in the state treasury. All expenses of the department
pertaining to the deferred compensation plan including staffing and
administrative expenses shall be paid out of the deferred compensation
administrative account. Any excess balances credited to this account
over administrative expenses disbursed from this account shall be
transferred to the deferred compensation principal account at such time
and in such amounts as may be determined by the department with the
approval of the office of financial management. Any deficiency in the
deferred compensation administrative account caused by an excess of
administrative expenses disbursed from this account shall be
transferred to this account from the deferred compensation principal
account.
(8)(a)(i) The department shall keep or cause to be kept full and
adequate accounts and records of the assets of each individual
participant, obligations, transactions, and affairs of any deferred
compensation plans created under RCW 41.50.770 and this section. The
department shall account for and report on the investment of state
deferred compensation plan assets or may enter into an agreement with
the state investment board for such accounting and reporting.
(ii) The department's duties related to individual participant
accounts include conducting the activities of trade instruction,
settlement activities, and direction of cash movement and related wire
transfers with the custodian bank and outside investment firms.
(iii) The department has sole responsibility for contracting with
any recordkeepers for individual participant accounts and shall manage
the performance of recordkeepers under those contracts.
(b)(i) The department's duties under (a)(ii) of this subsection do
not limit the authority of the state investment board to conduct its
responsibilities for asset management and balancing of the deferred
compensation funds.
(ii) The state investment board has sole responsibility for
contracting with outside investment firms to provide investment
management for the deferred compensation funds and shall manage the
performance of investment managers under those contracts.
(c) The state treasurer shall designate and define the terms of
engagement for the custodial banks.
(9) The department may adopt rules necessary to carry out its
responsibilities under RCW 41.50.770 and this section.