PROPOSED RULES
RETIREMENT SYSTEMS
Original Notice.
Preproposal statement of inquiry was filed as WSR 02-05-037.
Title of Rule: WAC 415-108-980 Will I receive a transfer payment when I transfer to Plan 3?
Purpose: In the 2002 legislative session, the legislature changed the qualifying month for PERS Plan 3 "Phase 1" employees to June 2002, and changed the qualifying month for PERS Plan 3 "Phase 2" employees to either June 2002 or February 2003. (See SB 6376, amending RCW 41.40.795, codified in chapter 159, Laws of 2002.) This WAC is being amended to reflect that legislative change. During the review, we also identified a few housekeeping changes; we are also making these changes.
Statutory Authority for Adoption: RCW 41.50.050(5).
Statute Being Implemented: RCW 41.40.795 as amended (effective June 13, 2002).
Summary: See Purpose above.
Reasons Supporting Proposal: See Purpose above.
Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Merry A. Kogut, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291.
Name of Proponent: Department of Retirement Systems, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: In the 2002 legislative session, the legislature changed the qualifying month for PERS Plan 3 "Phase 1" employees to June 2002, and changed the qualifying month for PERS Plan 3 "Phase 2" employees to either June 2002 or February 2003. (See SB 6376, amending RCW 41.40.795, codified in chapter 159, Laws of 2002.) This WAC is being amended to reflect that legislative change. During the review, we also identified a few housekeeping changes; we are also making these changes.
Proposal Changes the Following Existing Rules: [No information supplied by agency.]
No small business economic impact statement has been prepared under chapter 19.85 RCW. These amendments have no affect on businesses.
RCW 34.05.328 does not apply to this rule adoption. The Department of Retirement Systems is not one of the named departments in RCW 34.05.328.
Hearing Location: Department of Retirement Systems, 6835 Capitol Boulevard, Room 115, Tumwater, WA, on May 21, 2002, at 9:00 a.m.
Assistance for Persons with Disabilities: Contact the rules coordinator or Amy Finney by seven days before the hearing, if possible, phone (360) 664-7291, TTY (360) 586-5450, e-mail merryk@drs.wa.gov.
Submit Written Comments to: Identify WAC Numbers, Merry A. Kogut, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail Merryk@drs.wa.gov, fax (360) 753-3166, by 5:00 p.m. on May 21, 2002.
Date of Intended Adoption: No sooner than May 22, 2002.
April 15, 2002
Merry A. Kogut
Rules Coordinator
OTS-5601.2
AMENDATORY SECTION(Amending WSR 02-03-120, filed 1/23/02,
effective 3/1/02)
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)) the
Phase 1 transfer period and establish service credit in June
2002, or transfer during the Phase 2 transfer period and
establish service credit in either June 2002 or 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)) June 2002.
• 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)) 2002).
♦ 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 2003*.
| * | A Phase 2 employee can establish service credit in either June 2002 or February 2003. |
♦ 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)) 2002).
♦ 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 employer: WAC 415-108-425.
Phase 2 employer: WAC 415-108-425.
Phase 1 transfer period: WAC ((415-108-420)) 415-108-425.
Phase 2 transfer period: WAC ((415-108-420)) 415-108-425.
Service: RCW 41.40.010 (9)(b).
Transfer basis: RCW 41.40.795 (1)(b).
Transfer period: RCW 41.40.795 (1)(a).
[Statutory Authority: RCW 41.50.050(5), 41.32.8401, 41.35.630, 41.40.795. 02-03-120, § 415-108-980, filed 1/23/02, effective 3/1/02.]