WSR 20-11-083
[Filed May 20, 2020, 11:52 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 19-19-088.
Title of Rule and Other Identifying Information: Portability of public employment benefits, WAC 415-113-065 Can I substitute salary from one system to another?
Hearing Location(s): On June 23, 2020, at 9:30 a.m.
The hearing will be conducted by telephone conference only: 360.407.3830 or 855.682.0796 (toll free). Conference ID: 5275784.
Date of Intended Adoption: June 24, 2020.
Submit Written Comments to: Jilene Siegel, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, email, by June 22, 2020.
Assistance for Persons with Disabilities: Contact Jilene Siegel, phone 360-664-7291, TTY 711, email, by June 16, 2020.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: RCW 41.54.030(2) allows members with service in more than one plan to use the base salary earned in one plan as the compensation for calculating the retirement benefit from another plan. This rule describes how the retirement benefit will be calculated when there is a break in employment.
Reasons Supporting Proposal: This rule making will clarify the process for calculating the benefit and ensure consistency between the plans.
Statutory Authority for Adoption: RCW 41.50.050.
Statute Being Implemented: RCW 41.54.030(2).
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of retirement systems (DRS), governmental.
Name of Agency Personnel Responsible for Implementation: Seth Miller, DRS, P.O. Box 48380, Olympia, WA 98504-8380, 360-664-7304.
A school district fiscal impact statement is not required under RCW 28A.305.135.
A cost-benefit analysis is not required under RCW 34.05.328. RCW 34.05.328 (5)(a)(i) does not apply to this proposed rule and is not voluntarily made applicable by the agency.
This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:
Is exempt under RCW 19.85.025(3) as the rules relate only to internal governmental operations that are not subject to violation by a nongovernment party; and rules only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect.
Is exempt under RCW 19.85.025(4).
Explanation of exemptions: DRS' rules only impact members and beneficiaries of the state retirement systems and participating public employers, and do not affect small businesses.
May 20, 2020
Jilene Siegel
Rules Coordinator
AMENDATORY SECTION(Amending WSR 08-02-048, filed 12/27/07, effective 1/27/08)
WAC 415-113-065Can I substitute salary from one system to another?
(1) You can substitute base salary between systems.
(a) If you choose to retire with a multiple system benefit, you may substitute your base salary under one dual member system for your includable compensation in a second dual member system for purposes of computing a retirement allowance from the second system.
(b) Your average final compensation (AFC) will be calculated by reviewing all base salary from all periods of dual member employment and determining your highest consecutive AFC period prior to your retirement or death.
(c) Using the substituted salary, the department will compute your average compensation under each system's own requirements.
((Example 6:
At retirement, Sandy is a member participant in PERS Plan 2 and has prior creditable service in TRS Plan 1. She earned her highest compensation during her PERS Plan 2 service. Sandy's PERS Plan 2 retirement allowance will be based on her PERS Plan 2 average compensation. For purposes of computing her TRS average compensation and retirement allowance, Sandy may substitute her PERS Plan 2 base salary earned over two consecutive fiscal years for her earnable compensation in TRS.
Example 7:
At retirement, Pat is a member participant in TRS Plan 1 and has prior creditable service in PERS Plan 1. He earned his highest compensation during his membership in TRS Plan 1 and received a sick-leave cashout. Pat may substitute his base salary earned while a member in TRS Plan 1 for his PERS Plan 1 compensation earnable. However, because Pat may substitute only his base salary from TRS Plan 1 for his compensation earnable in PERS, his PERS average compensation will not include the cashout payments from his TRS employer.
(b) If you do not have sufficient service credit months in one dual member system to complete an average compensation period under that system, the department will substitute the appropriate number of months of base salary from another system to complete the average compensation period.
Example 8:
Tim has creditable service in TRS Plan 1 and PERS Plan 2. He retires at age sixty-five after accruing twenty-four months of service in PERS Plan 2. Under PERS Plan 2, a member's average compensation period is the member's highest consecutive sixty-month period of compensation. To compute Tim's PERS Plan 2 retirement allowance, the department will substitute his highest consecutive thirty-six service credit months of TRS base salary to complete the PERS sixty-month average compensation period.))
Example: Average final compensation calculation.
Sarah became a member of TRS Plan 2 and earned two years of service credit. After a break in employment, Sarah returned to public service in a PERS Plan 2 position and worked two additional years. Sarah then returned to a TRS Plan 2 position until retiring at the age sixty-five. Sarah's career earnings were as follows:
TRS Plan 2
81-82 School Year - $18,000 per year
82-83 School Year - $20,000 per year
PERS Plan 2
2013 Calendar Year - $48,000 per year
2014 Calendar Year - $50,000 per year
TRS Plan 2
14-15 School Year - $60,000 per year
15-16 School Year - $64,000 per year
16-17 School Year - $68,000 per year
As a dual member, Sarah can substitute the PERS salary when calculating the highest sixty months of earnings to be used in the TRS benefit calculation:
$48,000 + $50,000 + $60,000 + $64,000 + $68,000
$4,833 AFC
60 months
The same calculation will be used for the PERS average final compensation.
(2) TRS Plan 1 adjusted full-time salary is not base salary. A multiple system retiree's adjusted full-time salary under RCW 41.32.345 shall not constitute base salary for purposes of computing the retiree's multiple system benefit.
(3) Includable compensation defined. For purposes of this chapter, "includable compensation" means:
(a) Earnable compensation under TRS Plan 1, 2 or 3 as defined in RCW 41.32.010(10);
(b) Compensation earnable under PERS Plan 1, 2 or 3 as defined in RCW 41.40.010(8);
(c) Compensation earnable under PSERS as defined in RCW 41.37.010(6);
(d) Basic salary under LEOFF Plan 2 as defined in RCW 41.26.030 (13)(b);
(e) Monthly salary under WSPRS Plan 1 or 2 as defined in RCW 43.43.120(23); and
(f) Compensation earnable under SERS Plan 2 or 3 as defined in RCW 41.35.010(6).
(4) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.
(a) "Average compensation" - WAC 415-113-030.
(b) "Base salary" - RCW 41.54.010(1).
(c) "Dual member system" - WAC 415-113-030.
(d) "Member participant" - WAC 415-113-030.
(e) "Multiple system benefit" - WAC 415-113-030.
(f) "Multiple system retiree" - WAC 415-113-030.