WSR 16-08-008
PERMANENT RULES
DEPARTMENT OF
RETIREMENT SYSTEMS
[Filed March 24, 2016, 3:09 p.m., effective April 24, 2016]
Effective Date of Rule: Thirty-one days after filing.
Purpose: When a member in certain retirement plans (LEOFF 2, PERS 3, SERS 3, TRS 3) has at least twenty years of service credit, and leaves employment, their defined benefit increases by approximately three percent for each year they delay receiving it. These rules clarify how the department applies this benefit when the member retires from more than one retirement plan. This revision also removes references to gainsharing from chapter 415-02 WAC.
Citation of Existing Rules Affected by this Order: Repealing WAC 415-113-084 How will my benefit be computed if I retire retroactively from LEOFF Plan 2?; and amending WAC 415-02-030 Definitions and 415-02-550 What happens to my defined contributions if I transfer to Plan 3 after the department of retirement systems accepts my property division dissolution order?
Statutory Authority for Adoption: RCW
41.50.050(5).
Adopted under notice filed as WSR 16-05-036 on February 9, 2016.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 2, Repealed 1.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, Amended 2, Repealed 1.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: March 24, 2016.
Marcie Frost
Director
AMENDATORY SECTION (Amending WSR 10-24-099, filed 12/1/10, effective 1/1/11)
WAC 415-02-030 Definitions.
This section contains definitions of words and phrases commonly used in the department of retirement systems' rules. It also serves as a directory for finding definitions within the RCW((s)) and WAC((s)).
(1) Accumulated contributions means the sum of all contributions paid into a member's defined benefit account, including interest.
(2)
Appeal means the proceeding through which a party obtains review of a department action in an adjudicative proceeding conducted under chapter
34.05 RCW (the Administrative Procedure Act) and chapter 415-08 WAC (the department's appeal rules).
(4)
Average final salary for WSPRS is defined in RCW
43.43.120(15).
(5) Cafeteria plan means a "qualified" employee benefit program under IRC section 125, such as certain health and welfare plans.
(6) Calendar month.
(a) Refers to one of the twelve named months of the year, extending from the first day of the named month through the last day. For example: January 1st through January 31st is a calendar month. February 1st through February 29th is a calendar month in a leap year. March 13th through April 12th is not a calendar month.
(b) Exception: For the purpose of administering the break in employment required by RCW
41.32.570,
41.32.802,
41.32.862,
41.35.060,
41.37.050 and
41.40.037 for retirees returning to work, one calendar month means thirty consecutive calendar days. For example: Kim's retirement date is August 1
st. August 31
st would be the earliest Kim could return to work and meet the requirement for a one calendar month break in employment.
(8) Contribution rate is:
(a) For employees: The fraction (percent) of compensation a member contributes to a retirement system each month.
(b) For employers: The fraction (percent) of payroll a member's employer contributes to a retirement system each month. Contribution rates vary for the different systems and plans.
(9) Deferred compensation refers to the amount of the participant's compensation, which the participant voluntarily defers from earnings before taxes to a deferred compensation program.
(10) Defined benefit plan is a pension plan in which a lifetime retirement allowance is available, based on the member's service credit and compensation.
(11) Defined contribution plan is a plan in which part of members' or participants' earnings are deferred into ((an)) investment accounts in which tax is deferred until funds are withdrawn. The benefit is based on the contributions ((rate)) and the amount of return from the investment of the contributions. Members or participants receive the full market rate of return minus expenses. There is no guaranteed rate of return and the value of an account will increase or decrease based upon market fluctuations.
(12) Department means the department of retirement systems.
(13) Director means the director of the department of retirement systems.
(14) Employee means a worker who performs labor or services for a retirement systems employer under the control and direction of the employer as determined under WAC 415-02-110(2). An employee may be eligible to participate as a member of one of the state-administered retirement systems according to eligibility requirements specified under the applicable retirement system.
(16)
Ex-spouse refers to a person who is a party to a "dissolution order" as defined in RCW
41.50.500(3).
(17)
Final average salary for LEOFF is defined in RCW
41.26.030(12).
(18)
((Gainsharing is the process through which members of certain plans share in the extraordinary investment gains on earnings on retirement assets under chapters 41.31 and 41.31A RCW.(19))) Independent contractor means a contract worker who is not under the direction or control of the employer as determined under WAC 415-02-110 (2) and (3).
(((20))) (19) IRC means the Federal Internal Revenue Code of 1986, as subsequently amended.
(((21))) (20) Indexed retirement allowance means a defined benefit retirement allowance from an indexed retirement plan, payable to a member who separates after having completed at least twenty service credit years, that is increased by twenty-five one-hundredths of one percent, compounded for each month from the date of separation to the date that the retirement allowance commences.
(21) Indexed retirement plan means one of the following retirement plans, which are administered by the department of retirement systems and provide an indexed retirement allowance: Law Enforcement Officers' and Firefighters Retirement System Plan 2 (RCW 41.26.530), Public Employees' Retirement System Plan 3 (RCW 41.40.790), School Employees' Retirement System Plan 3 (RCW 41.35.620), and Teachers' Retirement System Plan 3 (RCW 41.32.840).
(22) JRF means the judges' retirement fund created by chapter
2.12 RCW.
(((22))) (23) JRS means the Washington judicial retirement system created by chapter
2.10 RCW.
(((23))) (24) LEOFF means the Washington law enforcement officers' and firefighters' retirement system created by chapter
41.26 RCW.
(((24))) (25) Member means a person who is included in the membership of one of the retirement systems created by chapters
2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 41.37, 41.40, or
43.43 RCW.
(((25))) (26) Participant means an eligible employee who participates in a deferred compensation ((or dependent care assistance)) plan.
(((26))) (27) Participation agreement means an agreement that an eligible employee signs to become a participant in a deferred compensation ((or dependent care assistance)) plan.
(((27))) (28) Pension plan is a plan that provides a lifelong post retirement payment of benefits to employees.
(((28))) (29) PERS means the Washington public employees' retirement system created by chapter
41.40 RCW.
(((29))) (30) Petition means the method by which a party requests a review of an administrative determination prior to an appeal to the director. The department's petitions examiner performs the review under chapter 415-04 WAC.
(((30))) (31) Plan 1 means the retirement plans in existence prior to the enactment of chapters 293, 294 and 295, Laws of 1977 ex. sess.
(((31))) (32) Plan 2 means the retirement plans established by chapters 293, 294 and 295, Laws of 1977 ex. sess., chapter 341, Laws of 1998, and chapter 329, Laws of 2001.
(((32))) (33) Plan 3 means the retirement plans established by chapter 239, Laws of 1995, chapter 341, Laws of 1998, and chapter 247, Laws of 2000.
(((33))) (34) Plan year is the twelve-month period that begins on January 1st and ends on December 31st of the same calendar year.
(((34))) (35) Portability is the ability to use membership in more than one Washington state retirement system in order to qualify for retirement benefits. See chapters
41.54 RCW and 415-113 WAC.
(((35))) (36) PSERS means the Washington public safety employees' retirement system created by chapter
41.37 RCW.
(((36))) (37) Public record is defined in RCW
42.17.020(41).
(((37))) (38) Restoration is the process of restoring a member's service credit for prior periods.
(((38))) (39) Retirement system employer - See "employer."
(((39))) (40) Rollover means a distribution that is paid to or from an eligible retirement plan within the statutory time limit allowed.
(((40))) (41) Separation date is the date a member ends employment in a position eligible for retirement or disability benefit coverage.
(((41))) (42) SERS means the Washington school employees' retirement system created by chapter
41.35 RCW.
(((42))) (43) Split account is the account the department establishes for a member or retiree's ex-spouse.
(((43))) (44) Surviving spouse refers to a person who was married to the member at the time of the member's death and who is receiving or is eligible to receive a survivor benefit.
(((44))) (45) Survivor beneficiary means a person designated by the member to receive a monthly benefit allowance after the member dies.
(((45))) (46) Survivor benefit is a feature of a retirement plan that provides continuing payments to a beneficiary after the death of a member or retiree.
(((46))) (47) TRS means the Washington state teachers' retirement system created by chapter
41.32 RCW.
(((47))) (48) The Uniform Services Employment and Reemployment Rights Act of 1994 (USERRA) is the federal law that requires employers to reemploy and preserve job security, pension and welfare benefits for qualified employees who engage in military service.
(((48))) (49) WSPRS means the Washington state patrol retirement system created by chapter
43.43 RCW.
AMENDATORY SECTION (Amending WSR 08-10-025, filed 4/25/08, effective 5/26/08)
WAC 415-02-550 What happens to my defined contributions if I transfer to Plan 3 after the department of retirement systems accepts my property division dissolution order?
(1)
Who may use this section? You may use this section if you were a member of PERS Plan 2, SERS Plan 2, or TRS Plan 2 and
first obtained a property division dissolution order using the language in RCW
41.50.670(2) and WAC 415-02-510 or 415-02-520, and
then transfer to Plan 3.
1(2)
What happens if the property division dissolution order (using the language in RCW 41.50.670(2) and WAC 415-02-510) did not split my account? Refer to WAC 415-02-530 for information about your defined benefit account and about your and your ex-spouse's defined contribution accounts after you transfer to Plan 3.
(3) What happens if the property dissolution order used the language in WAC 415-02-520 and did split my account?
(a) Your ex-spouse's account will remain in Plan 2. Your ex-spouse is ineligible to transfer to Plan 3.
(b) The balance of your accumulated contributions remaining in your Plan 2 account after it was split will be transferred to your Plan 3 defined contributions account. (Refer to chapter 415-111 WAC for information about your defined contribution account.)
(4) ((How will gainsharing be applied to my account? Gainsharing is not applied to Plan 2 member accounts. If gainsharing is applied after you have transferred to Plan 3, only you will receive the gainsharing amount.
(5))) Terms used:
(b) Ex-spouse - WAC 415-02-030.
(c)
((Gainsharing - Chapter 41.31 RCW (Plan 1); chapter 41.31A RCW (Plan 3); WAC 415-02-030; 415-111-440.(d))) PERS - Public employees' retirement system.
(((e))) (d) Plan 3 retirement systems - WAC 415-111-100.
(((f))) (e) SERS - School employees' retirement system.
(((g))) (f) Split accounts - WAC 415-02-030.
(((h))) (g) TRS - Teachers' retirement system.
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Footnote to section: |
1 | The section does not apply to retirees, because retirees cannot transfer to Plan 3. |
NEW SECTION
WAC 415-113-066 How does service credit from more than one retirement system affect my indexed retirement allowance?
(1) May I combine service credit from more than one retirement system to receive an indexed retirement allowance? If you are a dual member, you may combine service credit from any dual member system to be eligible for an indexed retirement allowance.
(2) How will my indexed retirement allowance be calculated? If there is a period of at least one month between your separation from employment in an indexed retirement plan and your date of retirement, the department will calculate your indexed retirement allowance in the following two ways and use the higher of the two results:
(a) Method 1: Use the average compensation from the indexed retirement plan. Index the retirement allowance (for the indexed retirement plan only) from the date both of the following have occurred, to the date of retirement:
(i) Separation from the indexed retirement plan; and
(ii) Accrual of twenty years of service from one or more of the systems in which service credit was earned.
(b) Method 2: Use the highest average compensation from any of the systems in which service credit was earned. Index the retirement allowance (for the indexed retirement plan only) from the date both of the following have occurred, to the date of retirement:
(i) Separation from all systems; and
(ii) Accrual of twenty years of service from one or more of the systems in which service credit was earned.
(3) Defined terms used. Definitions for the following terms used in this section may be found in the WAC sections listed in (a) through (e) of this subsection:
(a) "Average compensation" - WAC 415-113-030
(b) "Dual member" - WAC 415-113-041
(c) "Dual member system" - WAC 415-113-030
(d) "Indexed retirement allowance" - WAC 415-02-030
(e) "Indexed retirement plan" - WAC 415-02-030
REPEALER
The following section of the Washington Administrative Code is repealed:
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WAC 415-113-084 |
How will my benefit be computed if I retire retroactively from LEOFF Plan 2? |
