Original Notice.

Preproposal statement of inquiry was filed as WSR 99-19-128.

Title of Rule: Changes to general chapter 415-02 WAC to clarify and comply with amendments to chapter 41.50 RCW.

Purpose: To amend the department's general rules in order to make them consistent with 1994 and 1996 statutory amendments to chapter 41.50 RCW and with a state court decision Newlun v. Retirement Systems 53 Wn. App. 809, 770 P.2d 1071 (1989).

Statutory Authority for Adoption: RCW 41.50.050.

Statute Being Implemented: Chapter 41.50 RCW.

Summary: The proposed rules amend the department's general rules.

Reasons Supporting Proposal: To clarify existing rules; bring them into conformity with chapter 41.50 RCW as amended; bring them into conformity with Newlun v. Retirement Systems 53 Wn. App. 809, 770 P.2d 1071 (1989); and reflect the agency's address, organizational structure and functions which have changed since 1977 and 1978 when many of the general rules were adopted.

Name of Agency Personnel Responsible for Drafting: Elyette Weinstein, 6835 Capitol Boulevard, Tumwater, (360) 664-7307; Implementation and Enforcement: Leah Wilson, 6835 Capitol Boulevard, Tumwater, (360) 664-7049.

Name of Proponent: Department of Retirement Systems (DRS), governmental.

Rule is necessary because of state court decision, Newlun v. Retirement Systems 53 Wn. App. 809, 770 P.2d 1071 (1989).

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rule is an amendment to provisions of chapter 415-02 WAC, the department's general rules implementing chapters 41.26, 41.32, 41.40 and 41.50 RCW. The amendments are necessary to conform to the changes to chapter 41.50 RCW, the department and a state court decision rendered after the WACs went into effect.

Proposal Changes the Following Existing Rules: WAC 415-02-010 is changed to delete outdated references to DRS organization and location.

WAC 415-02-020 is changed to show the retirement systems that DRS currently administers and the scope of its current authority under chapter 41.50 RCW.

WAC 415-02-030 changes the definitions to reflect current department authority, structure and procedures and to list retirement systems that DRS currently administers.

WAC 415-02-040 is repealed. It is a definition of Retirement Systems Plan 1 which has been moved to the definitions section WAC 415-02-030 in the interest of brevity and clarity.

WAC 415-02-050 updates the reference to the State Environmental Policy Act.

WAC 415-02-060 is revised to conform to the state court decision in Newlun v. Retirement Systems 53 Wn. App. 809, 770 P.2d 1071 (1989). The decision holds that a refund of member contributions does not occur until the member cashes the refund check.

WAC 415-02-070 is repealed. It is a definition of Retirement Systems Plan 2 which has been moved to the definitions section WAC 415-02-030 in the interest of brevity and clarity.

WAC 415-02-080 is revised to clearly advise members that the Internal Revenue Code gives the department authority to request member Social Security numbers. It also explains that although failure to provide the number will not result in a loss of benefits, it may lead to adverse tax consequences due to misreporting.

WAC 415-02-100 has been revised to remove language referring to its 1984 effective date which is no longer needed.

New WACs in chapter 415-02 WAC have been drafted to conform to the requirements of RCW 41.50.065 and 41.50.137 which were passed in 1994 and 1996, respectively.

WAC 415-02-120 conforms to RCW 41.50.137 which authorizes the department to issue investigative subpoenas.

WAC 415-02-130 conforms to RCW 41.50.065 which requires that the department issue members annual statements providing retirement benefit information.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The rules apply to public employers and employees participating in the retirement systems administered by DRS. No private business are [is] affected by the rules, therefore, no small business [economic] impact statement is required.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption. DRS is not one of the agencies that RCW 34.05.328 applies to. DRS does not opt to voluntarily bring itself within the coverage of that statute.

Hearing Location: Boardroom, 3rd Floor, 6835 Capitol Boulevard, Tumwater, WA, on March 10, 2000, at 1:00 p.m.

Assistance for Persons with Disabilities: Contact Elyette Weinstein by March 10, 2000, 11:00 a.m., TDD (360) 586-5450, or (360) 664-7298.

Submit Written Comments to: Elyette Weinstein, P.O. Box 48380, Olympia, WA 98504-8380, fax (360) 664-3618, by March 9, 2000.

Date of Intended Adoption: March 10, 2000.

January 24, 2000

Elyette M. Weinstein

Rules Coordinator

OTS-3705.2

AMENDATORY SECTION(Amending Order 4, filed 7/27/77)

WAC 415-02-010
Identification.

The department of retirement systems is a department of state government created by chapter 105, Laws of 1975-'76 2nd ex. sess.

(1) The chief executive officer of the department of retirement systems is the director of retirement systems.

(2) ((The department of retirement systems is divided, structurally, into two divisions.      Each division is headed by an assistant director answerable to the director.      The two divisions are:

(a) The administrative services division which is headed by the assistant director for administrative services; and

(b) The program services management division which is headed by the assistant director for program services.

(3))) Members of the public may obtain information, make submittals or requests, or obtain copies of agency decisions by addressing their requests or submittals to the director of the Department of Retirement Systems at ((1025 East Union,)) P.O. Box 48380, Olympia, Washington, 98504.      Upon receipt of such a request or submittal, the director shall forward the same to the proper officer or employee of the department of retirement systems for an appropriate response.

(((4))) (3) Members of the public who wish to inspect and/or copy public records maintained by the agency pursuant to chapter 42.17 RCW shall do so in accordance with the methods and procedures established in chapter 415-06 WAC ((415-06-010 through 415-06-110 of these rules)).

[Order 4, § 415-02-010, filed 7/27/77.]

(1) The department ((of retirement systems)) is vested with the authority to administer, in accordance with chapter 105, Laws of 1975-'76 2nd ex. sess., as now or hereafter amended, the Washington public employees' retirement system created by chapter 41.40 RCW, the Washington state teachers' retirement system created by chapters 41.32 and 41.34 RCW, the Washington school employees retirement system created by chapter 41.35 RCW, the Washington law enforcement officers' and fire fighters' retirement system, created by chapter ((41.25)) 41.26 RCW, the Washington state patrol retirement system, created by chapter 43.43 RCW, the Washington judicial retirement system, created by chapter 2.10 RCW, and the judges retirement fund created by chapter 2.12 RCW.

(2) ((The director of retirement systems and the state finance committee are empowered to provide for the investment of all funds of the Washington public employees' retirement systems, the Washington teachers' retirement system, the Washington law enforcement officers' and fire fighters' retirement system, the Washington state patrol retirement system, the Washington judicial retirement system, and the judges retirement fund, pursuant to RCW 43.84.150, with the approval of the respective boards of the retirement systems and funds above listed.      The state finance committee will execute all such transactions.

(3))) The director is empowered to propose rules pursuant to RCW ((2.10.050, 2.10.070, 41.26.060, 41.32.160, 41.40.020, and 43.43.140, with the approval of the appropriate retirement board.

(4) The director has no authority to perform functions vested in the various retirement boards by law with respect to applications for benefits paid upon either temporary or permanent disability, except to see that such staff assistance is provided by the department to the boards as may be required.

(5) The director is required to evaluate all proposed legislation to be submitted by a retirement board as a departmental request.      When such legislation is submitted to the director, he will obtain an initial actuarial estimate of the cost of each systems of the changes contained in the proposed legislation as if the legislation were applicable to each retirement system under his jurisdiction.      The results of that estimate will then be transmitted to the retirement board which has requested the proposed legislation.      That board may then modify its legislative proposal into final form for introduction as a bill on the basis of the estimate.      The final form for the legislative proposal shall then be returned to the director who shall obtain a final actuarial estimate of the costs applied in the same manner as the initial estimate.      On or before September 1, the director will transmit the final legislation proposal together with the actuarial estimates to the governor for consideration in his budget requests and shall also transmit the same to the chairman of the ways and means committees of the legislature)) 41.50.050.

[Order 4, § 415-02-020, filed 7/27/77.]

Unless the context requires otherwise, the following terms shall have the meanings established below:

(1) "Appeal" means the method by which a party secures a contested case hearing before ((a retirement board or the director subsequent to an initial determination by the board or director of the legal rights, duties or privileges of the specific party)) the department's presiding officer or hearings examiner under chapter 415-08 WAC.

(2) (("Clerk" means the director, any assistant director of the department of retirement systems, or the confidential secretary to the director of retirement systems, when used in reference to requests, submittals, papers or pleadings which must be filed with the clerk of one of the retirement boards established by chapters 2.10, 41.26, 41.32, 41.40, and 43.43 RCW or the director of the department of retirement systems.

(3))) "Department" means the department of retirement systems.

(((4))) (3) "Director" means the director of retirement systems.

(((5) "Employee" under this chapter, 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.

(6) "Employer" means the employer of a particular member.

(7) "Hearings examiner" or "presiding officer" means a person or persons appointed by a retirement board or the director to preside at a contested case hearing and matters related thereto.

(8))) (4) "Independent contractor" under this chapter, means a worker providing services under contract to a retirement system employer for remuneration who is not under the direction or control of the employer as determined under WAC 415-02-110 (2) and (3).      ((Independent contractors are ineligible to participate as members in any state-administered retirement system.

(9))) (5) "Member" means a person who is entitled to membership in one of the retirement systems created by chapters 2.10, 2.12, ((41.25)) 41.26, 41.32, 41.34, 41.35, 41.40, or 43.43 RCW.

(((10))) (6) "Petition" means the method by which a party secures a review of an administrative determination ((by an assistant director)) prior to an appeal to the director. The department's petitions examiner performs the review under chapter 415.04 WAC.

(((11) "Retirement board" means either the Washington judicial retirement board, the Washington law enforcement officers' and fire fighters' retirement board, the board of trustees of the Washington state teachers' retirement system, the Washington public employees' retirement board, or the Washington state patrol retirement board.

(12))) (7) "Plan 1" means the retirement plans in existence prior to the enactment of chapters 293, 294 and 295, Laws of 1977 ex. sess.

(8) "Plan 2" means the retirement plans established by chapters 293, 294 and 295, Laws of 1977 ex. sess., and chapter 341, Laws of 1998.

(9) "Plan 3" means the retirement plans established by chapter 239, Laws of 1995 and chapter 341 Laws of 1998.

(10) "Retirement system employer" means "employer" as defined in RCW 41.26.030(2), 41.32.010(11), 41.34.010(5), 41.35.010(4), or 41.40.010(4), and a "city" or "cities" as defined in RCW 41.44.030(2).

(((13))) (11) "Worker" means a person who performs services for a retirement system employer either as an employee or as an independent contractor.

[Statutory Authority: RCW 41.50.050.      94-09-039, § 415-02-030, filed 4/19/94, effective 5/20/94; Order 4, § 415-02-030, filed 7/27/77.]

The actions and activities of the department of retirement systems are not major actions significantly affecting the quality of the environment as described in chapter 43.21C RCW.      All of the activities of the department are exempted from the threshold determination and environmental impact statement requirements of the State Environmental Policy Act (SEPA) by WAC ((197-10-175)) 197-11-875.

The responsible official of the agency for the purposes of SEPA is the director.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.      78-03-023 (Order IV), § 415-02-050, filed 2/15/78.]

((A request for a refund of contributions will not be honored if it was executed more than thirty days prior to its receipt by the department.      A member may cancel the request for a refund of accumulated contributions at any time prior to the mailing of the warrant representing the refund of contributions.)) The department will automatically cancel a member's request for refund of defined benefit plan member contributions if the refund warrant is not cashed within one hundred eighty days of the date on the warrant. There will be no earnings on returned contributions for the one hundred eighty-day period that funds were held for distribution to the member.

If the member does not cash a warrant for a distribution of defined contribution plan member contributions within one hundred eighty days of the date on the warrant, the contributions will be returned to the member's account with the same allocation as existed at the time of distribution. There will be no earnings on returned contributions for the one hundred eighty-day period that funds were held for distribution to the member.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.      78-03-023 (Order IV), § 415-02-060, filed 2/15/78.]

((Records of members of the retirement systems will be filed and identified in part by Social Security number.      Each member of the systems shall be required to supply his or her Social Security number for such record keeping purposes.      Such disclosure shall be voluntary and shall only be used for record keeping and identification purposes.      Failure to supply a Social Security number shall not result in the loss of any benefits supplied by these systems.)) The department is authorized by the Internal Revenue Code to solicit Social Security numbers. The department uses Social Security numbers as the identifying number for the member file to ensure that any amounts paid from retirement accounts are properly reported to the Internal Revenue Service (IRS) as required by law. Each member of the retirement system is required to supply his or her Social Security number to the department. Failure to do so will not cause the member to lose benefits, but may result in misreporting to the IRS which can lead to adverse tax consequences for the member.

[Statutory Authority: RCW 41.50.050(6) and 41.50.090.      78-03-023 (Order IV), § 415-02-080, filed 2/15/78.]

((Effective December 1, 1984)) The department ((of retirement systems)) will not accept requests by retirees of any of the systems which the department administers to deduct premiums for any kind of insurance from retirement allowances unless the provider has at least twenty-five such retirees enrolled in a withholding program.      Any providers who now have less than twenty-five retirees in their deduction program will have twelve months in which to secure at least twenty-five participants.      Failing to acquire the required minimum within twelve months will result in suspension of the deduction program for such provider.      Any provider presently qualified who drops below twenty-five participants in the future will be suspended if they remain under twenty-five participants for ninety days.

[Statutory Authority: RCW 41.50.050(5) and 41.50.090.      84-24-017 (Order V), § 415-02-100, filed 11/28/84.]

(1) During the course of an audit or investigation, the department may issue a subpoena under RCW 41.50.137. The department may direct the subpoena to any employer, member, person or entity (served party) who may possess information which is relevant and material to the audit or investigation to compel the party to:

(a) Appear and give testimony; and/or

(b) Produce any books, papers, correspondence, memoranda, or other documents, which the department deems relevant and material to the audit or investigation.

(2) The subpoena must:

(a) Identify "Washington state department of retirement systems" as the agency issuing the subpoena;

(b) Identify the name and address of the party subpoenaed;

(c) Specifically describe the information which is sought;

(d) State a reasonable time and place for the production of the information, but no later than twenty days after service; and

(e) Notify the served party that if the information is not produced, the department will apply to the superior court under RCW 34.05.588 for an appropriate order or other remedy.

(3) The subpoena may be served by:

(a) Delivering it personally; or

(b) Sending a copy by certified mail, return receipt requested.

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(1) DRS provides information in an annual statement to all members who are currently employed and are being reported. The statements include, but are not limited to, the following information:

(a) Service credit;

(b) Contributions; and

(c) Interest.

(2) The annual statement is based on information provided to the department by the employer as of a certain date. At the time the department compiles the annual statement, it may not have all the information necessary to make a final computation of any data reported. Information in the annual statement is subject to correction.

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     The following sections of the Washington Administrative Code are repealed:

WAC 415-02-040	Definition of Plan II.
WAC 415-02-070	Application of particular rules to Plan II members.

© Washington State Code Reviser's Office