Original Notice.

Preproposal statement of inquiry was filed as WSR 99-19-126.

Title of Rule: School employee's retirement system (SERS), teachers' retirement system (TRS) Plan 3.

Statutory Authority for Adoption: RCW 41.50.050, chapters 41.32, 41.34, and 41.35 RCW.

Statute Being Implemented: Chapters 41.32, 41.34, and 41.35 RCW.

Summary: The proposed rules provide guidance to SERS and TRS members regarding administration of their retirement plans and bring department rules into conformity with chapters 41.32, 41.34, and 41.35 RCW.

Name of Agency Personnel Responsible for Drafting: Tim Valencia, 6835 Capitol Boulevard, Tumwater, WA, (360) 664-7117; Implementation and Enforcement: Jack Bryant, 6835 Capitol Boulevard, Tumwater, WA, (360) 664-7193.

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: The Teachers' Retirement System Plan 3 went into effect July 1, 1996. The school employees' retirement system went into effect on September 1, 2000. These rules give guidance to members regarding the new retirement plans' administration.

Proposal Changes the Following Existing Rules: Sections of chapters 415-108, 415-112, 415-113 and 415-115 WAC have been amended to accommodate the existence of SERS and TRS Plan 3. Changes to the amended rules are described below.

     Chapter 415-200 WAC has been updated to clarify the role of the Plans 3 external administrator and to clarify who must pay self-directed investment program expenses, see below.

     WAC 415-112-950 and 415-210-020 have been repealed to avoid duplication, see below.

     New chapters 415-110 and 415-111 WAC, have been drafted to conform to the requirements of chapters 41.32, 41.34 and 41.35 RCW. The 1995 and 1998 statutes authorized the new retirement system for teachers and school employees. The new rules are described below.

CHAPTER 415-108 WAC
AMENDED	415-108-0109	Clarifies the system acronym definitions; amended to include SERS.
AMENDED	415-108-726	Describes when and how a member can participate in PERS if concurrently employed in SERS.
AMENDED	415-108-728	Clarifies when and how a member is reported if employed in PERS and TRS. Amended to delete reference to "concurrent" in table headings. This change will avoid confusion with the PERS/SERS concurrent rule in WAC 415-113-200.
CHAPTER 415-112 WAC
AMENDED	415-112-0167	Defines the SERS acronym.
AMENDED	415-112-130	Describes when and how a member may reestablish membership in TRS. Amended to include Plan 3.
AMENDED	415-112-135	Describes the TRS rights of an educational staff associate converted from PERS to SERS.
AMENDED	415-112-155	Clarifies when and how a member is reported if employed in PERS and TRS. Amended to delete reference to "concurrent” in table headings. This change will avoid confusion with the PERS/SERS concurrent rule in WAC 415-113-200.
AMENDED	415-112-727	Clarifies a member's retirement benefit options. Amended to include Plan 3.
CHAPTER 415-113 WAC
AMENDED	415-113-030	Expanded the sections that the chapter covers to include the new section added for SERS concurrent employment.
AMENDED	415-113-0302	Provides a reference for the definition of SERS average final compensation.
AMENDED	415-113-0303	Clarifies the definition of dual member system. Amended to include SERS.
AMENDED	415-113-0310	Clarifies the system acronym definitions. Amended to include SERS.
AMENDED	415-113-041	Clarifies the definition of dual member. Amended to include SERS.
AMENDED	415-113-042	Clarifies when a member can terminate dual member status. Amended to include SERS.
AMENDED	415-113-065	Allows a member to substitute base salary between systems. Amended to include SERS.
AMENDED	415-113-070	Clarifies the process of delaying a dual member benefit. Amended to include SERS.
CHAPTER 415-115 WAC
AMENDED	415-115-020	Updates the cross references for the definition of standard administrative fee.
AMENDED	415-115-090	Clarifies the systems that the maximum additional administrative fee applies to. Amended to include SERS.
CHAPTER 415-200 WAC
AMENDED	415-200-030	Clarifies the role of the plan 3 external administrator.
AMENDED	415-200-040	Clarifies who must pay the expenses caused by the self-directed investment program.
CHAPTER 415-110 WAC (NEW) This new chapter copies the rules from chapter 415-108 WAC the rules that apply specifically to the SERS membership. The intent is to copy each in part of in whole as applicable.
NEW SECTION	415-110-010	Clarifies the location of applicable definitions.
NEW SECTION	415-110-0102	Defines the term "normally" as used in the definition of eligible position.
NEW SECTION	415-110-0103	Defines "project position."
NEW SECTION	415-110-0104	Defines the term "report."
NEW SECTION	415-110-0108	Defines the term "year."
NEW SECTION	415-110-0109	Defines the retirement system acronyms.
NEW SECTION	415-110-0110	Defines the term "reportable compensation."
NEW SECTION	415-110-0111	Defines the term "annual leave."
NEW SECTION	415-110-020	Provides the WAC reference for public record information.
NEW SECTION	415-110-030	Describes the relationship and governance rules pursuant to SERS and the state-wide cities retirement system.
NEW SECTION	415-110-040	Describes the disability appeals process. Cross references appeals rules.
NEW SECTION	415-110-315	Clarifies the rules for the designation of beneficiaries upon death of a member.
NEW SECTION	415-110-320	Describes the rules determining a Plan 3 member's defined benefit eligibility.
NEW SECTION	415-110-324	Clarifies the requirements for spousal consent on member benefit selection.
NEW SECTION	415-110-326	Describes the retirement benefit options.
NEW SECTION	415-110-340	Provides the actuarial tables, schedules, and factors for calculating optional retirement allowances.
NEW SECTION	415-110-400	Describes the rules for a beneficiary receiving a retirement allowance to authorize deductions for insurance premiums.
NEW SECTION	415-110-441	Describes the purpose and scope of compensation earnable rules.
NEW SECTION	415-110-443	Provides a quick reference guide in table format to reportable compensation rules.
NEW SECTION	415-110-445	Clarifies what compensation can be reported.
NEW SECTION	415-110-451	Describes salary or wages that are reportable.
NEW SECTION	415-110-453	Clarifies reportable compensation rules for performance bonuses.
NEW SECTION	415-110-455	Clarifies reportable compensation rules for compensation under a cafeteria plan.
NEW SECTION	415-110-456	Clarifies reportable compensation rules for leave payments earned over time.
NEW SECTION	415-110-457	Clarifies reportable compensation rules for retroactive salary increases.
NEW SECTION	415-110-458	Clarifies reportable compensation rules for severance pay earned over time.
NEW SECTION	415-110-459	Clarifies reportable compensation rules for payroll deductions.
NEW SECTION	415-110-463	Clarifies reportable compensation rules for payments not for services rendered.
NEW SECTION	415-110-464	Clarifies reportable compensation rules for legislative leave.
NEW SECTION	415-110-465	Clarifies reportable compensation rules for paid leave not earned over time.
NEW SECTION	415-110-466	Clarifies reportable compensation rules for union leave.
NEW SECTION	415-110-467	Clarifies reportable compensation rules for reinstatement or payment in lieu of reinstatement.
NEW SECTION	415-110-468	Clarifies reportable compensation rules for compensation authorized by statute for periods of absence due to sickness or injury.
NEW SECTION	415-110-469	Clarifies reportable compensation rules for standby pay.
NEW SECTION	415-110-470	Clarifies reportable compensation rules for non-money maintenance payments.
NEW SECTION	415-110-475	Clarifies reportable compensation rules for fringe benefits.
NEW SECTION	415-110-477	Clarifies reportable compensation rules for disability insurance payments.
NEW SECTION	415-110-479	Clarifies reportable compensation rules for workers' compensation payments.
NEW SECTION	415-110-480	Clarifies reportable compensation rules for vehicle use value.
NEW SECTION	415-110-482	Clarifies reportable compensation rules for illegal payments.
NEW SECTION	415-110-483	Clarifies reportable compensation rules for optional payments.
NEW SECTION	415-110-484	Clarifies reportable compensation rules for reimbursements for expenses.
NEW SECTION	415-110-485	Clarifies reportable compensation rules for vehicle allowances.
NEW SECTION	415-110-487	Clarifies reportable compensation rules for retirement bonus or incentive payments.
NEW SECTION	415-110-488	Clarifies reportable compensation rules for severance pay not earned over time.
NEW SECTION	415-110-491	Clarifies reportable compensation rules for salary imputed to periods of unpaid leave.
NEW SECTION	415-110-550	Clarifies the membership eligibility and membership application for elected officials.
NEW SECTION	415-110-560	Clarifies the membership eligibility and membership application for appointed officials.
NEW SECTION	415-110-570	Clarifies the service credit rules for elected and appointed officials.
NEW SECTION	415-110-679	Describes the purpose and scope of membership eligibility rules.
NEW SECTION	415-110-680	Clarifies the rules for determining if a person is eligible for membership.
NEW SECTION	415-110-690	Describes the process for determining eligibility.
NEW SECTION	415-110-700	Clarifies the eligibility rules for members employed in multiple ineligible positions with one employer.
NEW SECTION	415-110-710	Clarifies the rules and effects of a member returning to work after retirement.
NEW SECTION	415-110-720	Clarifies when a person can be excluded from membership when in an eligible position.
NEW SECTION	415-110-725	Clarifies the rules for a retiree from another retirement system participating in SERS.
NEW SECTION	415-110-728	Clarifies the rules for reporting a member working in TRS and SERS position during the same year.
NEW SECTION	415-110-820	Clarifies when and how an interim and final retirement benefit will be computed on an account.
NEW SECTION	415-110-830	Describes the rules for actuarial recomputation of retirement allowance upon retirement following reemployment.
NEW SECTION	415-110-910	Clarifies the rules regarding the conversion of membership from PERS to SERS.
CHAPTER 415-111 WAC (NEW CHAPTER)
NEW SECTION	415-111-100	Clarifies who the chapter applies to.
NEW SECTION	415-111-110	Clarifies member and employer responsibilities under the defined contribution plan.
NEW SECTION	415-111-111	Clarifies the employer and member responsibility for monitoring deferral limits.
NEW SECTION	415-111-210	Describes when and how a member elects an investment program.
NEW SECTION	415-111-220	Describes when and how a member elects a contribution rate.
NEW SECTION	415-111-230	Describes how a member establishes an allocation under the self-directed program.
NEW SECTION	415-111-310	Clarifies when and how a member may withdraw from their defined contribution account.
CHAPTER 415-112 WAC
NEW SECTION	415-112-156	Clarifies when and how a member is reported if employed in TRS and SERS.
CHAPTER 415-113 WAC
NEW SECTION	415-113-200	Provides the definition and rules for participation as a "concurrent" member.
CHAPTER 415-112 WAC
REPEAL	415-112-950	Same rules being added under new chapter 415-111 WAC. Therefore, these rules are duplicative and should be repealed.
CHAPTER 415-210 WAC
REPEAL	415-210-020	Plan 3 contribution rate rules and references are added in new chapter 415-111 WAC. Therefore this rule is duplicative and should be repealed.

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 Washington State Patrol retirement system administered by Department of Retirement Systems (DRS). No private business are affected by the rules, therefore, no small business impact [economic] 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: Department of Retirement Systems, Board Room, 6835 Capitol Boulevard, Tumwater, WA, on December 5, 2000, at 10:00 a.m. - 12:00 p.m.

Assistance for Persons with Disabilities: Contact Amy Martin by December 4, 2000, at 5 p.m., TDD (360) 586-5450.

Submit Written Comments to: Tim Valencia, Department of Retirement Systems, P.O. Box 48330, Olympia, WA 98504-8380, fax (360) 753-1090, by December 4, 2000.

Date of Intended Adoption: December 5, 2000.

October 30, 2000

Elyette M. Weinstein

Rules Coordinator

OTS-4459.1

AMENDATORY SECTION(Amending WSR 95-16-053, filed 7/25/95, effective 8/25/95)

WAC 415-108-0109
System acronyms -- Definition.

The acronyms used in this chapter are defined as follows:

     (1) "PERS" means the public employees' retirement system.

     (2) "TRS" means the teachers' retirement system.

     (3) "SERS" means the school employees' retirement system.

[Statutory Authority: RCW 41.50.050.      95-16-053, § 415-108-0109, filed 7/25/95, effective 8/25/95.]

(1)(a) Yes.      You may earn service credit in PERS and any of the following systems at the same time if:

     (i) You work for a PERS employer and an employer covered by a retirement system of the city of Seattle, Spokane or Tacoma (First Class City Retirement System); and

     (ii) You cannot report service for the First Class City Retirement System in PERS;

     (b) The combined service credit under PERS and the retirement system listed in (a) of this subsection may not exceed one month of service for a calendar month of employment.

     (c) To qualify for PERS service credit, it is up to the employee to initiate the process by applying under subsection (2) of this section.

Example:

A member works part time for the City of Seattle and part time for the University of Washington (UW). She may receive partial service credit in PERS for the UW service since she cannot report the time she works for Seattle under PERS.

Note:

The combined service credit under PERS and the City of Seattle Retirement System may not exceed one month of service for a calendar month of employment. To receive PERS service credit she must apply to the department.

     (2) How do I apply?

     (a) To apply for membership and service credit under subsection (1) of this section you must send the department an application.      The application is a statement that you want membership and/or service credit in PERS.      Include:

     (i) Your name;

     (ii) Your SSN;

     (iii) All period(s) of service that you want to receive service credit for;

     (iv) All PERS and non-PERS employer(s) that you worked for during the periods of service referenced in (a)(iii) of this subsection.

     (b) After the department receives your application, it will contact your employer(s) to verify how much service credit you have earned.      When the department receives the necessary information, it will determine how much service credit you will receive.      At that time the department will send you a bill for member contributions and interest that must be paid in order to establish the service credit.

     (3) When should I submit my payment?

     You should pay contributions and interest required under subsection (2)(b) of this section within twenty-four consecutive months from the last day of the calendar year for which you claim service credit.      After that date, you must pay the actuarial cost of purchasing the service credit under RCW 41.40.104 and 41.50.165.

     (4) What if I worked before this WAC became effective?

     If you worked for a PERS employer and for one of the retirement systems listed in subsection (1) of this section, before this WAC became effective, you have until December 31, 2000, to apply in order to purchase service credit by paying member contributions plus interest.      After December 31, 2000, you must pay the actuarial cost of purchasing the service credit under RCW 41.40.104 and 41.50.165.

     (5) You may participate in PERS if you are concurrently employed, as described in WAC 415-113-200, in a SERS position.

     (6) Defined terms used.      Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Membership" - RCW 41.40.023.

     (b) "Retirement plan" - WAC 415-108-0105.

     (c) "Service" - RCW 41.40.010.

     (d) "Normally" - WAC 415-108-0102.

[Statutory Authority: RCW 41.50.050.      99-22-043, § 415-108-726, filed 10/29/99, effective 11/29/99; 95-16-053, § 415-108-726, filed 7/25/95, effective 8/25/95.]

(1) If you work in both a PERS and TRS position during the same year, your membership status and the nature of your positions will determine the system your employer will report you in.      You will be reported in either PERS or TRS according to the following table:

Former TRS Plan ((I)) 1 Members ¹/

Type of ((Concurrent)) Employment 2/	Type of Employer(s)	System You Will Be Reported In
A substitute or less than full-time teaching position and a PERS-eligible position	Same employer	PERS - for both positions.
	Separate TRS employers	PERS - for PERS position only. Your substitute part-time position is not reported unless you qualify for and elect to establish TRS membership under RCW 41.32.240. If you elect to establish TRS membership, your employers will report you in TRS for both positions. Any previously reported service credit and compensation in PERS will be transferred to TRS.
	A TRS employer and non-TRS employer	PERS - for PERS position only. Your substitute part-time position is not reported unless you qualify for and elect to establish TRS membership under RCW 41.32.240. If you elect to establish TRS membership, you must elect either to: 1.     Have your TRS service reported in PERS and receive service credit in PERS for both positions; or 2.     Have your TRS service reported in TRS and not receive service credit for the PERS position.
A full-time teaching position and an eligible PERS position	Same employer	TRS - for both positions.
	Separate TRS employers	TRS - for both positions.
	A TRS employer and non-TRS employer	You must elect to: 1.     Have your TRS service reported in PERS and receive service credit in PERS for both positions; or 2.     Have your TRS service reported in TRS and not receive service credit for the PERS position.

TRS Plan ((I)) 1 Members

Type of ((Concurrent)) Employment 2/	Type of Employer(s)	System You Will Be Reported In
A full-time or less than full-time TRS position and an eligible PERS position	Same employer	TRS - for both positions.
	Separate TRS employers	TRS - for both positions.
	A TRS employer and non-TRS employer	You must elect either to: 1.     Have your TRS service reported in PERS and receive service credit in PERS for both positions; or 2.     Have your TRS service reported in TRS and not receive service credit for PERS position.
A full-time or less than full-time TRS position and an ineligible PERS position	Same employer	TRS - for both positions.
	Separate TRS employers	TRS - for both positions.
	A TRS employer and non-TRS employer	TRS - for the TRS position only; your ineligible PERS position is not reportable.

TRS Plan ((II)) 2 Members

Type of ((Concurrent)) Employment 2/	Type of Employer(s)	System You Will Be Reported In
An eligible TRS position and an ineligible PERS position	Same employer	TRS - for both positions.
	Separate TRS employers	TRS - for TRS position only; your ineligible PERS position is not reported.
	A TRS employer and non-TRS employer	TRS - for TRS position only; your ineligible PERS position is not reported.
An eligible TRS position and an eligible PERS position	Same employer	TRS - for both positions.
	Separate TRS employers	TRS - for both positions.3/
	A TRS employer and non-TRS employer	You must elect either to: 1.     Have your TRS service reported in PERS and receive service credit in PERS for both positions; or 2.     Have your TRS service reported in TRS and not receive service credit for the PERS position.

PERS Members

Type of ((Concurrent)) Employment 2/	Type of Employer(s)	System You Will Be Reported In
An eligible PERS position and an ineligible TRS or substitute position	Same employer	PERS - for both positions.
	Separate TRS employers	PERS - for the PERS position only, unless you qualify for and elect to establish membership in TRS at the end of the school year under WAC 415-112-125(1). If you elect to establish TRS membership, your employers will report you in TRS for both positions. Any previously reported service credit and compensation in PERS will be transferred to TRS.
	A TRS employer and non-TRS employer	PERS - for the PERS position only. You will not be reported for the TRS position unless you elect to either: 1.     Have your TRS service reported in PERS and receive service credit in PERS for both positions; or 2.     Have your TRS service reported in TRS and not receive service credit for the PERS position.

Neither TRS Nor PERS Member

Type of ((Concurrent)) Employment 2/	Type of Employer(s)	System You Will Be Reported In
An ineligible TRS and an ineligible PERS position	Same employer	TRS - for both positions if the positions combined, qualify as an eligible position.
	Separate employers, TRS or non-TRS	Neither position reported.
A substitute teaching position and an ineligible PERS position	Same employer	Neither position reported. However, if you qualify, you may elect to establish membership in TRS at the end of the school year for your substitute teaching position under RCW 41.32.013 and WAC 415-112-140.
	Separate employers, TRS or non-TRS	Neither position reported. However, if you qualify, you may elect to establish membership in TRS at the end of the school year for your substitute teaching position under RCW 41.32.013 and WAC 415-112-140.

1/	"Former TRS ((I)) 1 member", as used here, means you terminate your membership by withdrawing your contributions.
2/	(("Concurrently")) Means during the same school year.
3/	EXAMPLE: A TRS ((II)) 2 member teaches in an eligible position and during the summer, she works for a state agency in an eligible position under PERS. Because the member has established membership in TRS ((II)) 2 through employment as a teacher, her state agency employer must report her service and compensation from the PERS position to the Department in TRS ((II)) 2.
	EXAMPLE: A TRS ((II)) 2 member is employed concurrently by School District A in an eligible TRS position and by School District B in an eligible PERS position. Because he is a TRS ((II)) 2 member, School District B employer must report his service and compensation from the PERS position to the Department in TRS ((II)) 2. If the member terminates his employment in the TRS position with School District A, School District B will report him in PERS for the PERS position.

     (2) Defined terms used.      Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.40.010.

     (b) "Employer" - RCW 41.40.010 (PERS); RCW 41.32.010 (TRS).

     (c) "Ineligible position" - RCW 41.40.010.

     (d) "Member" - RCW 41.40.010.

     (e) "Membership" - RCW 41.40.023.

     (f) "Report" - WAC 415-108-0104

     (g) "Service" - RCW 41.40.010.

[Statutory Authority: RCW 41.50.050.      95-16-053, § 415-108-728, filed 7/25/95, effective 8/25/95.]

OTS-4460.1

All definitions in RCW 41.35.010 apply to terms used in this chapter. Other terms relevant to the administration of chapter 41.35 RCW are defined in this chapter.

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"Normally," as used in the definition of eligible position under RCW 41.35.010, means a position is eligible if it is expected to require at least five months of seventy or more hours of compensated service each month during each of two consecutive years. Once a position is determined to be eligible, it will continue to be eligible if it requires at least five months of seventy or more hours of compensated service during at least one year in any two-year period.

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"Project position" means a position established by an employer that has a specific goal and end date.

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"Report" means an employer's reporting of an employee's hours of service, compensation and contributions to the department on the monthly transmittal report.

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"Year" means any twelve consecutive month period established and applied consistently by an employer to evaluate the eligibility of a specific position. The term generally will be limited to a school year.

Example:	An employer has used the twelve consecutive month period from September 1 to August 31 to evaluate the eligibility of positions. When the employer hires a new employee to fill an existing position, the employer must continue to use the September 1 through August 31 period to define a year for the position.
Example:	If the same employer in the above example hires a person to work in a project position beginning in November, the employer will use the twelve-month period beginning in November to evaluate the eligibility of the new position. The employer must consistently apply this twelve-month period to evaluate the eligibility of this position.

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The acronyms used in this chapter are defined as follows:

     (1) "PERS" means the public employees' retirement system.

     (2) "TRS" means the teachers' retirement system.

     (3) "SERS" means the school employees' retirement system.

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"Reportable compensation" means compensation earnable as that term is defined in RCW 41.35.010.

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"Annual leave" means leave provided by an employer for the purpose of taking regularly scheduled work time off with pay. Annual leave does not include leave for illness, personal business if in addition to and different than vacation leave, or other paid time off from work: Provided, however, That if an employer authorizes only one type of leave to provide paid leave for vacation and illness as well as any other excused absence from work, such leave will be considered annual leave for purposes of RCW 41.50.150.

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See chapter 415-06 WAC.

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Pursuant to RCW 41.35.130, the statutes and rules applying to the school employees' retirement system and the department of retirement systems (as provided in chapters 41.35 and 41.50 RCW and Title 415 WAC) govern the administration and operation of the former statewide cities retirement system.

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Appeals will be governed by the provisions of chapter 415-08 WAC as now existing or hereafter amended.

     Any person aggrieved by any final decision must, before he/she appeals to a superior court, file a notice of appeal with the director personally or by mail, within sixty days from the date such decision was communicated to such person. The notice of appeal must contain the information required by WAC 415-08-020 as now existing or hereafter amended.

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This section applies to Plan 2 members' defined benefit or Plan 3 members' defined contribution distribution.

     (1) As a member, you have the right to designate a beneficiary or beneficiaries to receive a benefit in the event of your death while you are an active member. You may change your beneficiary designation at any time by filing a change of beneficiary form with the department.

     (2) You may name:

     (a) An organization or person, including your unborn or later adopted children. Unborn or later adopted children will not be included unless you specifically designate them as beneficiaries on the form. You must state the date of birth for any living person you name as a beneficiary;

     (b) Your estate;

     (c) A trust in existence at the time of death. Before making distribution to any trust the department must receive:

     (i) A copy of the trust document;

     (ii) The name, address, telephone number of the current trustee; and

     (iii) The tax identification number;

     (d) A trust to be established under your last will.

     (3) You may name contingent beneficiaries in addition to primary beneficiaries.

     Examples:

     EXAMPLE ONE.

     Facts

     John, a member, completes a beneficiary designation form.

     In the place on the form reserved for persons, he names his daughter Ann. He checks the box to indicate that Ann is a primary beneficiary.

     In the place on the form reserved for trust/organizational beneficiaries, he lists the "Barbara Trust." His daughter Barbara is the trust beneficiary. He checks the box to indicate that the trust is a primary beneficiary.

     Result

     Subject to applicable statute, at John's death, the department will consider both the Barbara Trust and daughter Ann as primary beneficiaries. The department will require the name of the trustee, the tax identification number, a copy of the trust and other information specified in this rule before distribution to the trust.

     EXAMPLE TWO.

     Facts

     John, a member, completes a beneficiary designation form.

     In the place on the form reserved for persons, he names his daughter Ann. He checks the box to indicate that Ann is a primary beneficiary.

     In the place on the form reserved for trust/organizational beneficiaries, he lists his daughter Barbara personally (no trust name is provided). He checks the box labeled "primary beneficiary." John misunderstands the form and rather than provide the names of the trustee or trust administrator, John writes the word "both" in the blank provided.

     Result

     At John's death, the department learns that John has created no trusts. Subject to existing statute, if the department receives no notice of competing claims to John's death benefit, the department will distribute the death benefit to Ann. If the department receives notice of competing claims, a court resolution may be required.

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This WAC provides eligibility terms for retirement from the defined benefit component of SERS Plan 3.

     (1) Definition. Qualified service credit -- For purposes of this section, the following types of service credit may be used to qualify for retirement:

     (a) SERS Plan 3 service credit;

     (b) Service credit earned in a dual member system, but only in combination with SERS Plan 3 service credit (chapter 41.54 RCW); or

     (c) Up to forty-five days of sick leave (RCW 41.35.010).

     (2) Members must be age 65 to retire with an unreduced defined benefit. SERS Plan 3 members can retire with an unreduced defined benefit at age 65 if they have accumulated the following amounts of qualified service credit:

     (a) Ten service credit years;

     (b) Five service credit years, including twelve service credit months after attaining age 54; or

     (c) Five service credit years by September 1, 2000, under Plan 2.

     (3) Members may retire with a reduced benefit after attaining age 55. A SERS Plan 3 member who has attained age 55 may retire with an actuarially reduced defined benefit (RCW 41.35.680) if they have accumulated at least ten years of qualified service credit.

     (4) Members may use only qualified service credit to receive a retirement benefit from the SERS Plan 3 defined benefit component.

     (5) To be eligible to receive a retirement benefit, SERS Plan 3 members must:

     (a) Submit a completed, signed, and notarized SERS Plan 3 retirement application; and

     (b) Terminate employment with all retirement system employers from which they are claiming service credit. Termination from non-SERS system employers is required in cases where a member is using dual member rules to qualify for retirement (chapter 41.54 RCW).

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(1) The member, if married, must provide the spouse's written consent to the option selected under WAC 415-110-326. If a married member does not provide spousal consent, the department will pay the retired member a joint and one-half survivor benefit allowance and record the member's spouse as the survivor in compliance with chapter 41.35 RCW and RCW 41.35.220(2).

     (2) Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an exspouse under RCW 41.50.790.

     (3) "Spousal consent" means that the married member's spouse consents to the retirement option selected by the member. The spouse's notarized signature on a completed retirement application constitutes spousal consent.

[]

RCW 41.35.220 enables the department to provide retiring members with four retirement benefit options. The retiring member must choose an option(s) when applying for service or disability retirement:

     (1) Option one (standard allowance). The department will pay a monthly retirement allowance based solely on the single life of the member, as provided by RCW 41.35.220, 41.35.440, or 41.35.690. When the retiree dies all benefits cease. Any remaining balance of the retiree's accumulated contributions will be paid to:

     (a) The retiree's designated beneficiary; or if none, to

     (b) The retiree's surviving spouse; or if none, to

     (c) The retiree's legal representative.

     The member must designate a beneficiary at the time of retirement by filing a completed and notarized form provided by the department.

     (2) Benefit options with a survivor feature. A retiring member is allowed to select from several retirement options which create an actuarially equivalent benefit that includes a survivor feature. The survivor feature entitles the survivor to receive a monthly allowance after the retiree dies. If the member chooses one of the survivor options, the monthly benefit the member will receive is actuarially reduced to offset the cost of the survivor feature. After the retiree dies, the department pays the survivor an allowance for the duration of his or her life. If the retiree and the survivor both die before the retiree's accumulated contributions are exhausted, the remaining balance is retained in the retirement fund.

     Once retired with a survivor option, the retiree may only change the survivor option upon returning to eligible employment for two consecutive years.

     (a) Option two (joint and whole allowance). When the retiree dies, the department pays the survivor an allowance equal to the gross monthly allowance received by the retiree.

     (b) Option three (joint and one-half allowance). When the retiree dies, the department pays the survivor an allowance equal to one-half of the retiree's gross monthly retirement allowance.

     (c) Option four (joint and two-thirds allowance).

     (i) This subsection applies to members retiring on or after January 1, 1996.

     (ii) When the retiree dies, the department pays the survivor an allowance equal to two-thirds (66.667%) of the retiree's gross monthly retirement allowance.

     (3) If a member retires on or after June 6, 1996, the department is required to pay an exspouse survivor benefits pursuant to a marital dissolution order that complies with RCW 41.50.790.

     (4) Benefit increases when survivor predeceases retiree (pop-up provision).

     (a) This section applies to members retiring on or after January 1, 1996, who select option two, three, or four.

     (b) If the survivor dies before the retiree, the retiree's monthly retirement allowance increases, effective the first day of the following month, to:

     (i) The amount that would have been received had the retiree chosen option one; plus

     (ii) Any cost-of-living adjustments the retiree received prior to the survivor's death based on the original option selection.

     (c) Pop-up recalculation examples.

     Plan two:

     Agnes retires from SERS Plan 2 in 2006 (Year 0). Agnes would like Beatrice, her daughter, to receive a monthly allowance after Agnes dies. Therefore, Agnes selects a retirement benefit option with a survivor feature. As a result, her monthly allowance is reduced from $2,000 (standard allowance) to $1,750. Unfortunately, Beatrice dies in 2011 (Year 5). Under the "pop-up" provision, Agnes' monthly benefit will increase to $2,191.05, the amount she would have received had she chosen option one (standard allowance) plus her accumulated COLAs:

Year		Option One (Standard Allow.)	Survivor Option (2, 3, 4) plus COLAs		COLA incr. (3% max)		$ Increase
0 (2006)		2,000.00	1,750.00		(ineligible)		0.00
1 (2007)			1,750.00		.02		35.00
2 (2008)			1,785.00		.03		53.55
3 (2009)			1,838.55		.025		45.96
4 (2010)			1,884.51		.03		56.54
5 (2011)		2,000.00	1,941.05		-		-
					Total COLAs		191.05
	Original Option One Benefit Amount $2000			+ Total COLAs + $191.05		= New Benefit Amount = $2,191.05*

* In the future (i.e. Year 4), COLAs will be based on the increased benefit amount.

     (d) If the survivor dies and the retiree's benefit increases under this section, and thereafter the retiree also dies before all contributions are exhausted, the remaining balance is retained by the retirement fund.

     (5) Any retiree who retired before January 1, 1996, and who elected to receive a reduced retirement allowance under subsection (2) of this section is entitled to receive a retirement allowance adjustment if the retiree meets the following conditions:

     (a) The retiree's designated beneficiary predeceases or has predeceased the retiree; and

     (b) The retiree provides to the department proper proof of the designated beneficiary's death. The retiree is not required to apply for the increased benefit provided by this subsection.

     The adjusted retirement allowance will be effective on July 1, 1998, or the first of the month following the date of death of the designated beneficiary, whichever comes last. The adjustment is computed as described in RCW 41.35.220 (3)(c) for Plan 2 retirees.

     (6) Survivor. For the purposes of this provision, "survivor" means a person nominated by the member to receive a monthly benefit allowance after the member dies. A member nominates the survivor at the time of retirement by filing a completed and notarized form provided by the department.

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This chapter contains the tables, schedules, and factors adopted by the director of the department of retirement systems for calculating optional retirement allowances of members of the Washington state public employees' retirement system. These tables, schedules, and factors were adopted by the director upon the recommendation of the state actuary based on the actuary's investigation into the mortality, service, compensation, and other experience of the members and beneficiaries of public employees' retirement system. The tables, schedules, and factors contained in this chapter shall govern the retirement allowances only of members retiring during the period from September 1, 2000, until such time as these tables, schedules, and factors are amended by the director following the next actuarial investigation conducted by the state actuary. Any new tables, schedules, and factors adopted by the director in the future shall govern retirement allowances calculated at the time of retirement only of members retiring after the adoption of such new tables, schedules, and factors.

SCHOOL EMPLOYEES RETIREMENT SYSTEM

Plant 2 Option 1

Monthly Benefit per $1.00

of Accumulation

SERS 2 Survivor Option Factors

Member Younger

Age Difference	OPTION II (100%)	OPTION IV (66 2/3%)	OPTION III (50%)
-20	0.928	0.951	0.962
-19	0.925	0.949	0.961
-18	0.922	0.946	0.959
-17	0.919	0.945	0.958
-16	0.916	0.942	0.956
-15	0.912	0.940	0.954
-14	0.908	0.937	0.952
-13	0.904	0.933	0.949
-12	0.898	0.930	0.946
-11	0.892	0.925	0.943
-10	0.885	0.920	0.939
-9	0.879	0.916	0.935
-8	0.873	0.911	0.932
-7	0.865	0.906	0.927
-6	0.857	0.900	0.923
-5	0.849	0.894	0.918
-4	0.839	0.887	0.912
-3	0.828	0.878	0.906
-2	0.813	0.867	0.897
-1	0.797	0.855	0.887

Member Older

Age Difference	OPTION II (100%)	OPTION IV (66 2/3%)	OPTION III (50%)
0	0.779	0.841	0.876
1	0.763	0.829	0.866
2	0.748	0.817	0.856
3	0.735	0.807	0.848
4	0.725	0.798	0.841
5	0.716	0.791	0.835
6	0.708	0.785	0.830
7	0.698	0.777	0.823
8	0.687	0.767	0.815
9	0.674	0.757	0.806
10	0.662	0.747	0.797
11	0.653	0.739	0.791
12	0.646	0.733	0.786
13	0.640	0.728	0.781
14	0.634	0.722	0.776
15	0.628	0.717	0.772
16	0.622	0.712	0.767
17	0.616	0.707	0.763
18	0.611	0.702	0.759
19	0.606	0.698	0.755
20	0.602	0.694	0.751
21	0.596	0.689	0.747
22	0.591	0.684	0.743
23	0.587	0.681	0.740
24	0.582	0.676	0.736
25	0.577	0.672	0.732
26	0.573	0.668	0.729
27	0.569	0.665	0.726
28	0.565	0.661	0.722
29	0.562	0.658	0.720
30	0.558	0.655	0.717
31	0.555	0.652	0.714
32	0.552	0.649	0.712
33	0.549	0.647	0.709
34	0.546	0.644	0.707
35	0.543	0.641	0.705
36	0.540	0.638	0.702
37	0.538	0.637	0.700
38	0.535	0.634	0.698
39	0.533	0.632	0.696
40	0.531	0.630	0.695
Age difference = member's age minus beneficiary's age

SCHOOL EMPLOYEES RETIREMENT SYSTEM

PLAN 2

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(1) Definitions. Unless a different meaning is plainly required by the context:

     (a) "Group life insurance policy or plan" means a contract of group life insurance issued by an insurance carrier authorized to do business in the state of Washington which meets one of the group requirements set forth in chapter 48.24 RCW;

     (b) "Group disability insurance policy or plan" means a group disability insurance contract issued by an insurance carrier authorized to do business in the state of Washington which meets the requirements of chapter 48.21 RCW, and the term shall also include a group health care service contract as issued pursuant to, and regulated by, the provisions of chapter 48.40 RCW.

     (2) Scope. Any beneficiary of a retirement allowance payable for service or disability under the provisions of chapter 41.35 RCW may authorize the director to deduct from his or her retirement allowance, on a monthly basis only, the premiums on any group life or disability insurance policy or plan currently covering the beneficiary, issued to the employer by which the retiree was employed prior to retirement. The department and the director are not and will not be liable for any failure to make such deduction payments on time or in the proper amount.

     (3) Procedure. Any beneficiary, who desires to authorize a retirement allowance deduction as provided by this section, shall notify the department of his or her intention in writing at least thirty days prior to the date that the first deduction is to be made and shall file with the department a formal authorization on such form as may be provided by the department.

     (4) Revocability. You must submit to the department an express written statement of revocation to revoke an authorization for a retirement allowance deduction for payment of insurance premiums under this section. Such a revocation shall be applicable to the first retirement allowance deduction which would otherwise be made at the end of the calendar month following the month in which the statement of revocation is filed.

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WAC 415-110-443 through 415-110-488 codify the department's existing interpretation of statutes and existing administrative practice regarding classification of payments as compensation earnable in SERS Plan 2 and SERS Plan 3. The department has applied and will apply these rules to determine the proper characterization of payments occurring prior to the effective dates of these sections.

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The following table is provided as a quick reference guide to help you characterize payments under SERS Plan 2 and SERS Plan 3. Be sure to turn to the referenced rule to ensure that you have correctly identified the payment in question. The department determines compensation earnable based upon the nature of the payment, not the name applied.

Type of Payment	SERS Plan 2 and Plan 3 Reportable Compensation
Annual Leave Cash Outs	No - WAC 415-110-456
Assault Pay	No - WAC 415-110-468
Base Rate	Yes - WAC 415-110-451
Car Allowances	No - WAC 415-110-485
Cafeteria Plans	Yes - WAC 415-110-455
Deferred Wages	Yes - WAC 415-110-459
Disability Payments	No - WAC 415-110-477
Disability Retirees	No - RCW 41.35.440/ RCW 41.35.690 (until requirements are met)
Disability: Salary lost while on disability leave	Yes - WAC 415-110-468
	RCW 41.35.070
Employer Provided Vehicle	No - WAC 415-110-480
Employer Contributions	No - WAC 415-110-459
Fringe Benefits	No - WAC 415-110-475
Illegal Payments	No - WAC 415-110-482
Legislative Leave	Yes - WAC 415-110-464
Longevity/Education Attainment Pay	Yes - WAC 415-110-451
Nonmoney Maintenance	No - WAC 415-110-470
Optional Payments	No - WAC 415-110-483
Payments in Lieu of Excluded Items	No - WAC 415-110-463
Performance Bonuses	Yes - WAC 415-110-453
Retroactive Salary Increase	Yes - WAC 415-110-457
Reimbursements	No - WAC 415-110-484
Reinstatement Payments	Yes - WAC 415-110-467
Retirement or Termination Bonuses	No - WAC 415-110-487
Severance Pay - Earned Over Time	No - WAC 415-110-458
Severance Pay - Not Earned Over Time	No - WAC 415-110-488
Shared Leave - School/ ESD Employees	Yes - WAC 415-110-468
Sick Leave Cash Outs - School/ESD Employees	No - WAC 415-110-456
Standby Pay	Yes - WAC 415-110-469
Time Off With Pay	Yes - WAC 415-110-456      WAC 415-110-465
Union Leave	Yes - WAC 415-110-4661/
Worker's Compensation	No - WAC 415-110-479

          ^1/ Only specific types of union leave are reportable. See WAC 415-110-466.

[]

In order for payments to be subject to retirement system contributions and included in the calculation of a member's retirement benefit, those payments must meet the definition of compensation earnable in RCW 41.35.010.

     (1) Payments for personal services rendered. To determine whether a payment meets this definition and can be reported, ask the following questions:

     (a) Was the payment earned as a salary or wage for personal services rendered during a fiscal year? If the answer is no, the payment is not reportable. If the answer is yes, ask question (b).

     (b) Was the payment paid by an employer to an employee? If the answer is no, the payment is not reportable. If the answer is yes, report the payment.

     (2) Payments included that are not for personal services rendered. The legislature has included certain specific payments within the definition of compensation earnable even though those payments are not for personal services rendered by the employee to the employer. (See WAC 415-110-464 through 415-110-469.)

     (3) Reportable compensation is earned when the service is rendered, rather than when payment is made.

Example:

If a member works during September but does not receive payment for the work until October, the reportable compensation was earned during September and must be reported to the department as September earnings.

     (4) Salary characterizations are based upon the nature of the payment. A payment is reportable compensation if it meets the criteria of subsection (1) or (2) of this section. The name given to the payment or the document authorizing it is not controlling in determining whether the payment is reportable compensation. The department determines whether a payment is reportable compensation by considering:

     (a) What the payment is for; and

     (b) Whether the reason for the payment brings it within the statutory definition of compensation earnable.

Example:

A payment conditioned upon retirement is not reportable compensation. Attaching the label "longevity" to the payment does not change the fact that the payment is conditioned on retirement. Such a payment is not for services rendered and will not be counted as reportable compensation despite being identified by the employer as a longevity payment.

     (5) Differences in reportable compensation between plans. WAC 415-110-445 through 415-110-488 define reportable compensation for each of the two SERS plans. The characterization of payments as reportable compensation or not reportable compensation in WAC 415-110-455 through 415-110-488 is the same for both SERS Plan 2 and SERS Plan 3.

[]

Most employees receive a base rate of salary or wages expressed as an hourly or monthly rate of pay. This payment is for services rendered and qualifies as reportable compensation. Two possible components of an employee's base rate are salary considerations based on longevity or educational attainment.

     (1) A member who receives a salary increase based upon longevity or educational attainment receives a higher salary without working more hours. The higher salary indicates a higher level of performance due to greater experience or more education. The payment is therefore a payment for personal service and is reportable compensation.

     (2) Simply attaching the label "longevity" to a payment does not guarantee that it will be reportable compensation. If a payment described as a longevity payment is actually based upon some other criteria, such as retirement or notification of intent to retire, the payment may not be reportable.

[]

Bonuses that are based upon meeting certain performance goals are earned for services rendered and are reportable compensation. If a bonus was earned over a specified period of time, it should be prorated for reporting purposes.

Example:

An employer pays each employee in the work group an additional $100 if the work group had no work related accidents in the preceding year. Remaining accident free is a performance goal. Therefore, the payment is for services rendered and qualifies as reportable compensation. The bonus should be prorated over each of the preceding twelve months during which it was earned.

    

[]

Compensation received in any form under the provisions of a "cafeteria plan," "flexible benefits plan," or similar arrangement pursuant to section 125 of the United States Internal Revenue Code is reportable compensation if the employee has an absolute right to receive cash or deferred cash payments in lieu of the fringe benefits offered. In such an instance, the fringe benefits are being provided in lieu of cash and are considered reportable compensation, just as the cash would be. If there is no cash option, the value of the fringe benefit is not a salary or wage and is not reportable compensation, see WAC 415-110-475.

[]

(1) Sick and annual leave usage. Sick leave and annual leave is accumulated over time and paid to a person during a period of excused absence. Leave accrues at a prescribed rate, usually a certain number of hours per month. The employee earns a leave day by rendering service during the month the leave accrued. When the employee uses his or her accrued leave by taking a scheduled work day off with pay, the payment is deferred compensation for services previously rendered. The payment is a salary or wage earned for services rendered and is reportable.

     (2) Annual leave cash outs. Annual leave cash outs are not reportable compensation for SERS Plan 2 and SERS Plan 3 members. Although annual leave cash outs, like payments for leave usage, are deferred compensation earned for services previously rendered, they are excluded from the definition of compensation earnable by statute, see RCW 41.35.010 (6)(a).

     (3) Sick leave cash outs. Sick leave cash outs are excluded from the definition of compensation earnable for SERS Plan 2 and SERS Plan 3 members by statute.

     Sick leave cash outs are excluded from reportable compensation for:

     (i) School district employees by RCW 28A.400.210; and

     (ii) Educational service district employees by RCW 28A.310.490. See RCW 41.35.010 (6)(a).

[]

A retroactive salary payment to an employee who worked during the covered period is a payment of additional salary for services already rendered.

Note:

A retroactive salary increase is not the same as a retroactive payment upon reinstatement or in lieu of reinstatement of a terminated or suspended employee. For treatment of back payments for periods where services were not rendered, see WAC 415-110-467.

     (1) To qualify as reportable compensation under this section, the payment must be a bona fide retroactive salary increase. To ensure that is the case, the retroactive payment must be made pursuant to:

     (a) An order or conciliation agreement of a court or administrative agency charged with enforcing federal, state, or local statutes, ordinances, or regulations protecting employment rights;

     (b) A bona fide settlement of such a claim before a court or administrative agency;

     (c) A collective bargaining agreement; or

     (d) Action by the personnel resources board which expressly states the payments are retroactive.

     (2) The payments will be deemed earned in the period in which the work was done.

[]

All forms of severance pay are excluded from earnable compensation and are not reportable for Plan 2 or Plan 3 by RCW 41.35.010 (6)(a).

[]

Salary or wages for services rendered that are withheld from a member's pay still qualify as reportable compensation.

     (1) Retirement contributions. Payments deducted from employee compensation for employee retirement contributions are reportable. Employer contributions are a fringe benefit and are not reportable, see WAC 415-110-475.

     (2) Tax withholding. Payments withheld to satisfy federal tax obligations qualify as reportable compensation.

     (3) Voluntary deductions. Payments deducted voluntarily, such as I.R.C. section 457 plan contributions or other authorized deductions, are reportable.

[]

In general, payments cannot be reported to the retirement system unless they are for services rendered. However, the legislature has identified some types of compensation which are reportable even though they are not for services rendered.

     (1) WAC 415-110-464 through 415-110-469 discuss all payments that are not for services rendered that nonetheless qualify as reportable compensation.

     (2) WAC 415-110-475 through 415-110-488 discuss some payments that are not a salary or wage for services rendered and so do not qualify as reportable compensation. A payment not for services rendered other than those identified in WAC 415-110-464 through 415-110-469 is not reportable compensation even if it is not listed in WAC 415-110-475 through 415-110-488.

     (3) A payment made in lieu of a payment that is not for services rendered (such as a payment made in lieu of a car allowance) will be treated in the same way that the original payment was treated. Such a payment is not for services rendered and is not reportable.

[]

If a SERS member takes a leave without pay from an eligible position to serve in the legislature, the member may elect to participate in SERS as a legislator.

     (1) The employee may choose between:

     (a) The reportable compensation he or she would have earned had the member not served in the legislature; or

     (b) The actual reportable compensation for nonlegislative public employment and the legislative service combined.

     (2) If the member selects option (a) of this subsection, he or she is responsible for paying the additional employer and employee contributions to the extent the reportable compensation reported is higher than it would have been under (b) of this subsection.

[]

If paid leave is not based upon earned leave accumulated over time, the payment is not a deferred payment for services previously rendered. Further, the member on leave is not currently rendering services in exchange for the payment. However, RCW 41.35.470 and 41.35.650 identify payments received from the employer while on paid leave as reportable for SERS. Contributions are due on these payments to the extent they meet the following conditions:

     (1) The payment is equal to the salary for the position that the person is on leave from;

     (2) The payment is actually from the employer. Payments from an employer that are conditioned upon reimbursement from a third party are payments from the third party. Because the payments are not from the employer, they are not reportable compensation. The only exception is union leave paid by the employer subject to reimbursement from the union under the conditions specified in RCW 41.35.470 (Plan 2) and RCW 41.35.650 (Plan 3) and WAC 415-110-466.

[]

If a member takes an authorized leave of absence to serve as an elected official of a labor organization and the employer pays the member on leave subject to reimbursement from the union, the person's pay qualifies as reportable compensation provided that all the conditions of RCW 41.35.470 (Plan 2) and RCW 41.35.650 (Plan 3) as appropriate, are met.

[]

If an employer makes payments to an employee for periods where the employee was not employed and those payments are made upon reinstatement of the employee or in lieu of reinstatement, the payments are not earned for services rendered. However, RCW 41.35.010(6) specifically designates such payments as reportable compensation. The payments are only reportable to the extent that they are equivalent to the salary the employee would have earned had he or she been working.

[]

Compensation that a member receives for periods of absence due to sickness or injury are not payments for services rendered unless the payments are authorized pursuant to sick leave earned by the member for services rendered, see WAC 415-110-456. Certain specific types of payments for periods of absence due to sickness or injury have been included within the statutory definition of compensation earnable and therefore qualify as reportable compensation.

     (1) Assault pay qualifies as reportable compensation only to the extent authorized by RCW 27.04.100, 72.01.045, and 72.09.240.

     (2) Imputed compensation for periods of duty disability that a member would have received but for a disability occurring in the line of duty qualify as reportable compensation only to the extent authorized by RCW 41.35.070.

     (3) Shared leave.

     (a) Compensation that an employee, as defined in RCW 41.04.655, receives due to participation in a leave sharing program to the extent authorized by RCW 41.04.650 through 41.04.670 qualifies as reportable compensation.

     (b) Shared leave payments received by members who are not state employees, do not qualify as reportable compensation. Such payments are not for services rendered, nor are they specifically included within the statutory definition of compensation earnable.

[]

Some employers pay employees for being on "standby." A member is on standby when not being paid for time actually worked and the employer requires the member to be prepared to report immediately for work if the need arises, although the need may not arise. Because the member is not actually working, the member is not rendering service. However, RCW 41.35.010(6) specifically identifies standby pay that meets the above requirements as reportable compensation. Although included in the definition of compensation earnable, time spent on standby is excluded from the definition of "service," see RCW 41.35.010(7).

[]

Are payments from my employer in any form other than money considered compensation earnable? If you are a SERS Plan 2 or Plan 3 member, you are not entitled to count the value of any nonmoney maintenance compensation you receive from your employer as compensation earnable.

[]

Payments made by an employer to a third party to provide benefits for an employee are not part of the employee's salary or wage. Those payments are not reportable compensation. Examples of these types of payments are insurance premiums (other than those made under bona fide cafeteria plans, see WAC 415-110-455) and matching and nonmatching employer contributions to a benefit plan.

Note:

Mandatory salary deferrals are salary, not benefits. Such payments are reportable, see WAC 415-110-459.

Example:

An employer makes matching payments to employees who participate in a deferred compensation plan. This is not a mandatory salary deferral for purposes of SERS reportable compensation. Since the employer matching payment (employer match) is made contingent upon employee plan participation, it is not payment for services rendered. Therefore, it is a fringe benefit that is not reportable compensation under SERS.

[]

Disability insurance payments are paid to persons for periods when they are unable to work. Because no services are rendered in exchange for these payments, they are not reportable compensation. This is true whether the payments come directly from the employer or from an insurance company.

[]

Workers' compensation is paid to persons for periods when they are unable to work. Workers' compensation payments, like disability insurance, are not payments for services rendered and are not reportable compensation.

Example:

Some employees on unpaid disability leave submit their workers' compensation payments to their employer who then issues the employee a check for the same amount through the payroll system. This exchange of payments does not change the character of the workers' compensation payment. Whether the payments come from the department of labor and industries, a self-insured employer, or have the appearance of coming from the employer, workers' compensation payments are not payments for services rendered and do not qualify as reportable compensation.

Note:

A member may elect to make contributions and receive service credit for periods of disability covered by industrial insurance, see RCW 41.35.070.

[]

You are not entitled to count any of the value of an employer-provided vehicle as compensation earnable.

[]

Payments made by an employer in excess of the employer's legal authority are not reportable.

Example:

School districts are prohibited from increasing an employee's salary to include a payment in lieu of a fringe benefit per RCW 28A.400.220. If a district increased a person's salary instead of providing a fringe benefit, the payment would be illegal and should not be reported.

[]

If an employee can receive an additional payment only on the condition of taking an action other than providing service to the employer, the payment is not for services rendered and is not reportable compensation.

Example:

An employer offers to make a contribution to a deferred compensation plan on behalf of an employee only if the employee agrees to defer a portion of his or her salary. Because the employee does not have a right to receive the contribution based solely on the rendering of service, the employer payment is not reportable compensation.

[]

Reimbursements are not earned for services rendered and thus are not reportable compensation. Typical reimbursement payments include mileage reimbursements for use of a private car on employer business, see WAC 415-110-485, or meal and lodging reimbursements for business trips.

[]

(1) If your employer provides you any payment or allowance in lieu of a reimbursement for expenses you incur or expect to incur in performing services for your employer, the payment or allowance is not compensation earnable. Your vehicle allowance does not qualify as compensation earnable if you receive the allowance in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes.

     (2) The department presumes that any vehicle allowance provided to you by your employer is a payment in lieu of reimbursement for expenses and is not compensation earnable. If the contract authorizing your vehicle allowance states that it is provided solely in lieu of reimbursement for expenses that you incur or expect to incur in using your own vehicle for business purposes, the department's presumption is not rebuttable.

     (3) Your vehicle allowance may qualify as compensation earnable to the extent that it exceeds your actual expenses. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in driving your own vehicle for business purposes, the excess amount is compensation earnable. Your employer must maintain monthly contemporaneous records documenting the following:

     (a) The dates, if any, on which you used a privately owned vehicle in performing services for your employer;

     (b) The miles you drove the vehicle on each of these trips; and

     (c) Your itinerary for each of these trips.

     (4) How to determine what amount of your vehicle allowance, if any, is reportable as compensation earnable. If your employer documents that your vehicle allowance exceeds the actual expenses you incur in using your own vehicle for business purposes, your employer must report to the department as compensation earnable:

     Your Vehicle Allowance LESS (Miles X IRS Rate)

     (a) "Miles" above means the number of miles you drove a privately owned vehicle for business purposes during the month.

     (b) "IRS rate" above means the Internal Revenue Service mileage rate for use by taxpayers computing the value of the use of a vehicle.

     (5) Your vehicle allowance qualifies as compensation earnable if you also receive a separate reimbursement for each occasion you use your own vehicle for business purposes. If, in addition to your vehicle allowance, you receive a separate reimbursement for vehicle expenses for each occasion that you use a privately owned vehicle for business purposes, your vehicle allowance is compensation earnable.

     (6) Any part of your vehicle allowance that qualifies as earnable compensation is excess compensation. If any part of your vehicle allowance is included in the calculation of your retirement allowance, your employer will be billed for excess compensation under RCW 41.50.150. Your employer's bill will equal the total estimated cost of the portion of your retirement allowance payment attributable to your vehicle allowance.

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A payment made to an employee as a bonus or incentive when retiring or terminating is not a payment for services rendered. Rather, the payment is made in exchange for an employee's promise or notification of intent to retire or terminate. A retirement or termination bonus or incentive is not reportable compensation.

Example:

A collective bargaining agreement authorizes a school district to pay employees a higher salary during the last two years of employment if the employee gives written notice of his or her intent to retire or terminate. Because the payment is in exchange for the agreement to retire or terminate and not for services, the payment is not reportable compensation.

    

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Severance pay that is not earned over time is not earned for services rendered and is not reportable. An example of severance pay not earned over time is a payment negotiated as part of termination agreement.

Example:

At the time of an employee's termination the employer agrees to pay a lump sum payment equal to two months' salary. The employer identifies this payment as "severance pay." Because the payment was not earned for services rendered, it is not reportable compensation and will not be included in the retirement calculation.

For treatment of severance pay earned over time, see WAC 415-110-458.

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In some circumstances specified in statute, a member may elect to establish service credit for periods of unpaid leave. The salary imputed to a member for purposes of calculating contributions owing for such periods of leave is not reportable compensation. Depending on the type of leave, the imputed compensation may or may not be included as average final compensation in calculating a member's retirement allowance.

     (1) Authorized unpaid leave. RCW 41.35.470 (Plan 2) and RCW 41.35.650 (Plan 3) provides members with an option to establish service credit for periods of unpaid leave. RCW 41.35.070 provides members with an option to establish service credit for periods of disability covered by industrial insurance. Salary imputed to members in order to calculate contributions for such periods is not reportable compensation and can not be included as average final compensation in calculating a member's retirement allowance.

     (2) Military leave. Salary imputed to a member for purposes of calculating contributions owing for periods of interrupted military service is not reportable compensation. Federal law requires that if a member elects to purchase credit for such periods of military service, and that period falls in the member's average final compensation period, the member is entitled to have the imputed salary he or she would have earned during the period of absence used in the calculation of his or her average final compensation.

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(1) For purposes of this section and WAC 415-110-570, and pursuant to RCW 41.35.030 and 41.35.010, "elected" officials means:

     (a) Individuals who are elected or appointed to any vacant elective office at a school district or educational service district; or

     (b) Active SERS members who become elected or appointed to any state elective position.

     (2) An active member of SERS who is elected to a state elective position may elect to continue membership in SERS or apply for membership in PERS pursuant to RCW 41.40.023(3).

     (3) An active member of SERS who is elected or appointed to a nonstate elective position for an employer other than a school district or educational service district, does not have the option to continue membership in SERS pursuant to such elected service. However, the member may apply for membership in PERS pursuant to RCW 41.40.023(3).

     (4) Pursuant to RCW 41.35.030 (2)(a), elected officials are exempted from retirement system membership but may apply for membership during the official's current term of elected office. To apply for membership, the official shall submit a written application directly to the department. If the department approves the application, the elected official is entitled to establish membership and service credit retroactive to the first day of the official's current term of elected service. To establish such membership, the official shall pay the required employee contributions for the official's current term of elected service with interest as determined by the department.

     (5) Upon establishing membership for the official's current term of elected office, the official is entitled to establish membership and service credit retroactive to the first day of any previous elected term or terms of office. The official will be required to establish membership for all consecutive terms of office. To exercise this option, the official shall apply to the department pursuant to subsection (4) of this section. If the department approves the application, the official shall:

     (a) Pay the required employee contributions for such previous term or terms of elected service with interest as determined by the department; and

     (b) Pay the required employer contributions for such previous term or terms of elected service with interest as determined by the department. The employer may, at its discretion, pay the required employer contributions plus interest in lieu of the employee making payment of this amount.

     (6) If an official is employed in an eligible position at the time of election to office and will hold multiple positions concurrently the official may:

     (a) Apply to the department to participate in membership pursuant to the official's elected position as provided in subsection (4) of this section; or

     (b) Choose not to participate pursuant to the official's elected position while continuing membership through the nonelected position.

     (7) Except as provided under RCW 41.35.030, once an elected official has exercised the option of becoming a member of the retirement system the official shall be a member until the official separates from all eligible public employment. An official does not separate from public employment when that official's term of office ends and the official commences another term of office in the same or a different position for the same employer without a break in service. An official does not separate from service if the official resigns from the official's elected position and is later reappointed to the same position during the same term.

     (8) The department will apply this section to service by elected officials which occurred prior to the effective date of this section.

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(1) For purposes of this section and WAC 415-110-570, and pursuant to RCW 41.35.030 and 41.35.010, "appointed" officials means only those individuals who are active SERS members or were previously active SERS members and are appointed directly by the governor to any position, including but not limited to, agency directorships and memberships on a state committee, board or commission.

     (2) An individual must be a gubernatorial appointee or be appointed to serve in a position that meets the requirements of RCW 41.35.010 in order to be eligible for membership and service credit.

     (3) Pursuant to RCW 41.35.030, appointed officials are exempted from retirement system membership but may apply for membership during the official's current appointed term of office. To apply for membership, the official shall submit a written application directly to the department. If the department approves the application, the official is entitled to establish membership and service credit retroactive to the first day of the official's current term of appointed service. To establish such membership, the official shall pay the required employee contributions for the official's current term of appointed service with interest as determined by the department.

     (4) Upon establishing membership for the official's current term of appointed service, the official is entitled to establish membership retroactive to the first day of any previous elected term or terms of office. To exercise this option, the official shall apply to the department pursuant to subsection (3) of this section. If the department approves the application, the official shall:

     (a) Pay the required employee contributions for such previous term or terms of elected service with interest as determined by the department; and

     (b) Pay the required employer contributions for such previous term or terms of elected service with interest as determined by the department. The employer may, at its discretion, pay the required employer contributions plus interest in lieu of the employee making payment of this amount.

     (c) "Current term of appointed service" includes an appointed official's entire current term of service. If the official has not been appointed to a position with a set term of office, "current term of appointed service" includes all uninterrupted service in the official's current appointed position.

     (5) If an appointed official is employed in an eligible position at the time of appointment to office and will hold the two positions concurrently, the official may:

     (a) Apply to the department to participate in membership pursuant to the appointed position as provided in subsection (3) of this section; or

     (b) Choose not to participate pursuant to the official's appointed position while continuing membership through the nonappointive position.

     (6) Once an appointed official has exercised the option of becoming a member of the retirement system either at the start of the official's initial term or at a successive term, the official shall be a member until the official separates from all eligible public employment. An appointed official does not separate from public employment when that official's term of office ends and the official commences another term of office in the same or a different position for the same employer without a break in service. An appointed official does not separate from service if the official resigns from the appointed position and is later reappointed to the position during the same term.

     (7) The department will apply this section to service by appointed officials which occurred prior to the effective date of this section.

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(1) SERS members who were elected to office by statewide election and elect membership in SERS pursuant to WAC 415-110-550, may receive one month of service credit for each month during which they earn compensation pursuant to their elected positions.

     (2) Except for officials covered under subsection (1) of this section, members who were elected to office or appointed by the governor to positions and elect membership in SERS pursuant to WAC 415-110-550 or 415-110-560, may receive service credit only for months during which they are compensated:

     (a) In excess of ninety times the state hourly minimum wage in effect at the time they render the service; and

     (b) For ninety or more total hours of work.

     (3) On or after September 1, 1991, except for officials covered under subsection (1) of this section, members who were elected to office or appointed by the governor to positions and elect membership in SERS pursuant to WAC 415-110-550 or 415-110-560, may earn:

     (a) One month of service credit for each month during which they are compensated:

     (i) For ninety or more total hours of work; and

     (ii) In excess of ninety times the state hourly minimum wage in effect at the time they render the service; or

     (b) One-half month of service credit for each month during which they are compensated:

     (i) For less than ninety hours but equal to or more than seventy total hours of work; and

     (ii) In excess of ninety times the state hourly minimum wage in effect at the time they render the service; or

     (c) One-quarter month of service credit for each month during which they are compensated:

     (i) For less than seventy total hours of work; and

     (ii) In excess of ninety times the state hourly minimum wage in effect at the time they render the service.

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WAC 415-110-680 through 415-110-728 codify the department's existing interpretation of statutes and existing administrative practice regarding eligibility for membership in Plan 2 and Plan 3. The department has applied and will apply these rules to determine eligibility for service occurring prior to effective dates of these sections.

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(1) You are eligible for membership if you are employed in an eligible position. Your position is eligible under RCW 41.35.010 if the position, as defined by your employer, normally requires at least five months of seventy or more hours of compensated service per month during each year.

     (2) If you leave an eligible position to serve in a project position, you may retain eligibility. If you are a member and you leave employment in an eligible position to serve in a project position, the project position is eligible if:

     (a) The position, as defined by the employer, normally requires at least five months of seventy or more hours of compensated service each month; or

     (b) The position requires at least seventy hours per month and you take the position with the understanding that you are expected to return to your permanent eligible position at the completion of the project.

     (3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010.

     (b) "Employer" - RCW 41.35.010.

     (c) "Member" - RCW 41.35.010.

     (d) "Membership" - RCW 41.35.030.

     (e) "Normally" - WAC 415-110-0102.

     (f) "Project position" - WAC 415-110-0103.

     (g) "Year" - WAC 415-110-0108.

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(1) Your eligibility is based on your position. In evaluating whether your position is eligible, your employer will determine only whether the position meets the criteria of an eligible position under RCW 41.35.010. Your employer will not consider your membership status or individual circumstances unless you:

     (a) Leave employment in an eligible position to serve in a project position (see WAC 415-110-680); or

     (b) Work in both a SERS and TRS position during the same school year (see WAC 415-110-728).

     (2) Your employer will evaluate your position's eligibility for a particular year at the beginning of the year.

     (3) Your employer or the department may reclassify your position's eligibility based upon your actual work history. If your employer declares your position to be ineligible at the beginning of a year and by the end of the year, you have actually worked five or more months of seventy or more hours, your employer will, at that time, review your position's eligibility. If at the end of the first year:

     (a) Your employer believes your position meets the requirements for an eligible position and declares the position as eligible, you will enter membership and your employer will report you to the department effective from the date your employer declares the position as eligible; or

     (b) Your employer believes that the position will not meet the criteria for an eligible position during the next year, your employer may continue to define your position as ineligible. However, if during the next year the position actually requires you to again work seventy or more hours each month for at least five months, the department will declare your position as eligible. You will enter membership in the retirement system.

     (i) Except as provided in (b)(ii) of this subsection, your employer will report you to the department effective from the first month of the first year in which your position required you to work for seventy or more hours.

     (ii) If:

     (A) Your employer has monitored the work history of your position for eligibility;

     (B) Has notified you in writing when you entered the position that the position was not considered eligible; and

     You will enter membership prospectively.

     (4) The department will not reclassify your position's eligibility until history of the position shows that it meets the criteria for an eligible position. If your employer has declared your position ineligible, the department will not reclassify your position as eligible until history of the position shows a period of two consecutive years of at least five months of seventy or more hours of compensated employment each month.

     (5) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010.

     (b) "Employer" - RCW 41.35.010.

     (c) "Ineligible position" - RCW 41.35.010.

     (d) "Membership" - RCW 41.35.030.

     (e) "Project position" - WAC 415-110-0103.

     (f) "Report" - WAC 415-110-0104.

     (g) "Year" - WAC 415-110-0108.

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(1) All of your monthly work for an employer counts as one position. If you are employed with the same employer in two ineligible positions during a year which, when combined, equate to an eligible position and your employer expects you to continue in this employment for a second consecutive year, your employer will report the total hours you work in both positions to the department as an eligible position.

Example:	A person normally works for one employer as a cook for forty hours each month and as a bus driver for forty hours each month. The person is eligible for membership because he works a total of eighty hours each month for at least five months each year and this is the normal pattern of his employment.
Example:	A person normally works for one employer for forty hours each month as a cook. For one year only, she takes on extra duties by also working forty hours per month as a bus driver. Although she worked eighty hours each month for five or more months during one year, she is not eligible for membership because these hours are not the normal pattern of her employment.
Example:	A person works for one employer for forty hours each month as a cook and also works for another employer for forty hours each month as a bus driver. The person is not eligible for membership because he cannot combine the hours of employment with these separate employers to establish membership.

     (2) You may be reported in TRS if you work in two positions and one position is covered under TRS. See WAC 415-110-728.

     (3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010.

     (b) "Employer" - RCW 41.35.010.

     (c) "Ineligible position" - RCW 41.35.010.

     (d) "Membership" - RCW 41.35.030.

     (e) "Normally" - WAC 415-110-0102.

     (f) "Report" - WAC 415-110-0104.

     (g) "Year" - WAC 415-110-0108.

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(1) If you reenter membership after retiring, the department will suspend payment of your benefit.

     (2) You may work for an employer in some circumstances without reentering membership. You may enter employment with an employer after retirement without having to reenter membership if:

     (a) You are employed in an ineligible position; or

     (b) You are employed in an eligible position on a temporary basis for five months or less in a calendar year.

     (i) If you enter compensated employment in an eligible position during a month, that month is counted as a month of employment in the calendar year regardless of the number of hours you worked in the month.

     (ii) If you are employed in an eligible position for any five months during a calendar year, the department will count your employment as five months of employment, regardless of whether or not the months are consecutive or your employment is with one or more employers.

     (3) You are required to reenter membership if you become reemployed in an eligible position on a temporary basis for more than five months in a calendar year. If you become reemployed in an eligible position on a temporary basis for more than five months in a calendar year, you will reenter membership in the retirement system beginning with the sixth month of your employment. Effective at the beginning of the sixth month of your employment:

     (a) Your employer will report you to the department; and

     (b) The department will suspend your retirement allowance.

     (4) You are required to reenter membership if you become permanently reemployed in an eligible position. If you become reemployed in an eligible position on a permanent basis, you will immediately become a member. Effective from the date of your reemployment in a permanent eligible position:

     (a) Your employer will report you to the department; and

     (b) The department will suspend your retirement allowance.

     (5) Meaning of employment on a temporary or permanent basis.

     (a) "Employed on a temporary basis" under subsection (2) of this section means your employer expects your employment to last for five months or less and not be on a recurring basis.

     (b) "Employed on a permanent basis" under subsection (3) of this section means either:

     (i) Your employer expects you to continue in your position for more than five months in any calendar year; or

     (ii) Your employer expects you to continue in the same position for more than one year on a recurring basis and your employment is for five months or less during each year.

     (6) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010.

     (b) "Employer" - RCW 41.35.010.

     (c) "Ineligible position" - RCW 41.35.010.

     (d) "Membership" - RCW 41.35.030.

     (e) "Report" - WAC 415-110-0104.

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(1) You may be exempt from participating in membership even if you meet eligibility criteria. Even if you are employed in an eligible position you are exempt from participating in SERS if your individual circumstances qualify you for one of the exceptions to membership under RCW 41.35.030.

     (2) If you work for a SERS employer after you retire, you are subject to postretirement employment restrictions, even if you are excluded from participating in membership. If you become employed in an eligible position after you retire, you are subject to the postretirement employment restrictions under RCW 41.35.230 even if you are excluded from membership.

     (3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010.

     (b) "Employer" - RCW 41.35.010.

     (c) "Ineligible position" - RCW 41.35.010.

     (d) "Membership" - RCW 41.35.030.

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(1) If you have retired or are eligible to retire from another retirement system authorized by the laws of this state, you cannot participate in SERS membership unless you accrued less than fifteen years of service credit in the other retirement plan.

     (2) If you are receiving a disability allowance from any retirement system administered by the department, you cannot participate in SERS.

     (3) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Membership" - RCW 41.35.030.

     (b) "Retirement plan" - WAC 415-110-0105.

     (c) "Service" - RCW 41.35.010.

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(1) If you work in both a SERS and TRS position during the same year, your membership status and the nature of your positions will determine the system your employer will report you in. You will be reported in either SERS or TRS according to the following table:

Former TRS Plan 1 Members ¹/

Type of Employment 2/	Type of Employer(s)	System You Will Be Reported In
A substitute or less than full-time teaching position and a SERS-eligible position	Same SERS employer	SERS - for both positions.
	Separate SERS employers	SERS - for SERS position only. Your substitute part-time position is not reported unless you qualify for and elect to establish TRS membership under RCW 41.32.240. If you elect to establish TRS membership, your employers will report you in TRS for both positions. Any previously reported service credit and compensation in SERS will be transferred to TRS.
A full-time teaching position and an eligible SERS position	Same employer	TRS - for both positions.
	Separate SERS employers	TRS - for both positions.

TRS Plan 1 Members

Type of Employment 2/	Type of Employer(s)	System You Will Be Reported In
A full-time or less than full-time TRS position and an eligible SERS position	Same employer	TRS - for both positions.
	Separate SERS employers	TRS - for both positions.
A full-time or less than full-time TRS position and an ineligible SERS position	Same employer	TRS - for both positions.
	Separate SERS employers	TRS - for both positions.

TRS Plan 2 or 3 Members

Type of Employment 2/	Type of Employer(s)	System You Will Be Reported In
An eligible TRS position and an ineligible PERS position	Same employer	TRS - for both positions.
	Separate SERS employers	TRS - for TRS position only; your ineligible SERS position is not reported.
An eligible TRS position and an eligible SERS position	Same employer	TRS - for both positions.
	Separate SERS employers	TRS - for both positions.3/

SERS Members

Type of Employment 2/	Type of Employer(s)	System You Will Be Reported In
An eligible SERS position and an ineligible TRS or substitute position	Same employer	SERS - for both positions.
	Separate SERS employers	SERS - for the SERS position only, unless you qualify for and elect to establish membership in TRS at the end of the school year under WAC 415-112-125(1). If you elect to establish TRS membership, your employers will report you in TRS for both positions. Any previously reported service credit and compensation in SERS will be transferred to TRS.

Neither TRS Nor SERS Member

Type of Employment 2/	Type of Employer(s)	System You Will Be Reported In
An ineligible TRS and an ineligible SERS position	Same employer	TRS - for both positions if the positions combined, qualify as an eligible position.
	Separate SERS employers	Neither position reported.
A substitute teaching position and an ineligible SERS position	Same employer	Neither position reported. However, if you qualify, you may elect to establish membership in TRS at the end of the school year for your substitute teaching position under RCW 41.32.013 and WAC 415-112-140.
	Separate SERS employers	Neither position reported. However, if you qualify, you may elect to establish membership in TRS at the end of the school year for your substitute teaching position under RCW 41.32.013 and WAC 415-112-140.

1/	"Former TRS 1 member," as used here, means you terminate your membership by withdrawing your contributions.
2/	Means during the same school year.
3/	EXAMPLE: A TRS 2 member is employed concurrently by School District A in an eligible TRS position and by School District B in an eligible SERS position. Because he is a TRS 2 member, School District B employer must report his service and compensation from the SERS position to the department in TRS 2. If the member terminates his employment in the TRS position with School District A, School District B will report him in SERS for the SERS position.

     (2) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.35.010 (SERS); RCW 41.32.010 (TRS).

     (b) "Employer" - RCW 41.35.010 (SERS); RCW 41.32.010 (TRS).

     (c) "Ineligible position" - RCW 41.35.010 (SERS); RCW 41.32.010 (TRS).

     (d) "Member" - RCW 41.35.010 (SERS); RCW 41.32.010 (TRS).

     (e) "Membership" - RCW 41.35.030 (SERS).

     (f) "Report" - WAC 415-110-0104.

     (g) "Service" - RCW 41.35.010 (SERS); RCW 41.32.010 (TRS).

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(1) At the time of a member's application for retirement, the department does not have all information necessary to make a final computation of the member's retirement allowance. Based upon estimates of the retiree's compensation and earned service credit through the date of retirement, the department shall compute an interim retirement allowance made payable to the member in the interim between the member's date of retirement and the department's final computation of the member's retirement allowance. The interim retirement allowance is an initial, estimated computation of the retiree's retirement allowance subject to adjustment by the department based upon subsequent review of information provided by the member's employer.

     (2) In computing the interim retirement allowance, the department shall, subject to later correction, consider only the amount of the member's salary actually reported by the employer up to the date of the interim computation, but shall impute the member's earned service credit for the same period.

     (3) Following the department's computation of the interim benefit and receipt earnings history, the department shall complete a final computation of the member's retirement allowance. The department's final computation may either increase or decrease the amount of the interim retirement allowance computed pursuant to subsection (1) of this section.

     (4) Pursuant to RCW 41.50.130, following the department's final computation of the member's retirement allowance as provided in subsection (3) of this section, the department may subsequently adjust a member's retirement allowance to correct any error in retirement system records. For purposes of this subsection, errors in retirement system records include, but are not limited to, the following:

     (a) Applying an incorrect retirement allowance formula in computing the retirement allowance;

     (b) Including service that is not creditable to the member;

     (c) Including payments that do not constitute earnable compensation to a member in the member's retirement allowance computation, or excluding earnable compensation not reported by an employer;

     (d) Benefit overpayments and underpayments;

     (e) Including an individual in the membership of the retirement system who is not entitled to such membership.

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(1) The purpose of this rule is to establish a method to actuarially recompute the retirement allowance of a Plan 2 member or the defined benefit retirement allowance of a Plan 3 member who retires, reenters employment causing his or her retirement allowance to be suspended, and then retires again. The actuarially recomputed retirement allowance shall:

     (a) Include service credit the member earned following reestablishment of membership if any; and

     (b) Account for the actuarial reduction applied to the member's initial retirement if the member initially retired prior to age sixty-five.

     (2) If a Plan 2 or Plan 3 retiree reenters membership, upon the individual's next retirement, the department shall reinstate and actuarially recompute the individual's retirement allowance pursuant to RCW 41.35.230 (Plan 2) or RCW 41.35.640 (Plan 3) as follows:

     (a) If the member first retired before age sixty-five, the department shall:

     (i) Calculate the retirement allowance pursuant to RCW 41.35.400 (Plan 2) or RCW 41.35.620 (Plan 3) using the retiree's total years of career service, including service earned prior to initial retirement and service earned after reentering membership;

     (ii) Actuarially reduce the member's retirement allowance based on the present value of the retirement allowance payments the individual received during the initial retirement; and

     (iii) Calculate any survivor option selected by the retiree based upon the monthly retirement allowance calculated pursuant to (a)(i) and (ii) of this subsection.

     (b) If the member initially retired at or after age sixty-five, the department shall recompute the member's retirement allowance pursuant to RCW 41.35.400 (Plan 2) or RCW 41.35.620 (Plan 3) and include any additional service credit earned and any applicable increase in the member's average final compensation resulting from the member's reentry into membership. Under no circumstances shall a retiree receive a retirement allowance creditable to a month during which that individual earned service credit.

     (3) If a retiree's retirement allowance is suspended under RCW 41.35.450 or 41.35.640 due to reemployment but the retiree does not reenter membership, upon the retiree's separation from such employment, the retiree shall receive an actuarially recomputed retirement allowance equal to the sum of:

     (a) The amount of the monthly suspended retirement allowance; plus

     (b) An actuarially computed increase based upon the retirement allowance payments the member did not receive due to reemployment. The retiree may elect to receive the actuarially computed increase in either:

     (i) An amount amortized over the expected term of the recomputed retirement allowance; or

     (ii) A lump sum payment equal to the suspended retirement allowance plus interest.

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(1) You will be converted from PERS to SERS if:

     (a) You were employed with a school district or educational service district in an eligible position as of September 1, 2000;

     (b) You participated and then separated in PERS prior to September 1, 2000, and became reemployed in an eligible position at a school district or educational service district after September 1, 2000;

     (c) You retired out of PERS Plan 2 and:

     (i) Returned to PERS covered employment and became an active PERS membership; and

     (ii) Were a member as of September 1, 2000, at a school district or educational service district; or

     (d) You retired out of PERS Plan 2 and:

     (i) Returned to PERS covered employment and became an active PERS membership;

     (ii) Separated from your PERS position; and

     (iii) Become employed in an eligible SERS position prior to applying for reretirement in PERS.

     (2) What happens to my existing PERS service and account history when I am converted from PERS to SERS membership? All of your PERS service and account history with any PERS employer will be moved to SERS.

     (3) How many times will my PERS service be moved to SERS? Your PERS service shall be moved to SERS only once pursuant to subsection (1) of this section. After you have been converted from PERS to SERS, subsequent reenrollment(s) into SERS shall not cause any additional conversions of any PERS service. Any future eligible employment in PERS shall be reported into PERS and any future eligible employment in SERS shall be reported into SERS.

Example:	Employed in PERS prior to conversion. Joe has 15 years of service in PERS. He has been employed by a school district for the last 5 years. Joe previously was employed by a county for 10 years.
	Conversion from PERS to SERS. Since Joe is employed with the school district on September 1, 2000, his PERS service is moved to SERS service. Both his 5 years of service with the school district and his 10 years of service with the county are moved to SERS. Joe's PERS account now has zero service credit and contributions; Joe's SERS account now has 15 years of service credit and contributions.
	Return to PERS service. After another year of service with the school district, Joe separates employment with 16 years of credit in SERS and returns to employment with the county. Joe's 16 years of service remains in SERS and he begins to accrue service in PERS, starting from zero, for his new employment with the county.
	Return to SERS employment. Joe works for the county for 5 years. He now has 5 years of service credit in PERS and he still has 16 years of service credit in SERS. Joe separates employment from the county and goes back to work in a SERS covered position with an educational service district. Joe's PERS employer will stop reporting him and the educational service district will begin reporting Joe into SERS. He will begin accumulating service in SERS starting at 16 years. The 5 years of service that Joe rendered at the county stays in PERS.

     (4) If I am a PERS Plan 2 retiree and become employed in an eligible SERS position, will my service be converted from PERS to SERS? Except as allowed in subsection (1)(c) and (d) of this section, a PERS Plan 2 retiree will not have any of their service, account or retirement history converted to SERS.

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OTS-4461.1

This chapter applies only to members of Plan 3 retirement systems created under chapters 41.32 (TRS) and 41.35 (SERS) RCW.

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(1) What am I responsible for as a Plan 3 member? As a Plan 3 member your responsibilities include, but are not limited to:

     (a) Adhering to published time frames;

     (b) Making investment decisions for your defined contribution account;

     (c) Reviewing account information provided on statements, such as quarterly statements, and notifying the correct organization of any errors;

     (d) Filling out the correct form for a requested action;

     (e) Correctly completing the appropriate form for a requested action and submitting the form to the correct organization as directed on each form; and

     (f) Monitoring to ensure contributions do not exceed Internal Revenue Code limits (see WAC 415-111-111).

     (2) What can happen if I do not fulfill my responsibilities? If you do not fulfill your responsibilities, the consequences may include, but are not limited to:

     (a) You may not qualify for certain benefits, such as the transfer payment;

     (b) You may have a delay in the correction of errors on your account;

     (c) You may have a delay in the processing of your request for a defined contribution withdrawal; or

     (d) You may have a delay in the investment of your account as directed.

     (3) What responsibilities do employers have? Employers' responsibilities include, but are not limited to:

     (a) Adhering to Plan 3 administrative requirements, including the respective roles of employers and employees, communicated to employers by the department in written materials and formal training.

     (b) Maintaining a supply of Plan 3 forms;

     (c) Submitting contributions to the department as soon as possible and at least in accordance with chapter 41.50 RCW;

     (d) Reporting an employee's Plan 3 transfer election as soon as possible after receipt of the appropriate form from the employee;

     (e) Submitting to DRS the form on which the member made their Plan 3 transfer election as soon as possible after receipt of the appropriate form;

     (f) Reporting an employee's contribution rate election as soon as possible after receipt of the appropriate form from the employee;

     (g) Reporting an employee's investment program election as soon as possible after receipt of the appropriate form from the employee; and

     (h) Monitoring to ensure that a member's contributions do not exceed Internal Revenue Code limits (see WAC 415-111-111).

     (4) What can happen if my employer does not fulfill their responsibilities? If your employer does not fulfill their responsibilities, the consequences may include, but are not limited to:

     (a) Your employer may have to make your member account whole;

     (b) Your employer may be subject to penalties assessed by the department; or

     (c) Your employer may be subject to penalties assessed by the Internal Revenue Service.

     If the department determines that an employer has erred in its administrative role, such that an employee incurs an investment loss, the department will determine the amount of loss and bill the employer.

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(1) Can contributions in Plan 3 affect my deferral limits in other tax-deferred plans? Yes. Contributions to Plan 3 reduce your taxable income; this may affect your deferral limits if you participate in another tax deferred program that has a maximum contribution based on a percentage of your taxable income. You should consult with the Internal Revenue Service, a tax advisor, or a financial advisor regarding all questions of federal or state tax implications arising from participation in Plan 3.

     (2) Who is responsible for ensuring that I do not exceed my tax deferral limits? Both your employer and you are responsible for ensuring that you do not exceed your tax deferral limits:

     (a) Employers are responsible for monitoring to ensure that the contributions you make to your employer-sponsored tax deferred plan(s) do not exceed the limits under the Internal Revenue Code.

     (b) You are responsible for monitoring to ensure that the total contributions you make to all of your tax deferred plan(s) do not exceed the limits under the Internal Revenue Code if you participate in a tax deferred program(s) outside of your employer sponsored plan(s).

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You may choose between two ERBB-approved investment programs: The total allocation portfolio, administered by the Washington state investment board, and a self-directed investment program. You may contribute to only one of these programs at a time. However, you may maintain accounts in both investment programs and transfer money between investment programs.

     Pursuant to WAC 415-111-110, you bear the responsibility for completing the correct form for making an investment program election and submitting it to your employer as directed on the form.

     (1) Where do I get the form to make my election? Your employer must provide the appropriate form to elect an investment program if you are enrolling into Plan 3, transferring from Plan 2 to Plan 3, or changing your investment program.

     (2) When do I have to choose an investment program? If you are a new member or are reenrolling, you must select one of the ERBB-approved investment programs within ninety calendar days from your date of hire in an eligible position. However, if you are transferring from Plan 2 to Plan 3, you must select an investment program when you transfer. The ninety-day period does not apply to a member transferring from Plan 2 to Plan 3.

     If it is determined you should be reported into Plan 3 membership retroactively, the ninety-day period starts from the date it is discovered, as determined by the department, that you should have been reported.

     (3) What happens if I do not make an investment program election? You will be assigned to the default investment program described in subsection (4) of this section, if:

     (a) You are a new employee or changing your employer and do not make an investment program election within the ninety-day election period described in subsection (2) of this section; or

     (b) You are transferring from Plan 2 to Plan 3 and do not make an investment program election at the time of transfer.

     (4) What is the default investment program? The default investment program is the total allocation portfolio of the Washington state investment board.

     (5) Can I change my investment program? Once you have made an initial investment election or been directed into the default program, you may change your investment program at any time by submitting the appropriate form to your employer.

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A Plan 3 member shall contribute from his or her compensation according to one of the rate structures described in RCW 41.34.040.

     Pursuant to WAC 415-111-110, you bear the responsibility for completing the correct form for making a contribution rate election and submitting it in a timely manner to your employer as directed on the form.

     (1) Where do I get the form to make my election? Your employer must provide the appropriate form to elect a contribution rate if you are enrolling into Plan 3 or transferring from Plan 2 to Plan 3.

     (2) When do I have to elect a contribution rate? You must irrevocably elect a contribution rate within ninety calendar days from your date of hire in an eligible position. However, if you are transferring from Plan 2 to Plan 3, you must elect a contribution rate when you transfer. The ninety-day period does not apply to a member transferring from Plan 2 to Plan 3.

     (a) Once a member elects a contribution rate, contributions will begin the first day of the pay cycle in which the member makes the election.

     (b) If it is determined that a member should be reported into Plan 3 membership retroactively, the ninety-day period starts from the date it is discovered, as determined by the department, that the member should have been reported.

     (c) A Plan 3 member working in eligible positions for more than one employer may select a different contribution rate with each employer.

     (3) What happens if I do not make a contribution rate election? Pursuant to RCW 41.34.040, you will be irrevocably assigned to Option A if:

     (a) You are a new employee or changing your employer and do not make a contribution rate election within the ninety-day election period described in subsection (2) of this section; or

     (b) You are transferring from Plan 2 to Plan 3 and do not make a contribution rate election at the time of transfer. Contributions required under subsection (a) or (b) shall begin effective the first day of the pay cycle in which you are assigned to Option A.

     (4) Can I change my contribution rate? Once you elect a contribution rate or are defaulted into Option A, you cannot change your contribution rate unless you change employers. Each time you change employers, you will be allowed the ninety-day period described in subsection (2) of this section to elect a new contribution rate. For the purposes of this section, employer is defined as each school district and each educational service district.

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This section applies only to members who elect the self-directed investment program pursuant to WAC 415-111-210.

     (1) What is an allocation? An allocation is a set of instructions defining which self-directed investment program funds you wish your money to be invested in. The amount you allocate to each fund must be designated as a whole percentage. The sum of the percentages that you allocate must equal one-hundred percent.

Example:

Martha has elected the self-directed program as her investment manager and is contributing $150 per month. Martha decides to invest into three different funds with the following amounts: $30 invested in fund #1, $45 invested in fund #2 and $75 invested in fund #3. To accomplish this she must establish the following allocation:

Allocation to fund #1	20%
Allocation to fund #2	30%
Allocation to fund #3	50%
Total Allocation	100%

     (2) How do I establish an allocation? You must establish your allocation by contacting the department's designated recordkeeper. Once established, you may change your allocation at any time by contacting the department's designated recordkeeper.

     (3) What happens if I do not designate an allocation? If you do not provide an allocation prior to any of your investment money being received by the department's designated recordkeeper, or if you provide an allocation where the sum of the allocated portions does not equal one-hundred percent, your investment money will be directed into the default fund such that:

     (a) If your total allocations do not equal one-hundred percent, (i) the department will determine the percentage that is unallocated, and (ii) direct the unallocated percentage into the default fund.

Example:

Ralph designates the following allocation: 33% fund #1, 33% fund #2, and 33% fund #3. Since the total allocation equals 99%, the unallocated 1% will be directed into the default fund.

     (b) If the total allocations exceed one-hundred percent, the entire allocation will be directed into the default fund.

Example:

Chris designates the following allocations: 38% into fund #1, 40% into fund #2, and 10% into fund #3 and 15% into fund #4. Since the total allocation equals 103%, all of Chris' investment money will be directed into the default fund.

     (c) If no allocation is provided, the entire allocation will be directed into the default fund: Provided, That if the member previously participated in the self-directed investment program, the member's most recent allocation will be used. If that allocation includes a fund or funds that are no longer available, the portion of your investment money allocated to the unavailable fund(s) will be directed into the default fund.

Example:

Lew is a new member and elects the self-directed investment program, but does not establish an allocation. All of Lew's investment money will be directed into the default fund.

Example:	Linda becomes reemployed in an eligible position and elects to participate in the self-directed investment program again, but does not provide an allocation.
	Linda previously participated in the self-directed           investment program and had the following allocation:

10% in Fund #1

10% in Fund #2

30% in Fund #3

25% in Fund #4

25% in Fund #5

Since she did not establish a new allocation, her previous allocation will be used. However, fund #2 is no longer available so that part of her allocation will be directed into the default fund. A new allocation will be established for Linda as follows:

10% in Fund #1

10% in Default Fund

30% in Fund #3

25% in Fund #4

25% in Fund #5

     (4) What is the default fund? The default fund for the self-directed investment program is the Money Market Fund.

     (5) Can I change my allocation? Once you have established an allocation or been directed into the default fund, you may change your allocation at any time by contacting the department's designated recordkeeper.

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(1) How do I withdraw from my defined contribution account? Except as otherwise allowed by RCW 41.34.070, you must meet the following criteria to withdraw from your defined contribution account:

     (a) You must separate from all eligible employment;

     (b) Notice of separation must be received by the department from your employer(s) through the retirement transmittal system; and

     (c) You must submit the appropriate form for requesting a defined contribution withdrawal. Pursuant to WAC 415-111-110, you bear the responsibility for completing and submitting the form to the department's designated recordkeeper as directed on the form.

     (2) Can I still receive my defined contribution withdrawal if I return to work before receiving my withdrawal? If you have made a request for payment and meet all of the criteria in subsection (1) of this section, you may return to work in an eligible position and still take payment of the requested defined contribution withdrawal.

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OTS-4462.1

The acronyms used in this chapter mean:

     (1) "PERS" means the Public Employees' Retirement System.

     (2) "TRS" means the Teachers' Retirement System.

     (3) "SERS" means the School Employees' Retirement System.

[Statutory Authority: RCW 41.50.050.      95-16-053, § 415-112-0167, filed 7/25/95, effective 8/25/95.]

(1) If you are a TRS Plan ((I)) 1 member, you will participate in TRS Plan ((I)) 1 if you become reemployed with a TRS employer. If you are a Plan ((I)) 1 member and have separated from service without withdrawing contributions, you will participate in the system again if you become reemployed with a TRS employer, even if you are not working as a teacher.

     (2) If you terminate TRS Plan ((I)) 1 membership, you will not reenter TRS Plan ((I)) 1 unless you requalify for membership or repay withdrawn contributions as a dual member. If you were a Plan ((I)) 1 member and have terminated your membership, you can reestablish your membership and be eligible to participate in the system again only if you:

     (a) Become reemployed as a teacher in a position or positions meeting the membership eligibility criteria under RCW 41.32.240 and WAC 415-112-125(1); or

     (b) Repaid withdrawn contributions as a dual member under portability.      See RCW 41.54.020(2).

     (3) If you have service credit in TRS Plan ((II)) 2, you will only reestablish membership if you work as a teacher in an eligible position. If you were a Plan ((II)) 2 member who separated from service, you will reestablish membership and be eligible to participate in the system again only if you:

     (a) Become reemployed as a teacher; and

     (b) Render service in a position or positions meeting the membership eligibility criteria under WAC 415-112-125(1) or 415-112-140(1).

     (4) If you have service credit in TRS Plan 3, you will only reestablish membership if you work as a teacher in an eligible position. If you were a Plan 3 member who separated from service, you will reestablish membership and be eligible to participate in the system again only if you:

     (a) Become reemployed as a teacher; and

     (b) Render service in a position or positions meeting the membership eligibility criteria under WAC 415-112-125(1) or 415-112-140(1).

     (5) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Dual member" - RCW 41.54.010 and WAC 415-113-041.

     (b) "Eligible position" - RCW 41.32.010.

     (c) "Employer" - RCW 41.32.010.

     (d) "Member" - RCW 41.32.010.

     (e) "Service" - RCW 41.32.010.

     (f) "Service in an administrative or supervisory capacity" - WAC 415-112-0162.

     (g) "Service in an instructional capacity" - WAC 415-112-0163.

     (h) "Teacher" - RCW 41.32.010.

[Statutory Authority: RCW 41.50.050.      95-16-053, § 415-112-130, filed 7/25/95, effective 8/25/95.]

(1) You are eligible for membership if you are certificated and employed as an educational staff associate. You are a teacher for purposes of TRS membership if you:

     (a) Possess a valid educational staff associate certificate issued by the office of the superintendent of public instruction under WAC 180-75-055(3); and

     (b) Serve in an educational staff associate position.

     (2) Positions which qualify as an educational staff associate. "Educational staff associate," includes but is not limited to a person employed by a public school in any of the following positions: Communications disorder specialist, occupational therapist, physical therapist, reading resource technician, school counselor, school nurse, school psychologist, school social worker and school librarian.

     (3) If you were enrolled in PERS before June 7, 1984, based on your employment as an educational staff associate, you may remain in PERS. If you were enrolled in the PERS prior to June 7, 1984, based on employment as an educational staff associate, you will remain in PERS unless you choose either to:

     (a) Transfer your membership to TRS within the time limits established in RCW 41.32.032; or

     (b) Terminate your membership in PERS by withdrawing your accumulated contributions.

     (4) If you were enrolled in PERS prior to June 7, 1984, based on employment as an educational staff associate and converted to SERS you may maintain your SERS membership. If you were enrolled in the PERS prior to June 7, 1984, based on employment as an educational staff associate, and were converted to SERS membership under RCW 41.40.750, you will remain in SERS unless you choose either to:

     (a) Transfer your membership to TRS within the time limits established in RCW 41.32.032; or

     (b) Terminate your membership in SERS Plan 2 by withdrawing your accumulated contributions.

     (5) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Member" - RCW 41.32.010.

     (b) "Employer" - RCW 41.32.010.

     (c) "Public school" - RCW 41.32.010 and WAC 415-112-0158.

     (d) "Service" - RCW 41.32.010.

     (e) "Teacher" - RCW 41.32.010.

[Statutory Authority: RCW 41.50.050.      95-16-053, § 415-112-135, filed 7/25/95, effective 8/25/95.]

(1) If you work in both a TRS and PERS position during the same school year, your membership status and the nature of your positions will determine the system your employer will report you in.      You will be reported in either TRS or PERS according to the following tables:

Former TRS Plan ((I)) 1 Members ^1/

TRS Plan ((I)) 1 Members

TRS Plan ((II)) 2 Members

PERS Members

Neither TRS Nor PERS Member

^2/ Means during the same school year.

^3/ EXAMPLE: A TRS 2 member teaches in an eligible position and during the summer, she works for a state agency in an eligible position under PERS.      Because the member has established membership in TRS 2 through employment as a teacher, her state agency employer must report her service and compensation from the PERS position to the Department in TRS 2.

EXAMPLE: A TRS 2 member is employed concurrently by School District A in an eligible TRS position and by School District B in an eligible PERS position.      Because he is a TRS 2 member, School District B employer must report his service and compensation from the PERS position to the Department in TRS 2.      If the member terminates his employment in the TRS position with School District A, School District B will report him in PERS for the PERS position.

     (2) Defined terms used. Definitions for the following terms used in this section may be found in the sections listed.

     (a) "Eligible position" - RCW 41.32.010 (TRS); RCW 41.40.010 (PERS).

     (b) "Employer" - RCW 41.40.010 (PERS); RCW 41.32.010 (TRS).

     (c) "Full time" - RCW 41.32.240.

     (d) "Ineligible position" - WAC 415-112-0154 (TRS); RCW 41.40.010 (PERS).

     (e) "Member" - RCW 41.40.010.

     (f) "Membership" - RCW 41.40.023.

     (g) "Report" - WAC 415-108-0104.

     (h) "Service" - RCW 41.40.010.

[Statutory Authority: RCW 41.50.050.      00-10-015, § 415-112-155, filed 4/21/00, effective 5/22/00; 95-16-053, § 415-112-155, filed 7/25/95, effective 8/25/95.]

(1) If you work in both a TRS and SERS position during the same year, your membership status and the nature of your positions will determine the system your employer will report you in. You will be reported in either TRS and SERS according to the following table:

Former TRS Plan 1 Members ^1/