Original Notice.

Preproposal statement of inquiry was filed as WSR 01-04-027.

Title of Rule:

WACs Being Amended
WAC#	WAC Title	Statutory Authority (RCWs)
415-108-491	Salary imputed to periods of unpaid leave.	41.40.038, 41.40.170, 41.40.710, 41.40.805
415-108-570	As an elected or appointed official, what are my requirements for service credit?	41.40.023
415-108-640	Effect of meeting union verification requirements.	41.40.010 (4)(a), 41.40.057, 41.40.363
415-108-690	How is my membership eligibility evaluated?	41.40.010, 41.40.023
415-108-720	Participation -- Can I be excluded from participating in membership even if I am employed in an eligible position?	41.40.023, 41.40.150, 41.40.690
415-108-830	Actuarial recomputation of a Plan 2 or 3 retirement allowance upon retirement following reemployment.	41.40.620, 41.40.690
415-110-910	Conversion of service from PERS to SERS.	41.35.005 -- [41.35.]030, 41.40.070
415-112-250	Can I receive service credit for leave with pay?	41.32.267, 41.32.810, 41.32.850
415-112-400	When does the employer deduct salary for retirement contributions?	41.32.270
415-112-412	Are nonmoney payments from my employer considered compensation earnable?	41.32.010 (10)(b)
415-112-413	Vehicles -- Does the value of my use of an employer vehicle qualify as earnable compensation?	41.32.010(10), IRC Section 61
415-112-725	Married member's benefit selection -- Spousal consent required.	41.32.530(2), 41.32.785(2), 41.32.851(2)
415-113-0303	Dual member system -- Definitions and system acronyms.	41.54.010
415-113-0310	System acronyms -- Definitions (repealing).	NA - repealing
415-113-041	Am I a dual member?	41.54.010, 41.54.061
415-113-042	What can terminate my status as a dual member?	41.54.010, 41.54.030
415-113-065	Can I substitute salary from one system to another?	41.54.030
415-113-070	If I retire as a dual member, must I receive benefits from both systems immediately?
415-113-090	What is the maximum retirement benefit that I may receive under chapter 41.54 RCW?	41.54.070
415-113-200	SERS and PERS concurrent employment.	Chapters 41.32, 41.34, 41.35, 41.40, 41.50 WAC
415-200-030	Plan 3 external administrators.	41.50.088
New WACs
415-108-727	Can I transfer service credit earned as a cadet in the public employees' retirement system to the Washington state patrol retirement system?	41.40.092
415-108-815	What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?	41.40.815
415-110-815	What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?	41.35.670
415-111-400	Optional service purchase rules.	41.32.810, 41.32.865, 41.35.470, 41.35.650, 41.40.710, 41.40.805

Purpose: These rules are necessary to implement the public employees' retirement system Plan 3. DRS is also converting as much language as possible to "Plain English." This batch also includes some changes to the teachers' retirement system (TRS) and other parts of DRS WACs, as necessary to fully implement Plan 3.

Other Identifying Information: Unless specifically noted, substantive changes are required by ESSB 6530 (chapter 247, Laws of 2000). Sections of the Internal Revenue Code, 26 U.S.C., may also apply. Note: Additional PERS Plan 3 changes are being made in separate filings.

Statutory Authority for Adoption: RCW 41.50.050(5).

Statute Being Implemented: See Title of Rule above.

Reasons Supporting Proposal: These rules are necessary to implement the public employees' retirement system Plan 3.

Name of Agency Personnel Responsible for Drafting: Merry A. Kogut, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; Implementation and Enforcement: Jack Bryant, P.O. Box 48380, Olympia, WA 98504-8380, (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: Each rule is being amended to implement ESSB 6530 (2000). At the same time, the department is attempting to improve the clarity of each rule.

Proposal Changes the Following Existing Rules: See Title of Rule above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. These amendments have no affect on businesses.

RCW 34.05.328 does not apply to this rule adoption. The Department of Retirement Systems is not one of the named departments in RCW 34.05.328.

Hearing Location: Department of Retirement Systems, 6835 Capitol Boulevard, Boardroom, Tumwater, WA, on December 4, 2001, at 10:00 a.m.; and at the Department of Social and Health Services, Spokane Valley CSO, Lunchroom, 8517 East Trent, Spokane, WA, on December 6, 2001, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact the rules coordinator by seven days before the hearing, if possible, phone (360) 664-7291, TTY (360) 586-5450, e-mail merryk@drs.wa.gov.

Submit Written Comments to: Identify WAC Numbers, Merry A. Kogut, Rules Coordinator, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail Merryk@drs.wa.gov, fax (360) 753-3166, by 5:00 p.m. on December 6, 2001.

Date of Intended Adoption: No sooner than December 7, 2001.

October 17, 2001

Merry A. Kogut

Rules Coordinator

OTS-5230.3

AMENDATORY SECTION(Amending WSR 98-09-059, filed 4/17/98, effective 5/18/98)

WAC 415-108-491   Salary imputed to periods of unpaid leave.   In some circumstances specified in statute, a member may ((elect)) choose 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 41.40.710 provides Plan ((II)) 2 members with an option to establish service credit for periods of unpaid leave. RCW 41.40.805 provides Plan 3 members with an option to establish service credit for periods of unpaid leave. RCW 41.40.038 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. For Plan 2 and Plan 3, 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)) chooses 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.

[Statutory Authority: RCW 41.50.050. 98-09-059, 415-108-491, filed 4/17/98, effective 5/18/98.]

(b) ((Plan I)) If you are a Plan 1 member((s)) who ((were)) was appointed by the governor prior to July 1, 1976, to serve as a member((s)) of any committee, board or commission, you may receive one month of service credit for each month during which ((they)) you earn compensation pursuant to ((their)) your appointed positions.

(c) ((Plan I)) If you are a Plan 1 member((s)) who ((were)) was appointed or reappointed by the governor on or after July 1, 1976, to serve as a member((s)) of any committee, board or commission, you may receive one month of service credit for each month during which ((they)) you are compensated for at least seventy total hours of work.

(d) ((Plan I)) If you are a Plan 1 member((s)) who ((serve)) served in a governor-appointed position((s)) as a member((s)) of any committee, board or commission on or after September 1, 1991, you may receive one-quarter month of service credit for each month during which ((they)) you are compensated for less than seventy total hours of work.

(2)(a) ((Plan II)) If you are a Plan 2 or Plan 3 member((s)) who ((were)) was elected to office by statewide election, you may receive one month of service credit for each month during which ((they)) you earn compensation pursuant to ((their)) your elected position((s)).

(b) Except for Plan ((II)) 2 or Plan 3 elected officials covered under (a) of this subsection, ((Plan II members who were)) if you are elected to office or appointed by the governor to a position((s)) prior to September 1, 1991, you may receive service credit only for months during which ((they)) you are compensated:

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

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

(c) On or after September 1, 1991, except for Plan ((II)) 2 or Plan 3 elected officials covered under (a) of this subsection, ((Plan II members who)) if you were elected to office or appointed by the governor to a position((s)), you may earn:

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

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

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

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

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

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

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

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

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

(3) This section codifies the department's long-standing administrative practice in relation to elected and appointed officials. The department will apply this section to service by elected and appointed officials which occurred prior to the effective date of this section.

[Statutory Authority: RCW 41.50.050. 94-12-014, 415-108-570, filed 5/23/94, effective 6/23/94.]

(2) Plan ((I)) 1 union employers employing persons who have previously established Plan ((I)) 1 membership must report ((those persons)) you for participation in the retirement system if ((those persons opt into membership)) you choose to become a member under RCW 41.40.023.

(3) Plan ((I)) 1 members who are employed by union employers shall have an irrevocable ((election)) option to reenter membership. If this option is not exercised when ((the employee)) you first enter((s)) an eligible position with the union employer, it is waived. The union employer has the duty to notify you, as its new employee((s)), of the option to enter Plan ((I)) 1. Failure of the union employer to provide notification shall not ((obviate a person's)) prevent your waiver of the right to participate in Plan ((I)) 1 under this section. Union employers and their Plan ((I)) 1 employees who ((opt into membership)) choose to become members will be subject to the same statutory and regulatory requirements as other Plan ((I)) 1 nonstate agency employers and employees.

(4) Union employers shall ((elicit)) have all new employees state on a written form ((from all new employees)) whether ((the employee has)) they have ever been a Plan ((I)) 1 member.

(5) ((A union employer may not report employees for participation in Plan II.

(6)))(a) Upon first establishing union employer status the union must pay the ((prior service liability)) required retroactive contributions and interest as determined by the department under RCW 41.40.363 or ((41.40.045)) 41.40.057, as applicable for union elective officials and employees who ((opt into membership)) choose to become a member under RCW 41.40.023 and are eligible for Plan ((I)) 1.

(b) If employer and employee contributions have been ((erroneously)) submitted in error and the union subsequently establishes retroactive union employer status for the period in question, the contributions on deposit with the retirement system will be considered ((ratified)) valid to the extent that the periods of erroneous contributions coincide with periods for which the union has established union employer status.

(((7))) (6) Notwithstanding any provisions of WAC 415-108-620 Plan ((I)) 1 retirees who enter into employment with a union employer in an eligible position are subject to the provisions of RCW 41.40.150 (5)(a).

(7) A union employer may not report employees for participation in Plan 2 or Plan 3.

[Statutory Authority: RCW 41.50.050(5) and 41.40.010 (4)(a). 93-11-077, 415-108-640, filed 5/18/93, effective 6/18/93.]

In evaluating whether your position is eligible for membership, your employer will determine only whether the position meets the criteria of an eligible position under RCW 41.40.010(25) and WAC 415-108-680(1). 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 415-108-680(2)); or

(b) Work in both a PERS and TRS position during the same school year (See WAC 415-108-728).

(2) Your employer will evaluate your position's eligibility for a particular year at the beginning of the year. This is normally a calendar year unless your employer has determined and supports a different twelve-month period for its 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 PERS eligibility;

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

(C) The months of employment in a twelve-month period required by the position are determined by the occurrence or nonoccurrence of natural disasters such as forest fires;

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 or ineligible position.

(a) 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.

(b) If your employer has declared your position ineligible, the position must continue to fail to meet the requirements of an eligible position or reclassification of your position will occur as stated in subsection (3)(b) of this section.

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

(a) "Eligible position" - RCW 41.40.010.

(b) "Employer" - RCW 41.40.010.

(c) "Ineligible position" - RCW 41.40.010.

(d) "Membership" - RCW 41.40.023.

(e) "Project position" - WAC ((415-108-0103)) 415-108-010.

(f) "Report" - WAC ((415-108-0104)) 415-108-010.

(g) "Year" - WAC ((415-108-0108)) 415-108-010.

[Statutory Authority: RCW 41.50.050. 95-16-053, 415-108-690, filed 7/25/95, effective 8/25/95.]

(2) If you work for a PERS employer after you retire, you are subject to post-retirement 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 post-retirement employment restrictions under RCW 41.40.150, 41.40.690, and ((41.40.690)) 41.40.850 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 41.40.010.

(b) "Employer" - RCW 41.40.010.

(c) "Ineligible position" - RCW 41.40.010.

(d) "Membership" - RCW 41.40.023.

[Statutory Authority: RCW 41.50.050. 95-16-053, 415-108-720, filed 7/25/95, effective 8/25/95.]

(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 ((II)) 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 41.40.690 as follows:

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

(i) Calculate the retirement allowance pursuant to RCW 41.40.620 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 41.40.620 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 Plan 2 or Plan 3 retiree's retirement allowance is suspended under RCW 41.40.690 or RCW 41.40.850 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.

[Recodified as 415-108-830. 97-19-035, filed 9/9/97, effective 9/9/97. Statutory Authority: RCW 41.50.050. 94-09-040, 415-108-580, filed 4/19/94, effective 5/20/94.]

OTS-5243.1

NEW SECTION
WAC 415-108-727   Can I transfer service credit earned as a cadet in the public employees' retirement system to the Washington state patrol retirement system?   (1) A Plan 1 or Plan 2 member may transfer cadet service under RCW 41.40.092.

(2) A person who becomes a PERS Plan 3 member cannot transfer service credit earned as a cadet in PERS, regardless of when the credit was earned.

[]

OTS-5244.1

NEW SECTION

WAC 415-108-815   What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?   (1) The minimum dollar limit under RCW 41.40.815 for determining if a lump sum payment may be received instead of a monthly benefit is increased to $119.41 as of March 1, 2002.

(2) The limit established in subsection (1) of this section will be increased each January 1st by three percent beginning January 1, 2003.

[]

OTS-5247.1

NEW SECTION

WAC 415-110-815   What is the minimum dollar limit used to determine a Plan 3 lump sum benefit payment?   (1) The minimum dollar limit under RCW 41.35.670 for determining if a lump sum payment may be received instead of a monthly benefit is increased to $119.41 as of March 1, 2002.

(2) The limit established in subsection (1) of this section will be increased each January 1st by three percent beginning January 1, 2003.

[]

OTS-5227.2

AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-110-910   Conversion of service from PERS to SERS.   (1) You will be converted from ((PERS to SERS)) the public employees' retirement system (PERS) to the school employees' retirement system (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 are a participating member in PERS and move to a SERS employer after September 1, 2000;

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

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

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

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

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

(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))) (d) and (((d))) (e) of this section, a PERS Plan 2 retiree will not have any of ((their)) his or her service, account or retirement history converted to SERS.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-110-910, filed 12/12/00, effective 1/12/01.]

OTS-5245.1

NEW SECTION

WAC 415-111-400   Optional service purchase rules.   (1) Statutory deadline dates.

(a) When you are purchasing service available from participation as a former member of Plan 2, you will be subject to the statutory deadline date as if you were in Plan 2. The transfer of membership from Plan 2 to Plan 3 will not change a statutory deadline date for purchasing service credit while you were a member of Plan 2.

(b) When you are a Plan 3 member purchasing Plan 3 service credit, you are not subject to a statutory deadline date.

(2) Interest on purchase cost. When purchasing service as a Plan 3 member, you will not be required to pay interest on member contributions. When paying employer contributions, you will be required to pay interest on those contributions.

(3) Allocation of purchase money.

(a) Member contributions will be applied to your defined contribution account when paid. Paid member contributions are not refundable, except as a withdrawal of defined contributions under RCW 41.34.070 and WAC 415-111-310.

(b) Employer contributions and interest on employer contributions that you pay will be allocated to the fund described in RCW 41.50.075(3) and shall not be refundable.

[]

OTS-5229.1

AMENDATORY SECTION(Amending Order IV, filed 2/15/78)

WAC 415-112-250   Can I receive service credit ((allowed)) for leave with pay((.))?   ((If a)) (1) Plan ((I member is)) 1 members: If you are otherwise eligible, you will receive service credit ((shall be allowed)) for any time ((subsequent to)) on or after July 1, 1960, during which ((a member is)) you were on official leave from ((his)) your position, provided ((he is still)) that you were listed as employed by ((his)) your employer and ((is)) were receiving compensation for the time of ((his)) your leave.

(2) Plan ((II)) 2 members: You may receive ((such)) service credit in accordance with ((chapter 295, Laws of 1977 ex. sess. as now or hereafter amended)) RCW 41.32.810(1).

(3) Plan 3 members: You may receive service credit in accordance with RCW 41.32.865(1).

[Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-250, filed 2/15/78. Formerly WAC 462-20-030.]

(1) Plan 1.

(a) The employer must deduct salary for retirement contributions for a teacher who has not been a member if:

(i) ((They are)) The teacher is employed full time (at least four-fifths of a school day or full time assignment); and

(ii) ((Their)) The teacher's employment contract calls for at least ninety days of employment in a school year.

(b) The employer must also deduct the salary of each teacher who is a member employed full time if their employment contract calls for at least twenty days of employment in a school year.

(c) If a teacher who is not a member is employed for less than ninety days in a school year, ((they)) the teacher will fail to establish membership. The employer must refund ((their)) the teacher's salary deductions for retirement when ((they)) he or she terminates employment as a teacher. The ((nonmember)) member must file a refund application with the department before ((they)) he or she can receive the refund.

(d) If a member is employed by an employer for less than twenty days in a school year, the employer must refund all salary deductions for retirement based on service during that year at the time the member terminates for the year. The ((nonmember)) member must file a refund application with the department before ((they)) he or she can receive the refund.

(2) Plan 2 and Plan 3.

(a) The employer must deduct salary for retirement contributions for a teacher if:

(i) ((They)) The teacher works at least eight hundred ten hours for nine or more months between September and August of the following year; and

(ii) ((Their)) The teacher's employment contract calls for at least ninety days of employment in a school year.

(b) If a teacher who is not a member is employed for less than ninety days in a school year, ((they)) he or she will fail to establish membership. The employer must refund ((their)) the teacher's salary deductions for retirement when ((they)) the teacher terminates employment ((as a teacher)). The ((nonmember)) member must file a refund application with the department before ((they)) he or she can receive the refund.

[Statutory Authority: RCW 41.50.050. 99-14-008, 415-112-400, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 41.50.050(6). 79-10-024 (Order 79-02), 415-112-400, filed 9/10/79. Statutory Authority: RCW 41.50.050(6) and 41.50.090. 78-03-023 (Order IV), 415-112-400, filed 2/15/78. Formerly WAC 462-24-010.]

(a) If your employer provides you with materials in lieu of reimbursement for your business expenses, the value of the materials is not earnable compensation.

(i) The value of employer-provided materials is not earnable compensation if you use the materials solely in connection with your employer's business.

(ii) "Materials" includes, but is not limited to, living quarters, food, board, equipment, clothing, laundry, transportation, fuel, and utilities:

Example:

An employer provides an employee with uniforms which the employee must wear in performing services for his employer. Because the uniforms are to be used solely in connection with the employer's business, they do not qualify as nonmoney maintenance compensation. Therefore, the value of the uniforms is not earnable compensation.

(b) The department presumes that your employer provides you materials solely in lieu of reimbursement for business expenses. Unless you or your employer can show by corroborating evidence that your employer provided you materials in whole or in part as payment for your personal expenses, as opposed to business expenses, the value of the materials is not earnable compensation.

(c) If your employer provides you with materials for your personal use, the value of that use is nonmoney maintenance compensation and is included in your earnable compensation.

(i) "Nonmoney maintenance compensation" means the fair market value of materials legally ((furnished)) provided by your employer to you or your dependents for personal use.

(ii) Nonmoney maintenance compensation does not include any form of compensation other than cash that is excludable from taxation under provisions of the Internal Revenue Code. This applies regardless of whether you or your employer reported the compensation to the Internal Revenue Service as taxable income.

(d) Your use of employer-provided materials will qualify as nonmoney maintenance compensation if your employer substantiates that they were provided to you as payment for personal services. In order for employer-provided materials to qualify as nonmoney maintenance compensation, your employer must:

(i) Establish and regularly update a written schedule reflecting the monthly fair market value of each item of employer-provided materials claimed as nonmoney maintenance compensation. Typically, the fair market value would be the cost of the item if it were acquired in a purchase or lease transaction;

(ii) Report the fair market value of employer-provided materials as nonmoney maintenance compensation to the department as earnable compensation. If you pay any amount to your employer in order to own or use the materials, your employer must report as earnable compensation the amount by which the fair market value of the materials exceeds the amount of your payment;

(iii) Substantiate by adequate records, or by other sufficient corroborating evidence the following:

(A) That the fair market value of each item of nonmoney maintenance compensation as reported to the department is accurate;

(B) That each item of nonmoney maintenance compensation is provided to you for your personal use as payment for your services to the employer; and

(C) That each item of nonmoney maintenance compensation is includable in your taxable income for federal income tax purposes.

Example:

An employer leases an apartment for $700.00 per month. The employer charges an employee $300.00 per month to use the apartment for temporary living quarters. Because the employee uses the apartment for personal, rather than business, purposes, the amount by which the lease value exceeds the employee's payment is nonmoney maintenance compensation. The employer must report $400.00 per month to the department as earnable compensation for the employee.

(e) How to corroborate that your use of employer-provided materials qualifies as nonmoney maintenance compensation. In addition to the records required under (d) of this subsection, you may provide the department with any ((oral or written)) evidence which you or your employer believe ((corroborates)) confirms that your use of employer-provided materials qualifies as earnable compensation. However, ((oral)) verbal evidence alone has considerably less value than written evidence. Written evidence prepared at or near the time your employer provides you with the item of compensation is generally much stronger than ((oral)) verbal evidence or written evidence created years later.

(2) TRS Plan ((II)) 2 and Plan 3 members. If you are a TRS Plan ((II)) 2 or Plan 3 member, you are not entitled to count the value of any nonmoney maintenance compensation you receive from your employer as earnable compensation.

[Statutory Authority: RCW 41.50.050. 95-22-006, 415-112-412, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.32.010(11) and 41.32.160. 87-17-060 (Order DRS 87-07), 415-112-412, filed 8/19/87.]

(((a) If you use an employer vehicle solely in connection with your employer's business, your use of the vehicle does not qualify as earnable compensation. Use of an employer-provided vehicle only qualifies as earnable compensation to the extent that you use it for personal, rather than business, purposes. Your use of an employer vehicle does not qualify as earnable compensation if:

(i) You use the vehicle solely in connection with your employer's business; or

(ii) Your employer has an established policy prohibiting you from using the vehicle for any purpose other than in connection with your employer's business.

(b) The department presumes that any employer-provided vehicle is used solely in connection with your employer's business and does not qualify as earnable compensation.

(c) A portion of your use of an employer-provided vehicle may qualify as earnable compensation. In order for any portion of your use of an employer vehicle to qualify as earnable compensation, your employer must either:

(i) Report your personal use of the vehicle to the Internal Revenue Service (IRS) as income; or

(ii) Maintain monthly records reflecting your personal use of the vehicle.

(d) Your personal use of an employer vehicle qualifies as earnable compensation if your employer reports your use to the IRS as taxable income. Your employer may report your personal use of an employer vehicle to the Internal Revenue Service (IRS) as taxable income as provided under the Internal Revenue Code (I.R.C.). See I.R.C. Section 61 and Treas. Reg. Section 1.61-21. If so, the department will consider the amount reported to the IRS as earnable compensation.

(e) Your personal use of an employer vehicle qualifies as earnable compensation to the extent your employer documents your personal use of the vehicle. If your employer does not report your use of an employer vehicle to the IRS as income, your use of the vehicle may qualify as earnable compensation if your employer maintains monthly contemporaneous records detailing your personal use of the vehicle. Your employer records must reflect all of the following:

(i) Whether your employer authorized you to use the vehicle for personal use, including commuting;

(ii) Whether you used the vehicle for commuting and, if so, the distance you normally commuted on a daily basis during the month;

(iii) The dates, if any, on which you used the vehicle for other personal purposes, including the miles you drove the vehicle on each personal trip and your itinerary for each trip;

(iv) The total number of miles you drove the vehicle during the month; and

(v) The percentage of the total miles you drove the vehicle during the month for personal use, including commuting.

(f) Your employer must report as earnable compensation an amount based on your personal use of the vehicle. If your employer maintains records documenting your personal use of the vehicle as provided in (e) of this subsection, your employer must report to the department as monthly earnable compensation the lesser of the following amounts;

(((i)		Monthly Fair Market Lease Value of the Vehicle
x
		Percentage of Personal Use of the Vehicle During the Month;
or
		Miles of Personal Use
x
		IRS Mileage Rate))
(ii) "IRS mileage rate" means the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle.))

(a) Use of an employer vehicle for business purposes does not qualify as compensation earnable. If your employer's established policy prohibits the use of an employer vehicle for nonbusiness uses, all use of the vehicle will be deemed business use.

(b) Use of an employer vehicle for nonbusiness purposes qualifies as compensation earnable if:

(i) Your employer reports the value of this use as compensation earnable on a monthly basis. Monthly compensation earnable is the lesser of the following:

(A) Fair Market Lease Value x Percentage of Personal Use; or

(B) Miles of Personal Use x IRS Mileage Rate. The IRS Mileage Rate is the mileage rate adopted by the Internal Revenue Service for use by taxpayers in computing the value of the use of a vehicle; and

(ii) Your employer reports your personal use of the vehicle to the IRS as taxable income under IRC Section 61 and Treas. Reg. Section 1.61-21; or

(iii) Your employer maintains monthly records of your personal use.

These records must contain:

(A) Your employer's authorization of your personal use;

(B) The distance normally commuted each day during the month, if you use the vehicle to commute;

(C) The dates, mileage, and itinerary of each personal trip other than a commute trip; and

(D) Your total mileage for the month.

(E) The ratio of personal mileage to total mileage, expressed as a percent.

(c) The department presumes that your use of an employer vehicle is solely for business purposes.

(2) TRS Plan ((II)) 2 and Plan 3 members. If you are a ((TRS Plan II)) member of TRS Plan 2 or Plan 3, you are not entitled to count any of the value of an employer-provided vehicle as earnable compensation.

[Statutory Authority: RCW 41.50.050. 95-22-006, 415-112-413, filed 10/18/95, effective 11/18/95. Statutory Authority: RCW 41.32.010(11) and 41.32.160. 87-17-060 (Order DRS 87-07), 415-112-413, filed 8/19/87.]

(2) ((Spousal consent is not needed to enforce a marital dissolution order requiring the department to pay an ex-spouse under RCW 41.50.790.)) The department will comply with a dissolution order, consistent with the terms of RCW 41.50.790, that requires it to pay an ex-spouse of a Plan 1 or Plan 2 member, whether or not the member's spouse has consented.

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

[Statutory Authority: RCW 41.50.050. 99-14-008, 415-112-725, filed 6/24/99, effective 7/25/99. Statutory Authority: RCW 2.10.146, 41.26.460, 41.32.530, 41.50.050, 41.32.785, 41.40.188 and 41.40.660. 96-01-047, 415-112-725, filed 12/14/95, effective 1/14/96. Statutory Authority: RCW 34.05.050 and 1990 c 249. 91-03-016, 415-112-725, filed 1/7/91, effective 2/7/91.]

OTS-5228.2

AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-113-0303   Dual member system -- Definition and system acronyms.   "Dual member system" ((means)) is defined as the state and city retirement systems admitted to participate under chapter 41.54 RCW. These systems are:

(((1) PERS Plans 1 and 2;

(2) TRS Plans 1, 2 and 3;

(3) LEOFF Plan 2;

(4) WSPRS;

(5) Statewide city employees' retirement system;

(6) The first class city retirement systems; and

(7) SERS Plans 2 and 3.)) (1) First class city retirement systems of Seattle, Tacoma and Spokane;

(2) Law enforcement officers' and fire fighters' (LEOFF) retirement system Plan 2;

(3) Public employees' retirement system (PERS) Plan 1, Plan 2 and Plan 3;

(4) School employees' retirement system (SERS) Plan 2 and Plan 3;

(5) Statewide cities employees' retirement system (SCERS);

(6) Teachers' retirement system (TRS) Plan 1, Plan 2 and Plan 3; and

(7) Washington state patrol retirement system (WSPRS) Plan 1 and Plan 2.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-0303, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-0303, filed 10/29/99, effective 11/29/99; 95-03-001, 415-113-0303, filed 1/4/95, effective 2/4/95.]

(1) You must be a participating member of a dual member system. You must be a current member participant in at least one ((dual member system)) of the systems listed in WAC 415-113-030 to be a dual member. You may have established dual member status if you are or were a member participant ((of a dual member)) in one of those systems on or after:

(a) July 1, 1988, for current or former members of all plans of PERS, SERS, TRS, SCERS or WSPRS;

(b) July 25, 1993, for current or former members of LEOFF Plan 2; or

(c) January 1, 1994, for current or former members of a first class city retirement system;

(2) You must also be a former or current member of ((another dual member)) at least one other system listed in WAC 415-113-0303.

(3) You must not have been retired for service from a retirement system. You are not a dual member if you have ever been retired for service from any retirement system administered by the department of retirement systems or a first class city retirement system.

(4) ((You must not be in receipt of a disability benefit from a dual member system.)) If you are receiving a disability retirement allowance or disability leave benefits from a dual member system or LEOFF Plan 1, you cannot be a dual member.

(a) If you have received a lump sum disability benefit from PERS Plan 2 or 3, SERS Plan 2 or 3, TRS Plan 2 or 3 or LEOFF Plan 2 you are in receipt of a disability benefit unless the department has found that you are no longer disabled.

(b) You are not receiving a disability retirement allowance or disability leave benefits if you:

(i) Previously received disability benefits and the department has subsequently found that you are no longer disabled, and has terminated your disability benefit; or

(ii) Retired for disability from service from WSPRS Plan 1 or 2.

Example 1:

A former PERS Plan 1 member who has never been retired and becomes a member participant in TRS Plan 2 through employment with a TRS employer becomes a dual member.

(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(4).

(b) "Dual member system" - WAC 415-113-0303.

(c) "Member participant" - WAC 415-113-0305.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-041, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-041, filed 10/29/99, effective 11/29/99; 95-03-001, 415-113-041, filed 1/4/95, effective 2/4/95.]

Example 2:

Upon separation from TRS Plan 2 eligible employment, the person in Example 1 ((in)) (see WAC 415-113-041) is no longer a member of TRS Plan 2 nor a dual member.

(2) If you retire, you are no longer a dual member. ((Upon retirement)) When you retire from any or all dual member systems, ((a person is)) you are no longer a dual member except for the purpose of receiving a deferred retirement allowance under RCW 41.54.030(3) and WAC 415-113-070.

(3) If you ((are not a)) terminate dual ((member)) membership, you may still be eligible ((for)) to receive a multiple system benefit((. If you are no longer a dual member you may still be able to receive a multiple system benefit)) if otherwise eligible. The accrual date of your retirement allowance will vary depending upon the provisions of the particular system. You can find the accrual dates of different dual member systems in the following provisions:

(((a) PERS 1: RCW 41.40.193;

(b) PERS 2: RCW 41.40.680;

(c) TRS 1: WAC 415-112-520;

(d) TRS 2: RCW 41.32.795;

(e) TRS 3: RCW 41.32.855;

(f) LEOFF 2: RCW 41.26.490;

(g) SERS 2: RCW 41.35.450;

(h) SERS 3: RCW 41.35.640.))

(a) LEOFF 2: RCW 41.26.490;

(b) PERS 1: RCW 41.40.193;

(c) PERS 2: RCW 41.40.680;

(d) PERS 3: RCW 41.40.801;

(e) SERS 2; RCW 41.35.450;

(f) SERS 3: RCW 41.35.640;

(g) TRS 1: WAC 415-112-520;

(h) TRS 2: RCW 41.32.795;

(i) TRS 3: RCW 41.32.855.

(4) 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(4), WAC 415-113-041.

(b) "Dual member system" - WAC 415-113-0303.

(c) "Member participant" - WAC 415-113-0305.

(d) "Multiple system benefit" - WAC 415-113-0306.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-042, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-042, filed 10/29/99, effective 11/29/99; 95-03-001, 415-113-042, filed 1/4/95, effective 2/4/95.]

(a) If you ((elect)) choose to retire with a multiple system benefit, you may substitute your base salary under one dual member system for your includable compensation in a second dual member system for purposes of computing a retirement allowance from the second system. Using the substituted salary, the department will compute your average compensation under each system's own requirements.

Example 6:

At retirement, ((a person)) Sandy is a member participant in PERS Plan 2 and has prior creditable service in TRS Plan 1. ((Assume the multiple system retiree)) She earned her highest compensation during her PERS Plan 2 service. ((The retiree's)) Sandy's PERS Plan 2 retirement allowance will be based on her PERS Plan 2 average compensation. For purposes of computing her TRS average compensation and retirement allowance, ((she)) Sandy may substitute her PERS Plan 2 base salary earned over two consecutive fiscal years for her earnable compensation in TRS.

Example 7:

At retirement, ((a person)) Pat is a member participant in TRS Plan 1 and has prior creditable service in PERS Plan 1. ((Assume the multiple system retiree)) He earned his highest compensation during his membership in TRS Plan 1 and received a sick-leave cashout. ((The retiree)) Pat may substitute his base salary earned while a member in TRS Plan 1 for his PERS Plan 1 compensation earnable. However, because ((he)) Pat may substitute only his base salary from TRS Plan 1 for his compensation earnable in PERS, his PERS average compensation will not include ((any)) the cashout payments from his TRS employer.

(b) If you do not have sufficient service credit months in one dual member system to complete an average compensation period under that system, the department will substitute the appropriate number of months of base salary from another system to complete the average compensation period.

Example 8:

((A person who)) Tim has creditable service in TRS Plan 1 and PERS Plan 2. He retires at age sixty-five ((having accrued)) after accruing twenty-four months of service in PERS Plan 2. Under PERS Plan 2, a member's average compensation period is the member's highest consecutive sixty-month period of compensation. To compute ((the multiple system retiree's)) Tim's PERS Plan 2 retirement allowance, the department will substitute ((her)) his highest consecutive thirty-six service credit months of TRS base salary to complete the PERS sixty-month average compensation period.

(2) Adjusted full-time salary is not base salary. A multiple system retiree's adjusted full-time salary under RCW 41.32.345 shall not constitute base salary for purposes of computing the retiree's multiple system benefit.

(3) Includable compensation defined. For purposes of this chapter, "includable compensation" means:

(a) Earnable compensation under TRS Plan 1, 2 or 3 as defined in RCW 41.32.010(10);

(b) Compensation earnable under PERS Plan 1 ((or)), 2 or 3 as defined in RCW 41.40.010(8);

(c) Basic salary under LEOFF Plan 2 as defined in RCW 41.26.030 (13)(b);

(d) Monthly salary under WSPRS Plan 1 or 2 as ((used)) defined in RCW 43.43.120(((15))) (23) and WAC 415-103-010; and

(e) Compensation earnable under SERS Plan 2 or 3 as defined in RCW 41.35.010(6).

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

(a) "Average compensation" - WAC 415-113-0302.

(b) "Base salary" - RCW 41.54.010(1).

(c) "Dual member system" - WAC 415-113-0303.

(d) "Member participant" - WAC 415-113-0305.

(e) "Multiple system benefit" - WAC 415-113-0306.

(f) "Multiple system retiree" - WAC 415-113-0308.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-065, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-065, filed 10/29/99, effective 11/29/99; 95-03-001, 415-113-065, filed 1/4/95, effective 2/4/95.]

(b) Your retirement allowance under the deferred system will be based solely upon service actually established in that system.)) (1) If you qualify to retire in one system but not the second system, you may nonetheless choose to retire from both systems and receive a multiple system benefit.

(2) If you retire with a multiple system benefit, before you have become eligible in a second system(s), you must either:

(a) Take an actuarial reduction in the retirement allowance you receive from the second system(s); or

(b) Defer receipt of your retirement allowance in the second system(s) under RCW 41.554.030(3).

(3) If you take an actuarial reduction under subsection (2)(a) of this section, the reduction will account for the difference between your age at the time you begin to receive the retirement allowance and the earliest age when you would be fully eligible based on your combined service. You are "fully eligible" when you meet the age and service qualifications for retirement for each system.

(4) If you defer receipt of your retirement allowance under subsection (2)(b) of this section:

(a) You will retain dual member status for the sole purpose of receiving a deferred retirement allowance from the second system(s); and

(b) You may not subsequently withdraw accumulated contributions from the second system(s).

Example 9:	A sixty-two year old dual member of PERS Plan 1 and TRS Plan 2 retires. He ((elects)) chooses to receive PERS Plan 1 benefits but defers receipt of a TRS Plan 2 retirement allowance. If he becomes reemployed in a TRS Plan 2 eligible position, he will reenter TRS Plan 2 membership if otherwise eligible and terminate his dual member status, but he will continue to receive his PERS Plan 1 retirement allowance until he works more than the work-limit in a calendar year under WAC 415-108-710. The member's eligibility to retire from TRS Plan 2 will be based solely on his accrued service credit in TRS Plan 2 and his TRS Plan 2 retirement allowance will be based solely on his compensation while he was a member participant in TRS Plan 2.
Example 10:	Assume the retiree in Example 9 above became reemployed in a PERS position rather than a TRS Plan 2 position. He could work in this position up to the work-limit in a calendar year under WAC 415-108-710 without having his PERS retirement allowance suspended. If the retiree works over the work-limit:
	The department would suspend his retirement allowance until the next calendar year. He would remain a dual member. He would be able to retire in TRS 2 if otherwise eligible;
	The retiree could ((elect)) choose to reenter PERS Plan 1 membership at any time, if otherwise eligible, and terminate his dual member status. His ((election)) choice for membership is not retroactive. The effect on the person's right to a TRS Plan 2 benefit is the same as in Example 9. See WAC 415-108-710.

(((3))) (5) If you defer your retirement allowance and die before you begin receiving the allowance, your survivor may receive a continuing benefit. If you defer receipt of your retirement allowance from a system and die before you ((elect)) choose to begin receiving the allowance:

(a) Your surviving spouse, if any, must ((elect)) choose to receive either:

(i) A joint and one hundred percent survivor option from the deferred system. If your surviving spouse selects this option, your base salary under one system may be substituted for your includable compensation in the deferred system to compute the survivor retirement allowance from the deferred system; or

(ii) A refund of your accumulated contributions from the deferred system.

(b) If you do not have a surviving spouse, the department will pay your accumulated contributions from the deferred system to:

(i) Your designated beneficiary or beneficiaries; or

(ii) Your estate, if there are no living beneficiaries.

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

(a) "Dual member system" - ((RCW 41.32.010(4), WAC 415-113-041)) WAC 415-113-0303.

(b) (("Member participant" - WAC 415-113-0305.

(c))) "Includable compensation" - WAC 415-113-065(3).

(c) "Member participant" - WAC 415-113-0305.

(d) "Multiple system participant" - WAC 415-113-0307.

(e) "Nonmember participant" - WAC 415-113-0309.

(f) "System" - RCW 41.54.010(6).

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-070, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-070, filed 10/29/99, effective 11/29/99; 96-20-004, 415-113-070, filed 9/19/96, effective 10/20/96; 95-03-001, 415-113-070, filed 1/4/95, effective 2/4/95.]

(2) The department will compute your maximum multiple system benefit in the following order:

(a) Calculate the maximum benefit you could receive under each system. The department will compute your maximum benefit according to the benefit limitation provisions of each system as if you had earned your total career service and compensation in that system. In computing your maximum benefit under each system, the department will:

(i) Apply the provisions of each system governing the calculation of your average compensation in that system; and

(ii) Assume you earned all of your career service with your last employer for purposes of determining any limitations on the inclusion of leave cashouts in your average compensation.

Example 18:

A multiple system retiree retires from TRS Plan 1 state employment with prior creditable PERS Plan 1 service. His ((state)) PERS employer pays him an accrued sick leave cashout at termination. Because a sick leave cashout from a state agency employer is not includable as TRS earnable compensation, the department will not include the cashout in the retiree's average compensation for purposes of computing either his PERS Plan 1 or TRS Plan 1 maximum benefit.

Example 19:

A multiple system retiree retires from PERS Plan 1 local government employment and receives a sick leave cashout. Because a sick leave cashout from a local government employer may be included as earnable compensation, the department will include the sick leave cashout to compute the retiree's maximum benefits under both PERS Plan 1 and TRS Plan 1.

(b) Determine your retirement allowances from each system. After computing your maximum benefit, the department will determine the retirement allowances to which you are entitled ((to)) from each system under chapter 41.54 RCW before making any reduction under RCW 41.54.070. If applicable, the department will then reduce the amount of your retirement allowances provided by either of the dual member systems for:

(i) Your status as a nonmember participant of WSPRS Plan 1 or 2 pursuant to RCW 43.43.280(2); or

(ii) Your ((election)) choice to retire early from a Plan 2 system under RCW 41.40.630(2), 41.32.765(2), 41.35.420(2), and 41.26.430(2) or Plan 3 system under RCW 41.32.875(2), 41.35.680(2), and 41.40.820(2).

(c) Compute your total multiple system benefit. Upon computing your retirement allowances from each system and making any applicable reductions under (b) of this subsection, the department will add the systems' allowances to compute your total multiple system benefit.

(d) Compare your total multiple system benefit with your maximum benefit and, if necessary, proportionately reduce your retirement allowances. The department will then compare your total multiple system benefit with your maximum benefit calculated in (a) of this subsection. If your total multiple system benefit exceeds your maximum benefit, the department will proportionately reduce your retirement allowances provided by each system as follows:

(i) Calculate what proportion your total multiple system benefit is provided by each system separately; and

(ii) Proportionately reduce the benefit provided by each system to account for the excess of your total multiple system benefit over your maximum benefit.

Example 20:

A person with twenty-nine years of prior service in TRS Plan 1 and one year of subsequent service in PERS Plan 2 retires from both systems at age sixty-five. The retiree's TRS Plan 1 average compensation is thirty thousand dollars. The TRS Plan 1 maximum benefit is sixty percent of average compensation. The retiree's maximum TRS benefit is eighteen thousand dollars or one thousand five hundred dollars per month. The retiree's PERS Plan 2 average compensation is twenty-eight thousand dollars. The retiree's maximum PERS 2 benefit is sixteen thousand eight hundred dollars or one thousand four hundred dollars per month. The retiree's maximum benefit is the higher of the two amounts, one thousand five hundred dollars per month.

Assume the retiree's accrued service is such that her actual TRS Plan 1 monthly benefit is one thousand four hundred fifty dollars and her PERS Plan 2 monthly benefit is one hundred dollars. The retiree's total multiple system benefit is the sum of her TRS Plan 1 and PERS Plan 2 benefits, or one thousand five hundred fifty dollars. Because the retiree's total multiple system benefit exceeds her maximum benefit by fifty dollars, the department would proportionately reduce her TRS Plan 1 and PERS Plan 2 benefits. Her TRS Plan 1 benefit is 29/30 of her total service or ninety-seven percent, and her PERS Plan 2 benefit is 1/30 of total service, or three percent. The department would reduce her TRS Plan 1 benefit by ninety-seven percent of the overage, or forty-eight dollars and fifty cents (50 x.97) and her PERS Plan 2 benefit by three percent of the overage, or one dollar and fifty cents (50 x.03).

(3) If you select a benefit payment option, the department will reduce your multiple system benefit to account as appropriate. After making any applicable maximum benefit reductions, the department will further reduce your benefit if you ((elect)) choose:

(a) To withdraw your accumulated contributions at the time you retire from TRS Plan 1;

(b) A survivor benefit option; or

(c) A cost-of-living adjustment (COLA) option.

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

(a) "Average compensation" - WAC 415-113-0302.

(b) "Dual member" - RCW 41.54.010(4), WAC 415-113-041.

(c) "Dual member system" - WAC 415-113-0303.

(d) "First class city system" - WAC 415-113-0304.

(e) "Member participant" - WAC 415-113-0305.

(f) "Multiple system benefit" - WAC 415-113-0306.

(g) "Multiple system retiree" - WAC 415-113-0308.

(h) "Nonmember participant" - WAC 415-113-0309.

[Statutory Authority: RCW 41.50.050. 99-22-043, 415-113-090, filed 10/29/99, effective 11/29/99; 96-20-004, 415-113-090, filed 9/19/96, effective 10/20/96; 95-03-001, 415-113-090, filed 1/4/95, effective 2/4/95.]

If a member has been concurrently employed at any time, this section governs the calculation of service credit, average final compensation, and retirement benefits attributable to all periods of PERS employment, SERS employment, and concurrent employment.

(1) Can I participate in SERS and PERS at the same time? Yes, you may participate in SERS and PERS at the same time when employed concurrently in a PERS eligible position and a SERS eligible position. Your SERS employer will report your SERS eligible service in SERS. Your PERS employer will report your PERS eligible service in PERS.

(2) Will the factors used to calculate my defined benefit be different because of concurrent employment in SERS and PERS? No, the department will calculate your service credit and average final compensation as if all of your employment was reported in one system. These two factors are used to calculate your defined benefit.

(3) Will the amount of my benefit be different because of concurrent employment?

(a) If you are concurrently employed in SERS Plan 2 and PERS Plan 2, the amount of your benefit from SERS and PERS combined will be the same as if all of your service had been reported and you received a benefit in one system, because:

(i) SERS Plan 2 and PERS Plan 2 both use identical two-percent benefit formulas; and

(ii) Your total service credit and average final compensation will not be different than if all of your service had been reported in one system pursuant to subsection (2) of this section.

(b) If you are concurrently employed in SERS Plan 3 and PERS Plan 2, the amount of your benefit may be ((greater or less)) larger or smaller than if all of your service had been reported in one system:

(i) SERS Plan 3 uses a one-percent defined benefit formula and has a defined contribution component. You are responsible for the investment of your defined contribution component, which is subject to investment gains or losses; therefore, the dollar value of your total benefit may be greater or less than what you would have received if all of your service had been reported in one defined benefit system.

(ii) The allocation of your service credit while concurrently employed, as described in subsection (4) of this section, may also affect the dollar value of your benefit.

(4) How is my service credit granted while concurrently employed? As a concurrently employed member, you are entitled to exactly the same amount of service credit for your SERS and PERS service combined that you would have received had all of your service been reported in one system.

To calculate your service credit the department will:

(a) Combine your SERS and PERS service to determine the amount of service credit you would have earned had all of your service been reported in one system.

(b) Calculate and grant service credit in SERS based only on your reported SERS service.

(c) Calculate and grant service credit in PERS by subtracting the amount of service credit granted for SERS in (b) of this subsection from the amount of service credit calculated in (a) of this subsection that you would have earned had all of your service been reported in one system (see example 1):

(i) For any month ((that)) in which you receive one month of service credit in SERS for a calendar month of employment, you will not receive any PERS service credit in that month.

(ii) The combined service credit in SERS and PERS may not exceed one month of service for a calendar month of employment.

(d) Adjust the SERS service credit at the conclusion of each school year in accordance with the provisions of RCW 41.35.180. This adjustment may cause changes in the combined SERS/PERS service credit and/or changes in the PERS service credit. (See example 2).

Example 1:	Monthly computation of concurrent employment service credit.
	Part-time SERS and part-time PERS.
	(a) During a month, a member works 80 hours at a school district and 100 hours at a county. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .5 service credit in SERS based on the 80 hours of service reported in SERS and will receive .5 service credit in PERS based on subtracting the .50 service credit in SERS from the maximum of 1.00 service credit.
	(b) During a month, a member works 65 hours at a school district and 30 hours at a county. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .25 service credit in SERS based on the 65 hours of service reported in SERS and will receive .75 service credit in PERS based on subtracting the .25 service credit in SERS from the maximum of 1.00 service credit.
	Full-time SERS and part-time PERS.
	During a month, a member works 172 hours for an educational service district and works 30 hours for a state agency. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted one month of service credit in SERS based on the 172 hours of service reported in SERS and will receive 0.0 service credit in PERS (even though they worked 30 hours) based on subtracting the 1.00 service credit in SERS from the maximum of 1.00 service credit.
	Part-time SERS and full-time PERS.
	During a month, a member works 40 hours for a school district and 180 hours for a city. If all of the service had been reported in one system, the maximum the member could have earned is one service credit for that month. The member will be granted .25 service credit in SERS based on the 40 hours of service reported in SERS and will receive .75 service credit in PERS based on subtracting the .25 service credit in SERS from the maximum of 1.00 service credit.
Example 2:	Application of the educational service credit rules and the effects on concurrent employment service credit computation.
	During September, October, and November a member works 60 hours, 30 hours, and 70 hours in SERS and works 90 hours, 30 hours, and 60 hours in PERS, respectively. Based on these hours, the member would have been granted .25, .25, and .50 service credits in SERS and .75, 0.0, and .50 in PERS. The member's service credit calculated on a monthly basis through November is shown in Table 1 below.
	At the end of the school year, the educational service credit rules (RCW 41.35.180) are applied. The application of these rules may cause one or more months of SERS service credit to change. A change in the SERS service credit for any given month may cause the combined SERS/PERS service credit to change. See Table 2, second line. The PERS service credit would then need to be recalculated for any month that the SERS service credit changed.
	The members service for the entire school year is shown in Table 2 below. Applying the educational service credit rules, the member is now entitled to six service credit months in SERS for the school year (.50 in each month of September through August) based on working a total of 750 hours for the year. Thus, the service credit in September would be changed to .50 service credit in SERS and .50 credit in PERS. The service credit in October would be changed to .50 service credit in SERS and would remain at 0.0 service credit in PERS. November's service credit calculation is not affected by the application of the educational service credit rules.

Table 1: Month by Month Determination

Table 2: After RCW 41.35.180 Adjustment

(6) How is my defined benefit in each system calculated? A retirement allowance will be calculated using the appropriate formula for each system and plan as described in chapters 41.40 and 41.35 RCW, except that:

(a) The PERS service credit granted under subsection (4) of this section will be used in the PERS calculation and the SERS service credit granted under subsection (4) of this section will be used in the SERS calculation; and

(b) The average final compensation calculated under subsection (5) of this section will be used as the average final compensation for both PERS and SERS.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-113-200, filed 12/12/00, effective 1/12/01.]

     The following section of the Washington Administrative Code is repealed:

WAC 415-113-0310

System acronyms -- Definition.

OTS-5231.1

AMENDATORY SECTION(Amending WSR 01-01-059, filed 12/12/00, effective 1/12/01)

WAC 415-200-030   Plan 3 external administrators.   The employee retirement benefits board may obtain external investment management services to assist with the provision of self-direct investment options. External administrator and investment management services will be obtained through competitive procurement processes to ensure the teachers' retirement system Plan 3 ((and)), school employees' retirement system Plan 3 and the public employees' retirement system Plan 3 members receive quality services and competitive pricing. The department of retirement systems may select external administrators to assist with the administration of the defined contribution portion of ((the teachers' retirement system plan III established under chapter 41.34 RCW and the school employees' retirement system plan 3 established under chapter 41.35 RCW)) Plan 3 systems.

[Statutory Authority: Chapters 41.32, 41.34, 41.35, 41.50 RCW. 01-01-059, 415-200-030, filed 12/12/00, effective 1/12/01. Statutory Authority: RCW 41.50.088 and 41.32.060. 97-16-039, 415-200-030, filed 7/30/97, effective 7/30/97.]

Washington State Code Reviser's Office