Original Notice.

Preproposal statement of inquiry was filed as WSR 01-05-074.

Title of Rule: WAC 415-02-030 Definitions.

Purpose: The Department of Retirement Systems is proposing enhancements to its definition section in WAC 415-02-030. Words and phrases commonly used in the retirement systems (such as "pop-up") are being added to the definition section, and the definition section itself in some cases will now serve as a small "directory" for finding applicable RCWs/WACs. Existing definitions are being revised into language that is easier to understand. The department plans to add definitions of some words and phrases in common usage that are not currently defined within the department's WACs or statutes.

Statutory Authority for Adoption: RCW 41.50.050(5).

Statute Being Implemented: RCW 41.50.050(5).

Summary: Words and phrases commonly used in the retirement systems are being added to the definition section. Existing definitions are being revised into language that is easier to understand.

Reasons Supporting Proposal: Excellent customer service dictates that the department's members and staff find information easily, and that the information be clear and comprehensive.

Name of Agency Personnel Responsible for Drafting and Implementation: Merry A. Kogut, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; and Enforcement: Not applicable.

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: Excellent customer service dictates that the department's members and staff find information easily, and that the information be clear and comprehensive. Currently, definitions of frequently used terms, such as "defined benefit" and "defined contribution" exist neither in statute nor rule. The proposed change would add many new definitions to assist in customer understanding. In addition, many definitions are spread out throughout the department's WACs. A central location will help the department's customers and staff by eliminating long searches through many pages of rules for the information they seek.

Proposal Changes the Following Existing Rules: Words and phrases commonly used in the retirement systems are being added to the definition section. Existing definitions are being revised into language that is easier to understand.

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, Room 115, Tumwater, WA, on December 12, 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 12, 2001.

Date of Intended Adoption: No sooner than December 13, 2001.

November 6, 2001

Merry A. Kogut

Rules Coordinator

OTS-4656.6

AMENDATORY SECTION(Amending WSR 00-10-016, filed 4/21/00, effective 5/22/00)

WAC 415-02-030   Definitions.   ((Unless the context requires otherwise, the following terms shall have the meanings established below:)) This section contains a central location for definitions of words and phrases used in the department of retirement system's rules. It also serves as a directory for finding definitions within the RCWs and WACs.

(1) Accumulated contributions means the sum of all contributions paid into a member's defined benefit account, including interest.

(2) (("))Appeal((")) means the ((process)) proceeding through which a party obtains review of a department action in an adjudicative proceeding ((before the department's presiding officer or hearings examiner under chapter 415-08 WAC)) conducted under chapter 34.05 RCW (the Administrative Procedure Act) and chapter 415-08 WAC (the department's appeal rules).

(((2))) (3) Average final compensation - is defined in RCW 41.32.010(30) (TRS); RCW 41.35.010(14) (SERS); RCW 41.40.010(17) (PERS); and RCW 43.42.120(15) (WSP).

(4) Cafeteria plan means a "qualified" employee benefit program under section 125 of the Internal Revenue Code, such as certain health and welfare plans.

(5) Compensation earnable or earnable compensation definitions can be found in RCW 41.32.010(10) and 41.32.345 (TRS); RCW 41.35.010(6) (SERS); and RCW 41.40.010(8) (PERS).

(6) Contribution rate is:

(a) For employees: The fraction (percent) of compensation a member contributes to a retirement system each month.

(b) For employers: The fraction (percent) of payroll a member's employer contributes to a retirement system each month. Contribution rates vary for the different systems and plans.

(7) Deferred compensation refers to the amount of the participant's compensation which the participant voluntarily defers from earnings before taxes.

(8) Defined benefit plan is a pension plan in which a lifetime retirement benefit is available, based on the member's service credit and compensation.

(9) Defined contribution plan is a plan in which part of members' or participants' earnings are deferred into an investment account in which tax is deferred until funds are withdrawn. The benefit is based on the contribution rate and the amount of return from the investment of the contributions. Members or participants receive the full market rate of return minus expenses. There is no guaranteed rate of return and the value of an account will increase or decrease based upon market fluctuations.

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

(((3))) (11) Dependent care assistance salary reduction plan (DCAP) is a plan that allows an eligible employee of the state of Washington to set aside a "before tax" portion of his or her gross salary before federal income and Social Security taxes to be used for the reimbursement of dependent care expenses.

(12) (("))Director((")) means the director of the department of retirement systems.

(((4))) (13) (("))Employee((" under this chapter,)) means a worker who performs labor or services for a retirement systems employer under the control and direction of the employer as determined under WAC 415-02-110(2). An employee may be eligible to participate as a member of one of the state-administered retirement systems according to eligibility requirements specified under the applicable retirement system.

(((5))) (14) Employer is defined in RCW 41.26.030(2) (LEOFF), 41.32.010(11) (TRS), 41.34.010(5) (Plan 3), 41.35.010(4) (SERS), and 41.40.010(4) (PERS).

(15) Final average salary is defined in RCW 41.26.030(12) (LEOFF).

(16) Gainsharing is the process through which members of certain plans share in the extraordinary investment gains on earnings on retirement assets under chapters 41.31 and 41.31A RCW.

(17) (("))Independent contractor((" under this chapter,)) means a contract worker ((providing services under contract to a retirement system employer for remuneration)) who is not under the direction or control of the employer as determined under WAC 415-02-110 (2) and (3).

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

(((7))) (19) Participant means an eligible employee who participates in a deferred compensation or dependent care assistance plan.

(20) Participation agreement means an agreement that an eligible employee signs to become a participant in a deferred compensation or dependent care assistance plan.

(21) Pension plan is a plan that provides a lifelong post retirement payment of benefits to employees.

(22) (("))Petition((")) means the method by which a party ((secures)) requests a review of an administrative determination prior to an appeal to the director. The department's petitions examiner performs the review under chapter ((415.04)) 415-04 WAC.

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

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

(((10))) (25) (("))Plan 3((")) means the retirement plans established by chapter 239, Laws of 1995 ((and)), chapter 341 Laws of 1998, and chapter 247 Laws of 2000.

(((11))) (26) Pop-up is a term that the department uses to refer to the benefit available to a retiree where the survivor of a retiree receiving a benefit reduced by a survivor option predeceases the retiree. Example: Linda is receiving a retirement benefit reduced by a survivor option for her husband, Joe. Joe dies before Linda. Linda's monthly retirement allowance increases. The department refers to the increase as a "pop-up."

(27) Portability is the ability to use membership in more than one Washington state retirement system in order to qualify for retirement benefits. See chapters 41.54 RCW and 415-113 WAC.

(28) Public record is defined in RCW 42.17.020(36).

(29) Restoration is the process of restoring a member's service credit for prior periods.

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

(31) Rollover means a distribution that is paid to or from an eligible retirement plan within the statutory time limit allowed.

(32) Separation date is the date a member ends employment in a position eligible for retirement or disability benefit coverage.

(((12) "Worker" means a person who performs services for a retirement system employer either as an employee or as an independent contractor.)) (33) Survivor means a person designated by the member to receive a monthly benefit allowance after the member dies.

(34) The Uniform Services Employment and Reemployment Rights Act of 1994 is the federal law that requires employers to reemploy and preserve job security, pension and welfare benefits for qualified employees who engage in military service.

[Statutory Authority: RCW 41.50.050. 00-10-016, 415-02-030, filed 4/21/00, effective 5/22/00; 94-09-039, 415-02-030, filed 4/19/94, effective 5/20/94; Order 4, 415-02-030, filed 7/27/77.]

Washington State Code Reviser's Office