Original Notice.

Preproposal statement of inquiry was filed as WSR 01-16-089.

Title of Rule: WAC 415-501-510 Unforeseeable emergency.

Purpose: On October 24, 2001, the department filed a number of changes to the deferred compensation rules to make changes under the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). The hearings are scheduled for December 4th and 6th and the anticipated effective date is January 1, 2002. The amendment to WAC 415-501-510 was inadvertently omitted from the set of changes, and must be made for consistency with the other WACs and with EGTRRA. The specific amendment eliminates subsection (4) of the WAC, which refers to a section being repealed, and a provision being eliminated under EGTRRA.

Statutory Authority for Adoption: RCW 41.50.050(5).

Statute Being Implemented: RCW 41.50.770 and 41.50.780.

Summary: The specific amendment eliminates subsection (4) of the WAC, which refers to a section being repealed, and a provision being eliminated under EGTRRA.

Reasons Supporting Proposal: Inadvertently omitted from other deferred compensation section changes.

Name of Agency Personnel Responsible for Drafting: Merry A. Kogut, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7291; Implementation and Enforcement: Anne Holdren, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7009.

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: WAC 415-501-510 is the existing "unforeseeable emergency rule." The specific amendment eliminates subsection (4) of the WAC, which refers to a section being repealed, and a provision being eliminated under EGTRRA.

Proposal Changes the Following Existing Rules: [No information supplied by agency.]

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 27, 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 27, 2001.

Date of Intended Adoption: No sooner than December 28, 2001.

November 14, 2001

Merry A. Kogut

Rules Coordinator

OTS-5331.1

AMENDATORY SECTION(Amending WSR 00-11-104, filed 5/18/00, effective 6/18/00.)

WAC 415-501-510   Unforeseeable emergency.   (1) Distribution request. Notwithstanding any other provisions in plan chapter 415-501 WAC, in the event of an unforeseeable emergency, a participant may request the department to distribute all or a portion of accumulated deferrals. If the request is approved by the department, distribution will be made within sixty days following such an approval. The amount paid shall be limited strictly to that amount reasonably necessary to satisfy the emergency need.

For purposes of this plan, an unforeseeable emergency shall be severe financial hardship to the participant resulting from:

(a) A sudden and unexpected illness or accident of the participant or of a dependent (as defined in Section 152(a) of the Internal Revenue Code) of the participant,

(b) Loss of the participant's property due to casualty, or

(c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, distribution shall not be made to the extent that such hardship is or may be relieved:

(i) Through reimbursement or compensation by insurance or otherwise;

(ii) By liquidation of the participant's assets, to the extent liquidation of such assets would not itself cause severe financial hardship; or

(iii) By cessation of deferrals under the plan.

Examples of what shall not be considered to be unforeseeable emergencies include the need to send a participant's child to college or the desire to purchase a home.

A divorce does not constitute an "unforeseeable emergency" or "severe financial hardship."

(2) Applications for review. All applications for review of decisions on requests for distribution of accumulated deferrals due to an unforeseeable emergency shall follow the procedure established in WAC 415-08-015.

(3) Mandatory suspension. Unforeseeable emergency requests received by the department, whether approved or denied, will cause a mandatory suspension of the participant as established in WAC 415-501-470.

(((4) Pursuant to WAC 415-501-500, once distributions to a participant begin, the distributions may not be changed except in the event of an unforeseeable emergency and subject to the provisions of this section.))

[Statutory Authority: RCW 41.50.770, [41.50.]780 and 41.50.050. 00-11-104, amended and recodified as 415-501-510, filed 5/18/00, effective 6/18/00. Statutory Authority: RCW 41.50.050. 98-20-047, 415-524-010, filed 9/30/98, effective 10/31/98. Statutory Authority: RCW 41.50.050 and 41.50.780(11). 96-16-020, 415-524-010, filed 7/29/96, effective 7/29/96.]

Washington State Code Reviser's Office