WSR 14-03-130
PROPOSED RULES
DEPARTMENT OF
RETIREMENT SYSTEMS
[Filed January 21, 2014, 4:03 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 10-11-049.
Title of Rule and Other Identifying Information: Amending sixteen rules in chapter 415-501 WAC, Deferred compensation plan (DCP), and adding one new rule to the chapter related to military make-up provisions.
Hearing Location(s): Department of Retirement Systems, Conference Room 115, 6835 Capitol Boulevard S.E., Tumwater, WA 98502, on Tuesday, February 25, 2014, at 10:00 a.m.
Date of Intended Adoption: February 26, 2014.
Submit Written Comments to: Jilene Siegel, Department of Retirement Systems, P.O. Box 48380, Olympia, WA 98504-8380, e-mail jilenes@drs.wa.gov, fax (360) 753-5397, by February 24, 2014, 5:00 p.m.
Assistance for Persons with Disabilities: Contact Jilene Siegel by February 21, 2014, TTY (866) 377-8895 or (360) 586-5450.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Updates the rules as part of a general review. Removes annual deferral limits from rule, as the current limits will be maintained on the department's DCP web site. Adds a rule to describe how and when participants may make up contributions that were missed during a period of uniformed service. Removes references to the employee retirement benefits board.
Statutory Authority for Adoption: RCW 41.50.050(5).
Rule is not necessitated by federal law, federal or state court decision.
Name of Agency Personnel Responsible for Drafting: Ted Taylor, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7044; and Implementation: Jennifer Dahl, P.O. Box 48380, Olympia, WA 98504-8380, (360) 664-7219.
No small business economic impact statement has been prepared under chapter 19.85 RCW. Not applicable. These rules do not impact small businesses and are not being submitted by the state board of education.
A cost-benefit analysis is not required under RCW 34.05.328. The department of retirement systems is not listed in RCW 34.05.328 as required to prepare a cost-benefit analysis.
January 21, 2014
Jilene Siegel
Rules Coordinator
AMENDATORY SECTION (Amending WSR 05-15-045, filed 7/11/05, effective 8/11/05)
WAC 415-501-110 Definitions.
(1) Accumulated deferrals. Compensation deferred under the plan, adjusted by income received, increases or decreases in investment value, fees, and any prior distributions made.
(2) Beneficiary. A beneficiary of a participant, a participant's estate, or any other person whose interest in the plan is derived from the participant.
(3) Compensation. All payments made to a public employee by the employer as remuneration for services rendered.
(4) Deferred compensation. The amount of the participant's compensation that is deferred under a participation agreement. See WAC 415-501-410.
(5) Deferred compensation plan or plan. A plan that allows employees of the state of Washington and approved political subdivisions of the state of Washington to defer a portion of their compensation according to the provisions of Section 457(b) of the Internal Revenue Code.
(6) Department. The department of retirement systems created by RCW 41.50.020 or its designee.
(7) Eligible employee. Any person who is employed by and receives any type of compensation from a participating employer for whom services are provided, and who is:
(a) A full-time, part-time, or career seasonal employee of Washington state, a county, a municipality, or other political subdivision of the state, whether or not covered by civil service;
(b) An elected or appointed official of the executive branch of the government, including a full-time member of a board, commission, or committee;
(c) A justice of the supreme court, or a judge of the court of appeals or of a superior or district court; or
(d) A member of the state legislature or of the legislative authority of a county, city, or town.
(8) Eligible rollover distribution. A distribution to a participant of any or all funds from an eligible retirement plan unless it is:
(a) One in a series of substantially equal annuity payments;
(b) One in a series of substantially equal installment payments payable over ten years or more;
(c) Required to meet minimum distribution requirements of the plan; or
(d) Distributed for hardship or unforeseeable emergency from a 457 plan.
(9) ((Employee retirement benefits board. The board created by RCW 41.50.086.
(10))) Employer.
(a) The state of Washington; and
(b) Approved political subdivisions of the state of Washington.
(((11))) (10) Normal retirement age. An age designated by the participant for purposes of the three-year catch-up provision described in WAC 415-501-430(2). The participant may choose a normal retirement age between:
(a) The earliest age at which an eligible participant has the right to receive retirement benefits without actuarial ((adjustment)) or similar reduction from his/her retirement plan with the same employer; and
(b) Age seventy and one-half.
(((12))) (11) Participant. An eligible employee:
(a) Who has submitted a participation agreement that is approved by the department; and
(b) Who either:
(i) Is currently deferring compensation under the plan; or
(ii) Has previously deferred compensation and has not received a distribution of his/her entire benefit under the plan.
(((13))) (12) Participation agreement. The agreement executed by an eligible employee pursuant to WAC 415-501-410, in which the eligible employee chooses to become a plan participant.
(((14))) (13) You, as used in this chapter, means a participant as defined in subsection (((12))) (11) of this section.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-330 Does the department maintain a record of my account?
The department maintains a deferred compensation account for each participant. When necessary, the department will create and maintain a deferred compensation account for a beneficiary or for a former spouse.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-420 What are the annual deferral limits?
((Except as provided in WAC 415-501-430 (catch-up provisions), the maximum you may defer for any taxable year is the lesser of:
(1) One hundred percent of your includible compensation as defined in IRC Section 457 (e)(5), and Treasury Regulation 1.457.2(g), and determined without regard to community property laws; or
(2) The annual deferral limit in the following table:
For taxable year beginning in calendar year:
Annual deferral limit:
2001
$8,500
2002
$11,000
2003
$12,000
2004
$13,000
2005
$14,000
2006
$15,000
Beginning January 1, 2007
$15,000
 
plus cost-of-living adjustments, if any, established by the IRS under 26 U.S.C. 457))
The minimum contribution is fifteen dollars per semi-monthly payroll period, thirty dollars for monthly payroll periods. The annual maximum deferral amount varies each year based on the Internal Revenue Service limits. The current annual maximum deferral amount is published on the department's deferred compensation program web site.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-430 Are there exceptions to the annual deferral limits?
You may defer more than the annual deferral limit set ((in WAC 415-501-420)) forth by the Internal Revenue Service (IRS) if you qualify to use one of the "catch up" provisions described in this section. You may not use both catch-up provisions during the same taxable year.
(1) Age fifty and over: You may defer a higher amount during any plan year in which you are age fifty or older. The maximum you may defer each year is the sum of((:
(a))) the annual deferral amount ((in WAC 415-501-420)) for the current taxable year((; and
(b) The amount in the following table:
For taxable year beginning in calendar year:
Age 50 deferral limit:
2002
$1,000
2003
$2,000
2004
$3,000
2005
$4,000
2006
$5,000
Beginning January 1, 2007
$5,000
 
plus cost-of-living adjustments, if any, established by the IRS under 26 U.S.C. 414))
plus the over fifty catch up amount established by the IRS under 26 U.S.C. 414.
(2) Three years before normal retirement age: You may defer a higher amount during a period of three consecutive years immediately preceding the taxable year in which you reach normal retirement age as defined in WAC 415-501-110(((11))) (10). The maximum you may defer during each of the three years is the lesser of:
(a) Twice the annual deferral limit ((established in WAC 415-501-420)); or
(b) The sum of the annual deferral limit ((established in WAC 415-501-420,)) plus the portion of the annual deferral limit for any prior taxable year that you have not previously used.
(i) For years prior to 2002, amounts you deferred under certain other plans must be considered in determining the unused amount, consistent with Treasury Regulation 1.457-4 (c)(3)(iv).
(ii) A prior taxable year may be taken into account only if:
(A) It begins after December 31, 1978;
(B) You were eligible, during any portion of the taxable year, to participate in the plan; and
(C) Compensation deferred under the plan during that year, if any, was subject to a deferral limit under WAC 415-501-420.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-440 How are deferral limits monitored?
(1) ((Under WAC 415-501-315,)) Employers will monitor deferrals to ensure that amounts deferred comply with the ((limitations in WAC 415-501-420 and 415-501-430)) Internal Revenue Code (26 U.S.C. Sec. 414) as required by WAC 415-501-315.
(2) The department may also monitor deferrals and has the authority to disallow deferral of compensation in excess of the statutory limits.
(3) You must also monitor your deferrals to ensure that combined deferrals in two or more deferred compensation plans do not exceed the deferral limits.
(4) If the plan determines that your deferrals into the plan have exceeded the deferral limit, the excess deferrals will be distributed to you as soon as administratively practicable.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-450 May I change my deferral amount?
You may change the amount of your deferred compensation through the methods established by the department. Changes may be made only in((:
(1))) whole dollar increments((; or
(2) Whole percentages if percentage deferrals are allowed for your employer)).
A change in the amount will be effective for any calendar month only if you notify the department of the change, through the methods available, prior to the month for which the change is requested and prior to the established payroll cutoff date for your employer.
AMENDATORY SECTION (Amending WSR 05-22-109, filed 11/2/05, effective 12/3/05)
WAC 415-501-472 Who determines DCP's investment options?
(1) The state investment board, in consultation with the ((employee retirement benefits board)) department, makes certain investment options available to plan participants. The investment board may:
(a) Open, change, or close investment options according to its investment policy; or
(b) Change investment managers for any investment option.
(2) If the state investment board closes or substantially changes an investment option, the state investment board may transfer the funds invested in that option to another option that, in the board's judgment, most closely represents the investment characteristics of the option being closed or changed.
AMENDATORY SECTION (Amending WSR 05-22-109, filed 11/2/05, effective 12/3/05)
WAC 415-501-475 May I choose how I want my deferred compensation invested?
(1) You must designate on your participation agreement the investment option(s) in which you wish to have your deferrals invested.
(2) In general, you may change the investment of your accumulated deferrals, the investment of your future deferrals, or both, through the methods established by the department. However, if necessary to protect the performance results of the DCP program, the department has the right to:
(a) Limit the number of times you change investment options;
(b) Limit the frequency of the changes;
(c) Limit the manner of making changes; or
(d) Impose other restrictions.
In addition, changes must be consistent with any restrictions on trading imposed by the investment options involved.
(3) ((Beneficiaries receiving a distribution)) Beneficiaries/former spouses may change their investment options ((according to the provisions of subsection (2) of this section)) through the methods established by the department once a separate account has been established for them.
AMENDATORY SECTION (Amending WSR 06-04-058, filed 1/27/06, effective 2/27/06)
WAC 415-501-485 How do I obtain a distribution?
Distribution from the plan is governed by Internal Revenue Code Sections 401 (a)(9) and 457(d); the treasury regulations interpreting these sections; and these rules to the extent they are not inconsistent with the Internal Revenue Code. The options for distribution are set forth in the DCP Distribution Booklet. The booklet will be mailed to you ((when your employer notifies the department of your termination of employment)) upon request and can be accessed online at any time.
(1) Date of distribution. You may choose the date on which to begin distribution from your deferred compensation account, subject to the requirements in (a) through (c) of this subsection. ((The department must receive a properly completed distribution form from you at least thirty days prior to the date distribution is to begin.))
(a) Earliest date. You may not begin distribution prior to your termination of employment, with the following exceptions:
(i) A distribution for an unforeseeable emergency under WAC 415-501-510;
(ii) A voluntary in-service distribution under subsection (4) of this section; or
(iii) A distribution from funds that were rolled into the deferred compensation account.
(b) Latest date. You must begin distribution on or before April 1st of the calendar year following the latter of:
(i) The calendar year in which you reach age seventy and one-half; or
(ii) The calendar year in which you retire.
(c) If you do not make a timely choice of distribution date, the department will begin distribution according to the minimum distribution requirements in IRC Section 401 (a)(9).
(2) Method of distribution. You must choose a distribution method (amount and frequency) from the payment options outlined in the DCP Distribution Booklet. Payment options include a lump sum payment, periodic payments, or an annuity purchase.
(a) Periodic payments must be at least fifty dollars per month (if paid monthly) or six hundred dollars per year.
(b) Beginning at age seventy and one-half or when you terminate employment, whichever comes later, payment must be in an amount to satisfy minimum distribution requirements in IRC Section 401 (a)(9).
(3) Voluntary in-service distribution. You may choose to withdraw the total amount payable to you under the plan while you are employed if the following three requirements are met:
(a) Your entire account value does not exceed five thousand dollars;
(b) You have not previously received an in-service distribution; and
(c) Your deferrals have been suspended during the preceding two-year period ending on the date of the in-service distribution.
(4) Unforeseeable emergencies. See WAC 415-501-510.
(5) Rehire. ((If you terminate and then return to employment for an eligible employer, you may reenroll in the plan. The department will stop your distribution, if applicable, and void any choices of distribution date and method made prior to reenrollment.)) If you return to employment with a DCP employer the department will void any distribution request not yet fulfilled.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-486 How will my accumulated deferrals be distributed in the event of my death?
If you die before your entire deferred compensation account has been distributed, accumulated deferrals will be paid to the beneficiary or beneficiaries you have designated according to WAC 415-501-480. ((If no beneficiary is designated or if the designated beneficiary does not survive you by a period of thirty days, accumulated deferrals will be paid to your surviving spouse, if any. If you do not have a surviving spouse, the accumulated deferrals will be paid to your estate. Provisions regarding distribution to various classes of beneficiaries are set forth in WAC 415-501-487 through 415-501-494.))
(1) If one or more primary beneficiaries survive your death by a period of thirty days, your accumulated contributions will be distributed to the surviving primary beneficiaries in the percentages established on your beneficiary designation form.
(2) If no primary beneficiary survives your death, but one or more contingent beneficiaries survive your death by thirty days, your accumulated contributions will be distributed to the surviving contingent beneficiaries in the percentages established on your beneficiary designation form.
(3) If no primary or contingent beneficiary survives your death, but your spouse survives your death by a period of thirty days, your accumulated contributions will be distributed to your surviving spouse.
(4) If no primary beneficiary, contingent beneficiary, or spouse survives your death by a period of thirty days, your accumulated contributions will be distributed to your estate.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-488 How will the account be distributed if my beneficiary is my spouse?
If you die before the entire account has been exhausted, your spouse beneficiary will receive your accumulated deferrals according to the provisions of this section.
(1) Date of distribution. Your spouse beneficiary may choose the date on which to begin receiving the distribution, provided:
(a) The spouse beneficiary notifies the department of the distribution date within ninety days from the date the department is notified of your death.
(b) The department receives the election form at least thirty days before distribution is to begin.
(c) Distribution begins on or before the first day of April of the calendar year following the latter of:
(i) The year you would have reached age seventy and one-half; or
(ii) The calendar year in which you die.
If the beneficiary does not make a timely choice of distribution date, the department will begin distribution according to the minimum distribution requirements in IRC 401 (a)(9).
(2) Method of distribution. The spouse beneficiary must choose a distribution method from the payment options ((outlined in the DCP Distribution Booklet, which)) provided by the department. Instructions will be mailed to your beneficiary when the department is notified of your death. Payment options include a lump sum payment or periodic payments, provided:
(a) The amount and frequency allows for distribution of the entire account balance during the beneficiary's life expectancy, as computed by the Department of Treasury in IRS Regulation 1.72.9; and
(b) Periodic distributions made by the department are at least fifty dollars per month, if paid monthly, or six hundred dollars per year.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-491 How will the account be distributed if my beneficiary is not my spouse?
If you die before the entire account has been exhausted and your beneficiary is not your spouse, your accumulated deferrals will be distributed according to the provisions of this section.
(1) Date of distribution. A nonspouse beneficiary may choose the date on which to begin receiving the distribution, provided:
(a) The beneficiary notifies the department of the distribution date within ninety days from the date the department is notified of your death.
(b) The department receives the election form at least thirty days before distribution is to begin.
(c) Distribution begins on or before the first day of April of the calendar year following the latter of:
(i) The year you would have reached age seventy and one-half; or
(ii) The calendar year in which you die.
If the beneficiary does not make a timely choice of distribution date, the department will begin distribution according to the minimum distribution requirements in IRC 401 (a)(9).
(2) Method of distribution. A nonspouse beneficiary must choose a distribution method from the payment options ((outlined in the DCP Distribution Booklet, which)) provided by the department. Instructions will be mailed to your beneficiary when the department is notified of your death. Your beneficiary may choose a lump sum payment or periodic payments.
(a) If the nonspouse beneficiary begins distribution by the thirty-first day of December of the year following your death:
(i) The amount and frequency must allow for distribution of the entire account balance during the beneficiary's life expectancy, as computed by the Department of Treasury in IRS Regulation 1.72.9; and
(ii) Periodic distributions made by the department must be at least fifty dollars per month, if paid monthly, or six hundred dollars per year.
(b) If the nonspouse beneficiary does not begin distribution by the thirty-first day of December of the year following the year of your death, the entire account balance must be paid out within five years from the date of your death.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-495 Will the department honor domestic relations orders?
(1) The department will honor a domestic relations order (DRO) only if the order:
(a) Was entered by a court of competent jurisdiction((.));
(b) Establishes a right of a former spouse to a portion of your deferred compensation account pursuant to a division of property;
(c) Clearly states either the dollar amount or a percentage of the account to be transferred to the account of the former spouse from your account; and
(d) Provides your name and date of birth, and the name and date of birth of your former spouse.
(2) You must provide the address and Social Security number of both you and your former spouse to the department. This information may be submitted in a cover letter, in another document, or by other means arranged with the department.
(3) To implement a DRO, the department will establish a separate account for the former spouse in the amount specified in subsection (1)(c) of this section. ((The amount will initially be invested in the savings pool.)) The transfer(s) will be prorated across all funds and money sources based on the amount awarded to the former spouse. Thereafter, the former spouse may provide investment instructions under WAC ((415-501-450)) 415-501-475.
(4) Your former spouse may choose a method of distribution, including a direct rollover.
(5) If a DRO filed with the department prior to January 1, 2002, provides that distribution to the former spouse is not available until you separate from service, the department will comply with the express terms of the order unless it is subsequently amended.
(6) If the former spouse has not elected another method of distribution ((by)) before the original account holder reaches age seventy and one-half, the department will begin distribution in accordance with the minimum distribution requirements in IRC 401 (a)(9).
(7) If the former spouse dies before the account is fully distributed, the remaining balance will be paid to the former spouse's estate.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-510 May I have some or all of my accumulated deferrals in the event of an unforeseeable emergency?
(1) Notwithstanding any other provisions in this chapter, you may request all or a portion of your accumulated deferrals in the event of an unforeseeable emergency. Distribution will be made within sixty days following the department's approval of your request. The amount paid will be limited strictly to that amount reasonably necessary to satisfy the emergency need.
(2) For purposes of this plan, an unforeseeable emergency is severe financial ((hardship to you)) emergency resulting from:
(a) A personal illness or accident or the illness or injury of a spouse or dependent who meets the definition in Section 152(a) of the Internal Revenue Code;
(b) Loss of your property due to casualty, including the need to rebuild a home following damage not otherwise covered by homeowner's insurance, e.g., as a result of natural disaster; or
(c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control, such as:
(i) The imminent foreclosure of or eviction from your primary residence due to circumstances that were beyond your control;
(ii) The need to pay medical expenses, including nonrefundable deductibles as well as the cost of prescription drug medication; or
(iii) The need to pay funeral expenses of a participant's or beneficiary's spouse or dependent (as defined in Section 152(a) of the Internal Revenue Code without regard to Sections 152 (b)(1), (2), and (d)(1)).
(3) The circumstances that constitute an unforeseeable emergency depend upon the facts of each case, but, in no case will the department approve a distribution request if the financial ((hardship)) emergency is or may be relieved:
(i) Through reimbursement or compensation by insurance or otherwise; or
(ii) By liquidation of your assets, to the extent liquidation of such assets would not itself cause severe financial ((hardship; or
(iii) By cessation of deferrals under the plan)) emergency.
(4) Examples: (((a))) The following types of occurrences are not considered unforeseeable emergencies: (((i))) Sending your child to college((;)) or (((ii))) purchasing a home.
(((b) The following types of occurrences may be considered unforeseeable emergencies, depending on the facts in each case:
(i) Imminent foreclosure of or eviction from your primary residence;
(ii) Medical expenses, including nonrefundable deductibles, and/or the cost of prescription drug medication;
(iii) Funeral expenses of your spouse or a dependent as defined in Section 152(a) of the Internal Revenue Code; and
(iv) Extraordinary expenses resulting from a divorce.))
(5) If the department denies your request for distribution, you may request a review of that decision according to the provisions of WAC 415-08-015.
(6) ((Unforeseeable emergency requests received by the department, whether approved or denied, will cause a mandatory suspension of deferrals to the plan. You may not resume deferrals sooner than six months from the date of suspension.)) If your request meets the release for a financial emergency withdrawal, contributions into this plan must cease for a period of at least six months from the date of the emergency disbursement.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-590 Are department officers and employees ((and members of the employee retirement benefits board)) eligible to participate in the plan?
Department officers and employees ((and members of the employee retirement benefits board,)) who are otherwise eligible((,)) may participate in the plan under the same terms and conditions as apply to other participants. Such officers((,)) and employees((, or board members)) may not participate in any ((department or board)) action uniquely affecting their own participation.
AMENDATORY SECTION (Amending WSR 04-22-053, filed 10/29/04, effective 11/29/04)
WAC 415-501-410 How do I enroll in the plan?
(1) As an eligible employee, you may enroll in the plan by executing a participation agreement.
(2) By signing the participation agreement, you authorize your employer to reduce your gross compensation each month by a specific amount. This amount will be contributed to your deferred compensation account. Your employer will reduce your compensation by the specified amount until you change the amount (WAC 415-501-450) or suspend contributions (WAC 415-501-470).
(3) Deferrals from your compensation will start during the calendar month after the month your participation agreement is approved by the department.
(4) Reenrollment. If you transfer from a state agency to another state agency with no break in service, your deferred compensation program (DCP) enrollment will be automatically transferred to the new state agency. Your contributions will automatically continue. If you separate from employment with a DCP employer (break in service) and return to employment with a DCP employer, you must reenroll in the program if you want to resume contributions to DCP.
NEW SECTION
WAC 415-501-435 May I make deferrals that were missed during periods of uniformed service?
(1) Does the plan have a military make-up provision? Participants meeting certain eligibility requirements are allowed to make up contributions that were missed during periods of absence from employment due to uniformed service, based on federal laws and regulations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA, 38 U.S.C. Sections 4301 through 4335).
(2) What constitutes uniformed service? For the purposes of this rule, uniformed service includes: The Army, Navy, Air Force, Marines, Coast Guard, the commissioned corps of the Public Health Service, the reserve components of the foregoing services, the National Guard, the National Disaster Medical System, and any other category of persons designated as such by the President in a time of war or emergency. Service includes active duty, active duty for training, initial active duty for training, inactive duty training, examination to determine fitness for duty, funeral honors duty, and full-time National Guard duty. Service may be voluntary or involuntary.
(3) What is the time limit for making up missed deferrals? Make-up deferrals must be made within a period not exceeding three times the period of uniformed service, but in no case more than five years. This is referred to as the statutory period. The period begins the day you return to work. Missed deferrals can only be made while you are employed by your original employer. If you leave that employer but return to that employer within the statutory period, you may continue to make up deferrals until the end of the statutory period.
(4) What is the limit on military make-up contributions? You may contribute up to the maximum contributions for each calendar year that included absence from employment for uniformed service. In addition, you may contribute up to the maximum for the current calendar year.
EXAMPLE:
John is employed from January to June 2008, and defers $5,000 into his DCP account during that time. John is on leave for uniformed service from July 2008 through December 2009, one and one-half years. He returns to employment with this original employer in January 2010.
The deferral limits for this period are as follows: 2008 - $15,500; 2009 - $16,500; 2010 - $16,500; 2011 - $16,500; 2012 - $17,000; 2013 - $17,500; and 2014 - $17,500. John's statutory period for make-up contributions is four and one-half years (through June 2014). 
Upon his return to employment, during 2010: For 2010, John may defer $16,500 out of his regular salary (subject to limitations for includable compensation). During 2010, he may also defer:
• Up to $10,500 allocable to 2008 ($15,500 less $5,000 previously deferred); and
• Up to $16,500 allocable to 2009.
He decides to contribute $16,500 for 2010, and $5,000 for 2008.
During 2011. For 2011, John may defer $16,500 out of his regular salary. During 2011, he may also defer:
• Up to $5,500 for 2008 ($15,500 less $10,000 total previously deferred).
• Up to $16,500 for 2009.
(5) How are make-up deferrals made? Make-up deferrals are made through payroll deductions after you return to employment. Make-up contributions may not be paid using after-tax payments.
(6) What conditions must be met to qualify for this provision? You must not have been released from the uniformed service under dishonorable or other punitive conditions, as set forth in 38 U.S.C. Section 4304. In addition, you must return to employment with your original employer within the time frame specified in USERRA (38 U.S.C. Section 4312) based on your length of service.