Updated May 2008
This publication relates to the following retirement plans:
The information in this brochure is intended for Plan 3 members wishing to reinstate withdrawn Plan 3 contributions; apply for optional service credit; recover withdrawn Plan 2 service credit; or restore service credit under the rules of dual membership.
Plan 3 members wishing to reinstate withdrawn Plan 3 contributions may do so at any time after reestablishing membership. Reinstated contributions go directly into a member's defined contribution account. Members do not pay interest on funds they are reinstating. Also, members may reinstate all or only a portion of the funds that they withdrew from their Plan 3 defined contribution account. There is no time limit for reinstating withdrawn Plan 3 contributions.
Funds reinstated into the Plan 3 account will not be refunded, and are not eligible to be withdrawn until the member leaves employment or is eligible to withdraw. If you have questions regarding reinstating withdrawn Plan 3 contributions, contact DRS.
In addition to reinstating withdrawn Plan 3 contributions, Plan 3 members may also purchase service credit for eligible periods of public service or qualifying leaves of absences. This is referred to as optional service. Optional service can be acquired by paying contributions within a specific time period immediately after returning to normal active service. If statutory deadlines have passed, you can still recover optional service credit. Though it is considerably more expensive than recovering the service within the statutory deadline, optional service credit can be purchased any time during active membership. If you have questions about optional service credit, please contact DRS.
Plan 3 members may recover withdrawn Plan 2 service credit. There are two ways to recover the service and the rules for each method are listed below. Plan 3 members may also be eligible to recover service credit under the rules of dual membership as described later.
Under restoration rules, Plan 3 members can repay the full amount of their original Plan 2 withdrawal in a lump sum, or in installment payments.
You may make direct payment with either a personal or cashier's check. In many cases it's also possible to transfer funds from another eligible retirement account to purchase service credits. However, DRS cannot accept funds in excess of the cost to make your purchase. You are advised to check with the administrator of your account to see if you can transfer those dollars. DRS is classified by the Internal Revenue Service as a 401 (a) account.
Plan 3 members may not restore Plan 2 service credit unless they have reestablished membership by working in a position covered by the same system from which they withdrew. Once membership has been reestablished, Plan 3 members do not need to be working to start or complete payments for restoration of withdrawn Plan 2 contributions. If you wish to apply for restoration, contact DRS.
When restoring withdrawn Plan 2 contributions, you are required to initiate and complete restoration payments within a specific time period after reestablishing membership or becoming employed in an eligible position. Restoration payments must be completed before statutory deadline or retirement, whichever comes first. Except where dual membership is involved, payment must be completed within 60 calendar months of returning to service or retirement, whichever comes first.
As a Plan 3 member, if you reestablish membership, you can initiate and/or continue your Plan 2 restoration payments even if you subsequently leave active service. If you again leave service, you must complete payment for the withdrawal by the original deadline or the service is not recoverable under restoration rules. Service credit that is no longer recoverable under restoration rules can be regained using the service credit purchase option.
Mary is a former Plan 2 member. In 1992, after six years of service, Mary ended employment and withdrew her accumulated Plan 2 contributions. In 1996, she returned to work, transferred to Plan 3 and began restoration of the old Plan 2 credit in installment payments. Under restoration rules, she had five calendar years (60 calendar months) to complete payment.
In 2000, after four years in Plan 3, Mary again left employment without having completely restored her withdrawn Plan 2 service credit. She elected not to complete payment after separating from service, and her deadline (60 calendar months) subsequently passed. Since she did not completely restore her Plan 2 service credit, she receives no service credit under the rules of restoration. There is no partial restoration of service credit.
If the statutory deadline for repaying withdrawn or optional service credit has passed, you may still recover your service credit under the Service Credit Purchase law of 1994 (RCW 41.50.165(2)). Service credit purchased under this law costs significantly more than if restored within the statutory deadline. The cost is based on the increased value of your retirement benefit, not on the amount of withdrawn contributions. If you purchase service credit under this law, 50 percent of the amount you pay will be credited to your defined contribution account and the remainder will be used to fund the one percent defined benefit. If you wish to apply for service credit purchase, you must contact DRS.
DRS uses a formula based on the following:
Average Earnings
x
Service Credit Being Purchased
x
Actuarial Factor for Your Plan
=
Purchase Price
James is an active PERS Plan 3 member working for a state agency. Early in his career he left his PERS Plan 2 job and withdrew the two years' contributions he had accumulated. Later, he returned to another PERS Plan 2 job but did not restore within 60 months. When James decided to purchase his withdrawn Plan 2 service credit, he had 10 years until he would be eligible for normal retirement under Plan 3 (age 65). His average earnings are $36,000 per year. His calculation is as follows:
Average Earnings x Years Purchased x Actuarial Factor
=
Basic Purchase Cost
$36,000 x 2 years x 0.1943 = $13,989.00
For restoration under dual membership, you must repay the amount withdrawn within 24 months of becoming a dual member or before you retire, whichever comes first. Dual member restoration rules and deadlines apply to all dual member systems and plans.
A dual member:
For more information about dual membership rights, refer to the DRS publication, What Is Dual Membership and How Does it Affect Me?
To initiate the recovery of withdrawn or optional service credit, or to obtain an estimate for the cost of recovering withdrawn or optional service credit, contact DRS. Be sure to provide your:
The actual provisions governing the recovery of withdrawn or optional service credit are contained in Chapter 41.40 and 41.50 Revised Code of Washington (RCW). This publication is a summary of those provisions, not a complete description of the law, and describes provisions currently in effect. If there are any conflicts between what is written in this brochure and what is contained in the law, the applicable law will govern.
