Date: Aug. 11, 2016
Applies to: State and Higher Education Employers
Subject: DRS Email 16-012, Automatic Enrollment for DCP Coming January 1, 2017
To promote retirement readiness for public employees in Washington, the Legislature recently enacted an automatic enrollment provision for the state’s Deferred Compensation Program (DCP). The adoption of automatic enrollment for Washington follows other states in a successful model to encourage employees to save more for retirement.
Effective January 1, 2017, Engrossed Substitute Senate Bill 5435 requires state agencies and higher education employers to automatically enroll new full-time employees into DCP. Default contributions will be 3% of the employee’s pretax income. Employees will be able to opt out through the DCP record keeper prior to the first deferral being reported.
DCP enrollment will remain optional for current employees and new employees who are not covered by the automatic enrollment provisions. Like all DCP participants, employees who are automatically enrolled can change or stop deferrals at any time.
Who is required to be automatically enrolled into DCP under this new legislation?
For state employers, “full-time” status is defined in WAC 357-01-174; many higher education employees are also covered under this same definition. For employees not covered under WAC 357-01-174, the definition of “full-time” is at the organization’s discretion. This table specifies which employees qualify for automatic enrollment:
|Newly hired into state employment on or after January 1, 2017 with no prior state employment||Auto Enrolled|
|Newly hired into state employment on or after January 1, 2017 with a break in service from prior employment||Auto Enrolled|
|Newly hired into higher education on or after January 1, 2017 (automatic enrollment does not include student employees)||Auto Enrolled|
|Current state employee on January 1, 2017 through previous hire date||NOT Auto Enrolled|
|Newly hired into state employment on or after January 1, 2017 WITHOUT a break in prior state service||NOT Auto Enrolled|
|Employee changes from part-time to full-time with the same employer after January 1, 2017||NOT Auto Enrolled|
|Employed on or after January 1, 2017 as a seasonal employee WITHOUT separation from service during the off-season with the same employer||NOT Auto Enrolled|
What are the employer reporting requirements for this legislation?
Report new hires (defined above) to DRS:
|TRANSACTION-DATE (date sent)||(N8)|
What else is changing for DCP?
To prepare for the default contribution percentage, all DCP participants will be able to choose dollar or percentage deferrals. This change will be available to employees in early October 2016. Employees who default at 3% or choose a percentage deferral will be provided to you on the DCP Deferral Amount Change Report/File that is used today. You will continue to wait for this deferral amount information from DRS before initiating deferrals.
Who do I contact if I have questions?
For questions regarding changes to payroll reporting for DCP, consult your payroll/personnel system administrator (for HRMS, contact the Solutions Center at email@example.com).
For questions about this legislation, call DRS Employer Support Services at 360-664-7200, option 2, or 800-547-6657, option 6 and then 2.