Your employees who are members of Plan 3 will be receiving their quarterly statements this month and next month. There is an article regarding contribution rate flexibility in the Plan 3 Reports publication that accompanies the statements. The information below is reflective of the information being provided to Plan 3 members of SERS and PERS.
After a lengthy review, the Internal Revenue Service (IRS) has qualified PERS Plan 3 and SERS Plan 3 as defined benefit plans with a defined contribution component. This is good news - the favorable determination means that tax treatment of your contributions will continue unchanged and that DRS will continue to administer the plans as they were designed.
During the 2003 session, the legislature passed a bill that would give PERS and SERS Plan 3 members a one-month window each year to select a different contribution rate. We know many members have expressed interest in such flexibility and we initially included a rate change option with our request for plan qualification.
The IRS position on rate flexibility changed, however, between 2002 when TRS Plan 3 was qualified and 2005, when the determination on PERS and SERS Plan 3 was made. Rate flexibility does not comply, the IRS advised, with the irrevocable choice of a contribution rate at the time of hire. As a result, we removed the request for a rate change option and the IRS qualified the plans.
This publication will be delivered to employers next week and contains the information above. In addition, there is an article regarding the TRS Plan 3 January rate window that provides direction for members who wish to take advantage of this option.
Should you have questions call Employer Support Employer Support Services at (360) 664-7200, (option 2), or 1-800-547-6657, (option 6, option 2).