DRS Email 11-012, Plan 3 default change

  • Notice No.: 11-012
  • Date: May 25, 2011
  • Applies to: All Employers
  • Subject: DRS Email 11-012, Plan 3 default change

During the 2011 Regular Session, the Legislature passed HB 1625 changing the Plan 3 default investment manager from WSIB, Total Allocation Portfolio (TAP) to the Self-Directed Investment Program (Self). The default within Self will be to the Retirement Strategy Fund that assumes the member will retire at age 65.

What does the new law change for employers?

Effective July 22, 2011, a new employee of PERS, SERS, or TRS who fails to choose a retirement plan within the allotted 90 days will continue to be defaulted to Plan 3. However, employers will now default the member’s investment program into Self instead of WSIB.

Does this apply to any other Plan 3 members?

Yes, this applies to any Plan 3 member who changes employers and fails to select an investment program within the allotted 90 days. It also applies to current Plan 2 members who choose to transfer to Plan 3 in January but fail to select an investment program at the time of transfer.

Is the investment program default permanent?

No. A member can change his or her investment program and/or investment allocations at any time.

Does this legislation change the rate option default?

No, the rate option default remains option A, 5%. This rate cannot be changed unless the employee changes employers. The only exception is for TRS Plan 3 members. Each January, (subject to continued approval by the Internal Revenue Service), TRS Plan 3 members have the opportunity to select a different contribution rate.

Will I have to change any of my payroll programs?

That will depend on your payroll systems. If your systems require you to use WSIB as the default, then you will need to change it to allow for Self.

When will the forms and publications be updated?

New forms and publications will be available as we get closer to the effective date of July 22, 2011.

We will forward another communication to you as we get closer to the July effective date. We will provide you links to the updated forms and provide any further instructions.

If you have any questions, please respond to this email or call ESS at 360-664-7200 (option 2) or 1-800-547-6657 (option 6, option 2).

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