Chapter 2: Membership

Summary

This chapter provides information about membership in one of the Washington State retirement systems. Refer to this chapter for:

  1. General information about membership
  2. Eligibility rules
    • The Public Employees' Retirement System (PERS)
    • The Public Safety Employees' Retirement System (PSERS)
    • the School Employees' Retirement System (SERS)
    • the Teachers' Retirement System (TRS)
    • the Law Enforcement Officers' and Fire and Fighters' Retirement System (LEOFF)
    • the Washington State Patrol Retirement System   (WSPRS)
    • the Judicial Retirement System (JRS)
  3. Cross references to relevant statutes (RCW) and rules (WAC)

The Revised Code of Washington (RCW) and the Washington Administrative Code (WAC) may be available to you through your legal advisor. A copy of the first fifty pages of a specific RCW or WAC can be ordered directly from the Office of the Code Reviser at no cost. For RCWs or WACs, call (360) 786-6777. The RCWs may be found at http://apps.leg.wa.gov/rcw/. The WAC's may be found at http://apps.leg.wa.gov/wac/.

Refer to Chapter 6 for instructions on how to calculate and transmit employee and employer contributions.

Refer to Chapters 7 and 8 for information on how to report eligible employees.

See the employer forms section "New Employee" to obtain forms for enrolling new members.

Membership and the Employee

Once an employee establishes membership in a retirement system, the employee begins to build a future retirement benefit. This benefit is funded by contributions-made by the employee, the employer, and with some systems, the state-and the investment earnings from these contributions. Except for Plan 3 member contributions, WSIB invests retirement contributions. When a member retires, money from this investment fund is used to pay the retired member a defined monthly benefit. The number of years of service credit the member has earned and the amount of the member's highest average compensation during employment determine the amount of the service retirement benefit to which a member is entitled.

Plan 3 is composed of two retirement benefit components. The defined contribution component is member financed and the defined benefit component is employer financed. Members can choose between two investment programs: the Washington State Investment Board (WSIB) Investment Program or the Self-Directed Investment Program.

Member benefits are explained in member handbooks published by DRS. Member handbooks are available for PERS, PSERS, SERS, TRS, LEOFF, WSPRS and JRS members. Each member of a retirement system should be given a copy of the appropriate handbook to help the member understand retirement rights and benefits. If you need copies of these handbooks, please contact DRS.

Employer Responsibilities

Employers play a vital role in helping the Department of Retirement Systems (DRS) provide retirement services to members. An employer's responsibilities include:

  • making the initial determination of an employee's eligibility for membership;
  • enrolling each employee who is eligible for membership;
  • reporting information to DRS about each member;
  • informing DRS when a Washington State retirement system retiree is hired as an employee and under certain circumstances, when they are directly compensated for services performed as a contractor, or any other similar compensated relationship;
  • transmitting required employer and employee contributions to DRS each transmittal for each member;
  • maintaining documentation to support eligibility determinations; and
  • periodically reviewing determinations to ensure they remain accurate.

Steps in Evaluating Membership

The following summarizes the steps to consider when evaluating an employee's eligibility for membership. This summary does not attempt to give details about membership rules for each system. Please refer to the appropriate sections later in this chapter for those details.

Step 1: Ask each new employee/contractor if he or she has retired from a Washington State retirement system.

A retiree's benefits may be affected by returning to work. RCW 41.50.139 (formerly in RCW 41.50.130) requires you to ask all new employees if they are retirees of any Washington State retirement system. You must also solicit retirement status information from all contractors being directly compensated for performing services or any other similiar compensated relationship. (EHB 2391). When you hire a retiree you must use the "Transmittal Report" to inform DRS of this occurrence. If this report is not used, you may be liable for any pension overpayments.

Note: Please refer to the section in Chapter 5 called "Employing Retirees" for details about reporting and membership requirements for retirees.

Step 2: Ask each new employee if he or she has ever been a member of a Washington State retirement system.

If an employee has ever established membership with DRS, you may need to use different criteria when evaluating his or her current eligibility for membership. To determine if an employee has previous membership in a retirement system, you can:

Step 3: Evaluate the employee's eligibility for membership under the rules that apply for the appropriate system and plan.

Your handbook contains information on membership rules. Please read the information carefully so you can make the proper determination of the employee's eligibility for membership.

In PERS, PSERS, SERS, TRS, and LEOFF:

  • An employee, who established membership in a retirement system before October 1, 1977, should be evaluated under the rules for Plan 1.
  • An employee, who establishes membership in a retirement system on or after October 1, 1977, should be evaluated under the rules for Plan 2.
  • Plan 3 has the same eligibility rules as Plan 2.

Refer to Chapter 2 for specific rules.

If you determine that an employee is not eligible for membership in a retirement system, document your determination and then stop with this step. If you determine that an employee is eligible for membership, complete the remaining steps.

Step 4: Determine what forms the employee needs to complete if working in an eligible position:

  • Beneficiary Designation Form – All new employees
  • Retirement Status Form – All new employees. You are required by statute to ask new employees whether they have retired from a Washington State Retirement System. Use this form or one you have developed. This form is kept by the employer.
  • Member Information Form – PERS, SERS, and TRS if they are:
    • New members choosing Plan 2 or Plan 3, and potential SERS and TRS members hired into eligible positions
    • Members transferring from Plan 2 to Plan 3
    • Returning Plan 3 members, who must choose a rate option
  • Enrollment Form – All LEOFF and WSPRS employees

Chapter 12 provides a links to employer forms and instructions on how to order bulk copies of the forms. Before you send the form to DRS, make sure that both the employee and employer portions are completed correctly. If a form has not been completed correctly, it will be sent back to you for correction.

Step 5: Determine what forms the employee needs to complete if working in an ineligible position or as a contractor:

Retirement Status Form — You are required to ask new employees in ineligible positions or contractors who are being compensated for services performed, or as a result of contracted services performed by those in their employ, whether they have retired from a Washington State Retirement System. Use this form or one you have developed. This form is kept by the employer.

Step 6: Report the employee on the transmittal report and make payment of contributions due.

All eligible employees must be reported to DRS on the transmittal report. You should report each member each payroll. The first time you report an eligible employee, be sure to report a begin date, gender code, address and birth date.

If you are completing the first transmittal for a new member with a plan choice, a newly hired existing Plan 3 member changing employers , or a January Transfer Option , refer to those sections for instructions. Refer to Chapter 8 Index for other reporting topics.

Step 7: Contributions due

In addition to adding the employee to your transmittal report, include payment of all contributions due with your regular contribution payment to DRS. Refer to Chapter 6 for details about how to calculate and pay retirement contributions that are due.

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