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 a retiree performs services as a contractor or through 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.