A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2024 COLA percentages by retirement date and plan. When will I receive the 2024 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked percentages in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? Certain retirees in Plan 1 of the Public Employees’ Retirement System and Plan 1 of the Teachers’ Retirement System (PERS 1 and TRS 1) will receive a one-time benefit increase in July 2024 as a result of House Bill 1985 (pending the governor’s signature). More about COLAs [reblex id='14232']

At the end of July, state employees may notice a 3% increase to their paycheck. This increase is thanks to legislation that passed in March 2023 and is intended to help you with the cost of inflation. One of the best things about getting a paycheck increase is that it gives you more flexibility with your budget. You can use the extra money to:  pay off credit card debt save for a big vacation open an account or add to a child’s 529 college savings fund increase your DCP contributions for retirement No matter how you decide to use the extra funds, setting aside a small amount of $50 or $100 to an account every month can add up overtime and help you achieve any goal. Consider a percentage increase for your DCP contributions If you’re currently contributing a percentage of your paycheck to DCP, your account will already benefit from this increase. Just know that now is the perfect time to raise that number. By increasing your percentage, your DCP account will see faster gains in the upcoming years. At the same time, you’ll still see an increase in your take-home pay. It’s a win-win. Example: if you’re contributing 3% now, consider increasing it to 4% or 5%. How to change your contributions: Log in and select your DCP account At the Voya main menu select Accounts and then Washington State DCP Select Contributions & Savings, then Manage Contributions The page will show what your current contribution rate is. Select Update My Contributions to make the change. Log into your account Don’t have an account? It only takes a few minutes to enroll in DCP. Got a few minutes? Listen to the DCP podcast episode In episode 11, you’ll find out how DCP can help you save for retirement. The 17-minute episode explains how taxes are applied, the importance of contributing with a percentage of your income and tools for maximizing your investment. You can also read the transcript of the episode.

Moving to another state The one thing to keep in mind if you plan to live outside Washington, is state income tax. Your plan contributions were pretax, so you will have income tax when you receive your retirement payments. Washington doesn’t have state income tax, and we don’t withhold state income tax for any payments issued outside of the Deferred Compensation Program (DCP). This means, if you live in a state outside Washington, you will be responsible for paying any pension income taxes owed to that state. This is the main thing to know if you are considering leaving Washington. The rest of this article is for those of you who are planning to move outside the United States. Planning to live outside the United States in retirement? If you’re thinking about living outside the US in retirement, you’ll want to consider this relocation during your retirement planning. Security risks are high in financial as well as technical industries. And modern prevention measures are often extreme, especially when it comes to foreign transactions. This extra security can present a challenge for collecting your retirement income from outside the US. How do DRS customers receive their pension payments if they live outside the US? The answer is, it’s complicated. What about direct deposit? For some countries, direct deposit payments to your bank account are possible. If your bank has a branch in the US as well as the destination country, we have seen successful direct deposits in many cases. There are several banks that operate in the US and abroad. We require a 9 digit US routing number to implement the transfer.  Many foreign banks use routing systems that are incompatible with US banking and DRS systems cannot process these. Additionally, we cannot guarantee the bank will cooperate. What about paper checks? In most cases, paper checks are the solution for international customers. DRS mails paper checks to foreign customers. However, some countries will not accept foreign checks due to their own advanced security measures. Australia and Norway are two countries with such restrictions. Accessing DRS payments in a foreign country can require some creative solutions. Some customers have success using prepaid debit cards from a third-party vendor. But the fees on these are high. DRS is not able to offer advice for how you can receive these payments outside of traditional methods. We recognize that foreign payments are challenging and everyone’s situation is unique. Washington is considering future solutions for successful international pension payments, but right now, it’s complicated. Relocating outside the US when you retire? Here’s what to do. Talk to your bank. The most important step you can take is to have a conversation with your financial institution(s)—both foreign and US, about your relocation as well as options for receiving payment. It’s important to be honest about your situation. For customers straddling two countries, we’ve seen US banks close customer accounts when the physical address is foreign, simply as a security measure. Talk to DRS. Contact DRS and let us know you are moving, preferably before we start issuing your payments. There are different form and reporting requirements for international customer payments. Instead of an I9 for tax withholding, non-citizens with an international address need to complete a W8. Instead of a 1099 tax report, you’ll receive a 1042 report each year. If you are a US citizen living anywhere in the world, you will be responsible for paying federal taxes on your benefit payments. You will also be responsible for paying any income taxes required by the country in which you reside. If you have a Roth account, such as Washington’s DCP Roth option, you might wonder whether foreign countries honor Roth income as tax-free. Definitely check out the rules and regulations for the destination country. In many cases, countries will tax your worldwide income whether or not it is already-taxed Roth dollars. Bottom line - If you are planning to move out of country in retirement, it’s important to communicate and to explore your options.

Every summer, we post annual fee changes for DCP and Plan 3 investments. Fees are based on the cost to manage the investments and vary by fund type. The revised fee tables are available now on the DCP and Plan 3 pages. DRS investment options are provided by WSIB (Washington State Investment Board). At just a fraction of a percent, most investment fees seem pretty insignificant and many of us ignore them. Because DRS only recovers the cost of administering investment programs, we are able to keep the fees low. Knowing the true cost of your investments is a critical part of retirement savings. Especially when you are comparing one retirement plan to the value of another. Let’s take a closer look at investment costs. What costs are associated with DCP and Plan 3 investments? Investments have two types of costs: administrative and management. Administrative costs: These include investment services provided by WSIB, recordkeeping, communications and customer service. DCP fees are listed on your quarterly statement under “Expenses.” Administrative costs apply to all customers, are based on the administrative costs of the program and are determined annually. Changes, if any, usually become effective in July. The fee to cover administrative costs for DCP is 0.1084% (compared with 0.1180% in 2023). This fee is quite low for voluntary retirement savings. For this reason, many DCP participants choose to roll their savings plans from other employers into their DCP savings accounts. This consolidation simplifies retirement funds and can save costs. To see if this option is right for you, be sure to consider any potential costs and investment limitations. Management costs: Funds are managed by teams of investment professionals. The costs vary with each investment option. Management costs, also sometimes called investment fund fees or expense ratios, are included in the share price and won’t be visible on your statement. See the investment fee tables to view actual management fees for each fund (DCP and Plan 3). DCP fees applied to a $10,000 balanceThis example is simplified. Normally your investments would vary each quarter depending on your contributions and market performance. So every quarter would be calculated based on the exact account balance at the time.The fee total varies by fund. For this example, let’s use the 2035 Retirement Strategy Fund for DCP. The total cost for this fund is included in the last column of the fee tables above. The total fees for this fund (including administrative fees) is 0.3157% per year.The formula to estimate your fund cost is: Account balance x Total fee = Annual cost in dollars2035 Fund annual fee: $10,000 x 0.003157 = $31.57The total annual fees for the $10,000 balance would be $31.57 More resources Fee comparison calculatorDCP investmentsTRS Plan 3 investmentsPERS Plan 3 investmentsSERS Plan 3 investmentsInvestment login