SERS Plan 2

School Employees’ Retirement System (SERS) Plan 2

SERS Plan 2 is a lifetime retirement pension plan available to public employees in Washington. You and your employer contribute a percentage of income to fund the plan.

Your contributions

SERS Plan 2 employee contribution rate: 7.76%

This is the percentage of your pretax salary that goes toward your pension retirement income.

See a live or recorded Plan 2 webinar.

How much will your pension be?

Estimate your retirement benefit in minutes using the personalized Benefit Estimator in your online account. Your total pension amount is based on your years of service and your income.  See more about how we calculate your benefit.

Years of service

Service credit is based on the number of hours you work, which your employer reports to DRS. No more than one month of service credit can be earned each calendar month, even if more than one employer is reporting your hours.

You earn 12 months of service credit if:

  • You work 810 hours or more, beginning work in September and working at least nine months of the school year

You earn 6 months of service credit if:

  • You work 630-809 hours beginning work in September and working at least nine months of the school year –or –
  • You work at least 630 hours, working at least five months within a six-month period during the school year.

Service credit may be earned in smaller increments for work situations not covered above.

Review your service credit detail through your online account.

Your income

The Average Final Compensation, or AFC is the average of your 60 consecutive highest earning months in your career. This could be at the beginning, middle or end of your career. DRS uses your AFC income information to calculate your pension amount. For high income public employees, federal law limits the amount you can contribute toward retirement and limits the benefit calculation. See IRS limits.

SERS Plan 2 formula

2% x service credit years x Average Final Compensation = monthly benefit

Example:

Let’s say you work 23 years and the average of your highest 60 months of income (AFC) is $5,400 per month.

2% x 23 years x $5,400 = $2,484

When you retire, you’d receive $2,484 per month

When can you retire?

Now that we’ve discussed how much money you can get in retirement, let’s talk about when you can retire. You need 5 or more years of service to qualify for a retirement with SERS Plan 2. Full retirement age is 65. You can also choose to retire as early as age 55, but your benefit could be reduced depending on your total years of service.  

You need 5 years of service

With SERS Plan 2, you need five years of service to qualify for a retirement. Once you have five years, you are a “vested” member. Five is the minimum, but you can earn an unlimited number of years to increase your pension amount.

Full retirement

Full retirement is the earliest age you can retire without any reduction to your retirement benefit. For SERS Plan 2, this is when you reach age 65. If you have 30 or more years of service and you are age 62, you can also retire with a full benefit. What if you want to retire younger than age 65 and you don’t have 30 years of service?

Early retirement

If you retire before age 65, it’s considered an early retirement. If you have at least 20 years of service credit and are 55 or older, you can choose to retire early, but your benefit will be reduced. There is less of a reduction (in some cases no reduction) if you have 30 or more years of service credit.

More about early retirement

How does retiring early affect my monthly benefit?

When you retire early, your monthly benefit amount is reduced to reflect that you will be receiving your pension payments for a longer period of time. The amount of the impact depends on the amount of service credit you have, the date you retire, your age and the early retirement factor used. (See “Early retirement benefit formulas” below.)

If you retire with between 20 and 30 years of service credit, your monthly benefit is reduced by a factor that is based on your average life expectancy. The reduction is greater than if you retire with at least 30 service credit years.

If you retire with at least 30 years of service credit, you can choose one of the following options:

  • A 3% Early Retirement Factor (ERF) reduction for each year (prorated monthly) before you turn age 65
  • The 2008 ERF, which provides a smaller benefit reduction but imposes stricter return-to-work rules

Early retirement rules are different for members who are first hired on or after May 1, 2013. At age 55 with 30 years of service credit, your benefit is reduced by 5% for each year (prorated monthly) before you turn age 65.

The ERFs are subject to change based on State Actuary figures. The administrative factors used in this table are for illustrative purposes only.

Early Retirement Factors

Actuarial early retirement factors, for those with less than 30 years of service, vary by system and plan and are updated at least every six years. See current early retirement factors for Plan 2 members with at least 20 years or Plan 3 members with at least 10 years of service.

Early retirement factors for 30 or more years of service

If I retire early, what reductions will apply?

The amount of the reduction to your monthly benefit depends on how much younger than age 65 you are when you retire and the amount of service credit you have. This reduction reflects that you will be receiving your defined benefit for a longer period of time than if you had retired at age 65. Consider how the ERFs are applied in the early-retirement examples shown below.

For more information on early retirement, read Washington Administrative Code 415-02-320.

Plan 2 early-retirement formula:

2% x service credit years x Average Final Compensation (AFC) x ERF = monthly benefit

Returning to work could affect your retirement income. See working after retirement.

Early retirement examples

How much difference can early retirement make?That depends on your circumstances, including your wages and age at retirement. Consider the examples below. The administrative factors used in these examples are for illustrative purposes only.

Example 1

Retiring Sept. 1, 2018, at age 55 with 22 years of service credit

Mario retires Sept. 1, 2018, at age 55 with 22 years of service credit. His AFC is $3,600. He is retiring early, so his monthly benefit is 36.5% of what it would have been at age 65, calculated as follows:

= 2% x 22 years x $3,600 x 36.5%

= 0.02 x 22 x $3,600 x 0.365

= $578.16

Example 2:

Retiring March 1, 2018, at age 60 with 30 years of service credit

Haani retires March 1, 2018, at age 60 with 30 years of service credit. Her AFC is $4,000. She is retiring early, so her monthly benefit is 85% of what it would have been at age 65, calculated as follows:

= 2% x 30 years x $4,000 x 85%

= 0.02 x 30 x $4,000 x 0.85

= $2,040

Example 3:

Retiring April 1, 2018, at age 62 with 30 years of service credit using the 3% ERF

Ron retires April 1, 2018, at age 62 with 30 years of service credit. His AFC is $4,400. If he chooses the 3% ERF, his monthly benefit is calculated as follows:

= 2% x 30 years x $4,400 x 91%

= 0.02 x 30 x $4,400 x 0.91

= $2,402

Example 4:

Retiring April 1, 2018, at age 62 with 30 years of service credit using the 2008 ERF

If Ron instead chooses to retire under the 2008 ERF, his benefit is not reduced. But he now must follow stricter return-to-work rules than retirees who pick the 3% ERF. If he chooses the 2008 ERF, his monthly benefit is calculated as follows:

= 2% x 30 years x $4,400 x 100%

= 0.02 x 30 x $4,400 x 1.00

= $2,640

See a live or recorded early retirement webinar.

Using sick leave to qualify for retirement

You can use up to 45 days of unused sick leave to help you qualify for retirement.  Sick leave not cashed out by your employer may be converted into a maximum of two months of service credit. However, this service credit isn’t used in the calculation of your benefit. It can only be used to qualify for retirement.

How do you retire?

Retiring can take anywhere from a few months to a few years. Find out here which actions you need to take before retiring and what your application options are. 

Separation vs retirement

You are retired from DRS when you separate from employment and begin collecting your pension. If you leave public employment, but you are not yet collecting a pension, we consider you separated, but not retired. These instructions assume you are separating and will be collecting your pension (retiring).

Make a plan

Give yourself time to retire. It’s best to make a two-year plan. This will give you the opportunity to explore healthcare options, find out about Social Security, make retirement savings decisions and set your affairs in order for a successful retirement. The DRS retirement checklist walks you through the steps you’ll take.

You must request an estimate

But how do you actually retire? First you request an official benefit estimate from DRS. The estimate takes about 6 to 8 weeks and is necessary to determine your pension amount. Request an estimate through your online account or call us at 800-547-6657.

  • Official benefit estimate: Request the official benefit estimate if you are within one year of retiring.
  • Benefit Estimator tool: If you are still more than one year away from retirement, you can use the Benefit Estimator in your online account to calculate your projected pension amount.

Submit an application

Once your estimate is complete, you’ll receive a statement in the mail and you’ll have two options to retire: Online or paper application.

Retiring online

Retiring online with DRS is fast and easy. That’s why two out of three members choose to retire online! When you request your formal benefit estimate, you’ll enter an expected retirement date. With online retirement, you can retire anywhere from three months before to three months after the date you request.

Retiring on paper

There are some situations where customers cannot retire online (for example, if you are a member of more than one retirement system). For this reason, we also offer a paper application for retirement. With the paper application, you can retire anytime within one year of the official benefit estimate.

When do you get paid?

Your pension money will be direct deposited into your bank account on the last business day of the month, every month, for the rest of your life. The retirement application has a section for your bank information so your funds will be deposited. Once you’ve retired, you can make any updates to your direct deposit through your online account.

See live or recorded retirement planning webinars.

How can you increase your pension amount?

You can increase your SERS 2 pension benefit by increasing your years of service or your income. But when it comes to total retirement income, you have more options. 

DCP savings program

The Deferred Compensation Program or DCP is a voluntary savings program you can use to increase your retirement savings. DCP uses many of the same investment options available to Plan 3 members, including investments that are managed for you. With DCP, you control your contribution amount so your savings can grow with you. Saving an additional $100 a month now could mean an extra $100,000 in retirement! (Example based on 6% annual rate of return over 30 years of contributions.) Find out more.

See a live or recorded DCP webinar.

Annuity options

What is an annuity?

Annuities are lifetime income plans you purchase.

When it’s time to retire, you have some additional options—options that can change your finite savings into a monthly, lifetime income called an annuity. An annuity is a guaranteed income plan you purchase. The monthly payments you receive are based on the dollar amount you choose to purchase. The annuity will provide monthly payments for your lifetime. The annuities DRS offers are administered by Washington state with investments provided by the Washington State Investment Board.

Is an annuity right for me?

Annuities can provide guaranteed income for your life. And they offer security through a set monthly income which can increase annually if you are eligible for a Cost-of-Living Adjustment (COLA). However, flexibility is not a feature of annuities. Once you set it up, an annuity doesn’t allow you to change the income amount. Once you begin receiving monthly payments, you cannot cancel the annuity.

With annuities, you take money out of market risk and use it to give yourself a monthly lifetime income. Annuities are the only investment withdrawal option that guarantee you will not outlive your account balance.

How do annuities affect my taxes?

Each year you’ll receive a statement that shows the taxable amount of your annuity. Complete a Form W-4P to choose the amount you’d like withheld from your payments for taxes. Without a Form W-4P, the tax withholding will follow IRS guidelines using a status of married with three allowances.
For more information about taxes, review IRS Publication 575. You might want to consult a tax advisor. DRS and the record keeper are not authorized to give tax advice.

SERS Plan annuity

This annuity is available to all PERS, SERS and PSERS retirement plan members. With this annuity, your survivor will be the same as the one you selected for your pension payment. You can use your DCP savings to purchase this annuity in addition to other approved funding sources. If you return to work, this annuity continues. See annuity video.

More about the plan annuity

When can I purchase? When you are retiring.

Are there limits to the annuity amount I can purchase? Yes, the minimum purchase amount is $5,000. There are no maximum limits.

How much does it cost? Log in to your account and choose “Purchasing Annuity.” Here you can find the monthly increase to your pension for any purchase amount.

What funds can I use to purchase an annuity? Your payment must come from an eligible governmental plan, like your DCP savings. Members cannot use PERS/SERS/TRS Plan 3 contributions to pay for this annuity.

When does my annuity benefit begin? Your retirement date or the day after your bill for the annuity is paid in full, whichever comes later.

How often do I receive my annuity benefit? Monthly.

Can I designate a survivor? Yes. Your survivor must be the same survivor and survivor option you chose for your retirement benefit.

Will I receive a Cost-of-Living Adjustment (COLA)? Yes. You will receive a COLA up to 3% annually. If you’re a Plan 1 member, a COLA is optional at retirement and your choice will also apply to this annuity purchase.

How do I purchase this annuity? Request this annuity when you retire online. You can also purchase it when completing a paper retirement application.

Can I cancel the annuity if I change my mind? In most cases, no. Annuities are fixed income sources. Once you purchase the annuity, you will not have access to the funds you used to make the purchase.

There are two exceptions:

If you have not completed the annuity purchase, you can still change or cancel the annuity.

Once you make the purchase, you’ll have 15 days to cancel the transaction. You’ll receive a mailed contract that includes your rescission, or cancel by date.

Will my annuity purchase be refunded if I die? If you (and your survivor if you selected a survivor option) die before the amount of your annuity purchase has been paid back to you, the difference will be refunded to your beneficiary.What if I return to work? Your annuity continues.

Purchase service credit

Purchasing additional service credit increases your monthly retirement benefit for the rest of your life. You can purchase between one and 60 months of service credit in whole months. The increase to your benefit is calculated using the same formula as your retirement benefit. This additional service credit is available at the time of your retirement only. Also, you cannot use the additional credit to qualify for retirement (it won’t increase your years of service).

More about the service credit annuity

When can I purchase? When you are retiring.

Are there limits to the amount of service credit I can purchase? Minimum: One month; Maximum: 60 months.

How much does it cost? Log in to your account and choose “Purchasing Service.” Here you can find the estimated cost and income increase per month you purchase.

What funds can I use to purchase service credit? You can use any funds except for Plan 3 contributions.

When does my annuity benefit begin? After you have made payment in full.

How often do I receive the benefit? Monthly.

Can I designate a survivor? Yes. Your survivor will be the same option you chose for your retirement benefit.

Will I receive a Cost-of-Living Adjustment (COLA)? Yes. You will receive a COLA up to 3% annually. If you’re a TRS Plan 1 or PERS Plan 1 member, a COLA is an optional choice at retirement.

Can I cancel the annuity if I change my mind? No. Annuities are fixed income sources. Once you purchase the annuity, you will not have access to the funds you used to make the purchase. If you have not completed the annuity purchase, you can still change or cancel the annuity.

How do I purchase service credit? Request this annuity when you retire online. You can also purchase it when completing a paper retirement application.

Will my annuity purchase be refunded when I die? Yes. If you (and your survivor if you selected a survivor option) die before the amount of your purchase has been paid back to you, the difference will be refunded to your beneficiary. For TRS Plan 1, this refund does not apply if you selected the Maximum Option.

What if I return to work? The return to work rules for service credit are the same as your retirement benefit. If you return to work for a DRS-covered employer, your annuity will stop if you return to retirement system membership or if you exceed allowable hours as a retiree (867 per year). If you do not return to a DRS-covered employer, your annuity will continue.

When will my benefit increase be effective? The increase in your benefit will be effective the day after the department receives your full payment.

See a live or recorded annuity option webinar.

Life events that can affect your pension

Death

Death of a retired member

Please contact DRS as soon as possible. If the retiree chose a survivor benefit, we must update the account for payments to continue. If the retiree did not select a survivor option, we need to stop monthly benefits to avoid an overpayment. When you contact us, please be ready to provide the deceased retiree’s full name, Social Security number and date of death.

Death of an active or not yet retired member

If the deceased worked in a public service position in Washington, payment may be due to survivor(s). When you contact us, please be ready to provide the deceased member’s full name, Social Security number and date of death. Also tell us if the death may be work-related.

Death of a beneficiary

If you are an active member, you can update your beneficiary designation at any time by logging into your online account.

If you are retired and your beneficiary or survivor dies before you do, please contact DRS.


Report a death to DRS

Phone: 800.547.6657 – Menu option 3 or extension 47081

Email: drs.dnd@drs.wa.gov – Please provide only the last 4 digits of the deceased’s SSN

Disability

If you become totally incapacitated and leave your job as a result, you might be eligible for a disability retirement benefit. The disability retirement was originally created for customers who wouldn’t otherwise be eligible to start receiving a retirement benefit. Even if you have not yet reached the minimum age for retirement, or you are not yet vested in your plan, you can still apply for a disability retirement.

Do you already qualify for retirement?

If you are vested in your plan and qualify to retire, there is no financial benefit to taking disability vs retirement, even for early retirement. The income you receive for either retirement uses the same calculations. Early or full retirement is also a much faster process than disability retirement.

How to apply for a disability retirement

Call DRS and request an official estimate for a disability retirement. It takes about 3-4 weeks for DRS to calculate your benefit. Then we will mail you a packet with the estimate and a three-part form. You, your employer and your doctor will need to complete all three forms in the packet.

Once DRS receives the completed application and all supporting documentation, it usually takes about four to six weeks to determine your eligibility for a disability retirement.

The full application process averages 4-5 months from the time you request the estimate, but the timing can vary. Providing all requested documentation along with a complete application can help reduce the wait time.

If the disability retirement is approved, your retirement date would be the first of the month after your separation date. DRS would issue your monthly benefit payments on the last business day of the following month and every month after.

Separation and withdrawals

Separating

If you leave SERS employment, you can choose to either leave your contributions in the plan until you’re eligible to retire or withdraw them. The IRS requires that you begin taking payment of your monthly benefit no later than age 72, unless you are still employed.

Leaving SERS-covered employment is the only circumstance in which you can withdraw your contributions. Doing so cancels any rights and benefit you have accrued in SERS. You can restore your contributions and re-establish your benefit only in certain circumstances (see the next section).

There are tax implications to withdrawing your contributions, so you might want to contact the IRS or a tax advisor before making a decision. Withdrawal of Retirement Contributions offers more detailed information.

Be sure to keep us up to date on any changes to your name, address or beneficiary. It’s important that you keep your beneficiary designation current, because a divorce, marriage or other circumstance might invalidate it.

Withdrawals

For information about withdrawing your retirement contributions before retirement, see Withdrawal of Retirement Contributions.

Loans and borrowing

Due to Internal Revenue Service regulations regarding government pension plans, none of the state retirement pension plans allow for loans or borrowing from your contributions. Retirement plan members, you can only access the funds you’ve contributed if you have separated employment from a DRS-covered employer.

The Deferred Compensation Program (DCP) does not allow loans. If you have a DCP account, an Unforeseeable Emergency Withdrawal may be possible under certain criteria. To discuss the requirements and obtain an Unforeseeable Emergency Withdrawal Packet, contact a DCP representative at 888-327-5596.

If you need to show proof of your account balance or monthly pension payment to secure a home loan, mortgage or other borrowing, log in to your DRS online account to view, print or download an account balance or pension verification letter.

Returning to public service

Returning

If you leave your position, withdraw your contributions and later return to work covered by SERS, you might be able to restore your previous service credit. To do so, you must repay the total amount of the contributions you withdrew plus interest within five years of returning to work or before you retire, whichever comes first. Contact us to find out that amount.

A dual member, or someone who belongs to more than one retirement system, might be able to restore service credit earned in a retirement system other than SERS. Each time you become a dual member, you’ll have 24 months to restore service credit earned in a previous retirement system.

It might still be possible to purchase service credit after the deadline has passed. However, the cost in that case is considerably higher. To explore financial projections and comparisons of your estimated retirement benefits, try using the Plan Choice Calculator.

Missing or withdrawn service credit

Service credit is the time used to calculate your pension retirement income. Sometimes customers notice their service credit doesn’t match their seniority date—these times do not always match. Often, the difference is because of missing or withdrawn service credit. You may be eligible to purchase some or all of the missing credit. Here is what you need to know about the process.

How do I check my service credit?

View your complete service credit history through your online account. It is a good practice to check your service credit every few years to be sure it matches your expectations.

Contact DRS for a cost estimate

You will need to contact DRS to request a cost for restoring your credit. We are not able to provide an estimate when you call. Similar to a retirement benefit estimate, this cost must be calculated by DRS and may require information from your employer.

You’ll need this information

The following preparation can expedite your request:

Provide the dates for the missing service. Find your service credit history in your online account.

Let us know if there is a gap in your service credit or if you withdrew from your account.

  • If there is a gap in your service credit, do you know why? Were there any special circumstances around your employment at the time? Some common events for missing credit include: authorized leave of absence, childbirth, substitute teaching, temporary duty disability, or injury.
  • If you withdrew from your account, when did you pull out the contributions?

How do I pay?

Make direct payment with either a personal or cashier’s check. Or in many cases it’s also possible to transfer funds from another eligible retirement account to purchase service credit. However, DRS cannot accept funds in excess of the cost to make your purchase. Check with your account administrator to see if you can transfer those dollars to a 401(a) account type.

There is a deadline

You must request and purchase the missing service within the timeframe allowed for your plan. The amount of time varies by plan. Ask DRS about your options for purchase. If the deadline has passed, you may still have the option to purchase additional service credit as an annuity option when you retire. This purchase will not restore missing time, but it would be used in your retirement payment calculation.

Working after retirement

If you return to public service in Washington state after you retire, your benefit could be affected, depending on the position and number of hours you work.

In certain circumstances, you might be required to become a member of, and pay contributions to, another retirement system. You might be able to work limited hours with no impact to your benefit. If you retire early under provisions put in place in 2008, your benefit could be stopped if you return to public service.

If you think you might be returning to work after retirement, call us to see if your benefit will be affected.

See a live or recorded working after retirement webinar.

Members of more than one retirement plan

If you are a member of more than one Washington state retirement system, you are a dual member. You can combine service credit earned in all dual member systems to become eligible for retirement.

In most cases, your monthly benefit will be based on the highest base salary you earned, regardless of which system you earned it in. Base salary includes your wages and overtime and can include other cash payments if those payments are included as base salary in all the retirement systems you are retiring from.

Example:

If you retire at age 65 with three years of service credit from SERS Plan 2 and four from the Public Employees’ Retirement System (PERS) Plan 2, you are a dual member. Without dual membership, your service wouldn’t be eligible for a monthly benefit from either system. With dual membership, your service credit is combined, giving you enough to retire. Your benefit is calculated with service from that system alone. Here’s the calculation:

2% x 3 (SERS service credit years) x Average Final Compensation (AFC) = SERS benefit

2% x 4 (PERS service credit years) x AFC = PERS benefit

SERS benefit + PERS benefit = total monthly benefit

See a live or recorded membership in multiple plans webinar.

Military service

Do you have U.S. military service? If you leave or reduce your DRS retirement plan-covered employment to serve in the military, you may be eligible for restoration of missing retirement service credit. The amount of service credit you have directly affects your retirement income calculation.

There is a deadline

You must complete payment for the military service credit within five years of returning to DRS-covered employment, or before you retire, whichever comes first. After this time has passed, you will no longer be eligible to replace the service using the military credit program, but you are still welcome to purchase up to five years of standard service credit to fill in any gaps.

How much will it cost?

You can recover between five and 10 years of service, depending on your circumstance. If your service was during a period of war or an armed conflict during which you earned a campaign badge or medal, you can recover up to five years of interruptive military service credit at no cost to you. For other military service, you will receive an optional bill for the member retirement contributions you would have paid on your normal salary during that time (plus any interest).

How do I apply?

Contact DRS to ask about recovering military service credit. You will then submit information, such as a copy of your DD214, to help us determine your eligibility. DRS will review your account as well as the information you provide and notify you of our findings, including an optional bill if applicable. This usually takes 2-3 weeks.

Marriage or divorce

Your retirement account can be affected by changes in your marital status. If you marry or divorce before you retire, you need to update your beneficiary, even if your beneficiary remains the same.

Marriage

If you are married when you retire, you choose from a few benefit options that can include retirement income coverage for your spouse if you die before them. See options for changing your benefit after retirement.

If you marry after retirement, you could be eligible to change your benefit option to add your spouse. You need to be married at least a year and request DRS add your spouse during your second year of marriage. See options for changing your benefit after retirement.

If you become widowed after retiring, you can have your benefit option changed to the single-life option with no survivor reduction. You will need to report the death to DRS.

Contact DRS for more information.

Divorce or separation

Upon divorce or separation, your monthly benefit is not subject to sharing or division unless it is court-ordered. DRS could be required to pay a portion of your retirement account to satisfy a divorce agreement. This order is called a property division. The order could award an interest in your account to your ex-spouse, or split your account into two separate accounts.

For questions about a property division, or to start the process, contact DRS.

For further research on property orders, see WAC 415-02-500.

Transferring to SERS Plan 3

Each January, eligible members of Plan 2 can choose to make a permanent transfer to Plan 3.

Who is eligible? You must be actively employed as a SERS Plan 2 member. You also need to have been employed by a certain date:

  • SERS Plan 2 members (without past PERS Plan 2 service) who first established membership before July 1, 2007
  • SERS Plan 2 members (with past PERS Plan 2 service) who first established membership before August 1, 2009

To transfer from Plan 2 to Plan 3, complete a Member Transfer form and submit it to your employer in January. DRS will transfer your Plan 2 contributions, and any interest earned, to a Plan 3 investment account.

For more information about the differences between Plan 2 and Plan 3, see Plan Choice.

IRS federal taxes or limits on your benefit

Federal taxes on your benefit

Most, if not all, of your benefit will be subject to federal income tax. The only exception will be any portion that was taxed before it was contributed. When you retire, we will let you know if any portion of your contributions has already been taxed.

Since most public employers deduct contributions before taxes, it’s likely your entire retirement benefit will be taxable.

At retirement, you must complete and submit a federal W-4P form to let us know how much of your benefit should be withheld for taxes. If you don’t, IRS rules require withholding as if you are married and claiming three exemptions. You can adjust your withholding amount at any time during retirement by completing a new W-4P form.

For each tax year you receive a retirement benefit, we will provide you with a 1099-R form to use in preparing your tax return (see 1099-R). These forms are usually mailed at the end of January for the previous year. The information is also available through your online account.

It is your responsibility to declare the proper amount of taxable income on your income tax return.

Federal benefit limits for high income members

If you are a highly paid member or retiree, you may encounter a federal limit on your retirement benefit. There are two federal regulations that could limit benefits for highly paid members and retirees. The salary limit (which restricts the salary used to determine your benefit) and the benefit limit (which limits the annual benefit amount you can receive). In other words, federal law limits the amount of compensation you can pay retirement system contributions on, and that can be used in your benefit calculations. The IRS can adjust the amount each year.

2021 salary limit

The 2021 limit is $290,000. This means any salary you earn over this amount in 2021 will not be part of your retirement contributions or your pension calculation. See the following section for more information on how this limit applies to you.

Internal Revenue Salary Limit for Active Members

If you began public service before 1/1/96

  • You don’t have a salary limit
  • You pay contributions on all salary earned
  • DRS does not adjust your Average Final Compensation for limit testing purposes
  • Your pension calculation is not affected by salary limits
  • IRC section 415(b) requires that your annual benefit must not exceed the limit. If you don’t exceed the benefit limit at the time you retire, it is still possible that your benefit may be affected at a later date.

If you began public service on or after 1/1/96

  • The current year salary limit applies (see above)
  • The salary limit is the same for all members and is adjusted annually by the IRS
  • If you reach the salary limit in a calendar year, you stop paying contributions
  • DRS notifies your employer when you approach the salary limit
  • Your Annual Final Compensation is capped for limit testing purposes if it includes the years you exceeded the salary limit
  • Your pension calculation is affected by salary limits

How do survivors or beneficiaries impact the limit?

Does my benefit amount change for my survivor beneficiary after I die?

No. If you chose to provide for a survivor beneficiary, and you die before your survivor does, your benefit transitions to your survivor at the rate you chose (100%, 50% or 67%). After the transition, your survivor’s benefit will also be tested.

Example:

If a retirement member choose to provide 50% of their benefit to a spouse or a domestic partner, the full benefit is $230,000, but it’s over the dollar limit and is capped at $185,000 annually. If the member dies first, the spouse or domestic partner will receive $115,000 annually ($230,00 x .50 = $115,000.

What happens if my survivor beneficiary dies before I do?

If your survivor beneficiary dies before you do, your benefit increases as if you hadn’t chosen a survivor option. If your survivor beneficiary was your spouse or domestic partner, we will continue to use your original benefit amount in your annual testing. If your survivor beneficiary was not your spouse or domestic partner, we will use your new, higher limit amount in your annual testing.

More information about federal limits

The IRS characterizes the retirement systems as 401(a) defined benefit plans. To retain status as qualified plans, the systems must comply with federal regulations. For more information about salary limit regulations, see Internal Revenue Code (IRC) Section 401(a)(17). For more about benefit limit regulations, see IRC 415(b).

For more information see these IRS resources:

IRS Plan Benefit Limits

Employee Plans Technical Guidelines

More about SERS Plan 2

Selecting a beneficiary

The beneficiary information you give DRS tells us the person(s) you want to receive your remaining benefit, if any, after your death. Submit or update your beneficiary information at any time before retirement using your online account. Or you can submit a paper beneficiary form.

If you don’t submit this information, any benefits due will be paid to your surviving spouse or minor child. If you don’t have a surviving spouse or minor child, we will pay your estate.

Be sure to review your beneficiary designation periodically and update it in your online retirement account if you need to make a change. If you marry, divorce or have another significant change in your life, be sure to update your beneficiary designation because these life events might invalidate your previous choices.

State-registered domestic partners, according to RCW 26.60.010, have the same survivor and death benefits as married spouses. Contact the Secretary of State’s Office if you have questions about domestic partnerships.

Your retirement benefit options

When you apply for retirement, you will choose one of the four benefit options shown below. Once you retire, you can change your option only under limited circumstances.

Option 1: Single Life

This option pays the highest monthly amount of the four choices, but it is for your lifetime only. No one will receive an ongoing benefit after you die. If you die before the benefit you have received equals your contributions plus interest (as of the date of your retirement), the difference will be paid in a lump sum to your designated beneficiary.

Option 2: Joint and 100% survivor

Your monthly benefit under this option is less than the Single Life Option. But after your death, your survivor will receive the same benefit you were receiving for their lifetime.

Option 3: Joint and 50% survivor

This option applies a smaller reduction to your monthly benefit than Option 2. After your death, your survivor will receive half the benefit you were receiving for their lifetime.

Option 4: Joint and 66.67% survivor

This option applies a smaller reduction to your benefit than Option 2 and a larger reduction than Option 3. After your death, your survivor will receive 66.67% (or roughly two-thirds) of the benefit you were receiving for their lifetime.

Your spouse must agree to the option you pick

If you are married and choose a Survivor Option other than Option 3, the law requires that your spouse consent to your choice by cosigning your retirement application. If your spouse’s consent is not provided, an Option 3 benefit will be paid to you and your spouse will be designated to receive the survivor benefit.

See a live or recorded benefit options webinar.

Health insurance options

Ask your employer if you will be eligible for health insurance coverage through the Public Employees Benefits Board (PEBB) once you retire. You can also call the Health Care Authority at 800-200-1004 or visit hca.wa.gov.

If you qualify for continuing coverage after retirement, you must meet strict timelines to apply or request a deferral. If you are not entitled to PEBB coverage, you might be eligible for health insurance your employer provides. For more information, consult your employer.

Plan eligibility

In general, you are automatically a member of SERS if you are hired into an eligible position. A SERS-eligible position is normally compensated for at least 70 hours of work per month for at least five months of each year and the employer is a Washington state public school district or educational service district.

Enrollment in your specific SERS plan (Plan 2 or Plan 3) depends on additional conditions, including your hire date and the plan you chose at the time you first went to work for a DRS-covered employer.

Some employees might satisfy the basic membership criteria but be ineligible for other reasons. If one of the following applies to you, please contact us to determine whether you are eligible for SERS:

  • You are a member of, or have retired from, another public retirement system in Washington state.
  • You work for a college or university and belong to that entity’s retirement plan.
  • You signed a student waiver while employed by a college or university.
  • You provide professional services on a fee, retainer or contract basis and the income you receive from those services is less than 50% of gross income for work performed in that profession.
  • You work for the city of Seattle, Spokane or Tacoma, or you are an elected or appointed official of one of these cities.
  • You are enrolled in a state-approved apprenticeship program, employed to earn hours for completing the program, and are making contributions to a union-sponsored or Taft-Hartley retirement plan.

If you are a classified substitute, your SERS membership is optional. If you are an elected or appointed official, your SERS membership might be optional.

If you have ever been a member in another of Washington’s public service plans, it is important that you contact us to confirm your eligibility and discuss your retirement options.

Substitutes

A substitute is an employee of a school district or Educational Service District (ESD) who is employed exclusively as a substitute for an absent employee or working in an ineligible position. As a classified substitute, your membership in the School Employees’ Retirement System (SERS) is optional.

Am I eligible to obtain service credit?

To become eligible for membership if you’ve never been a SERS member, you must work as a classified substitute for 70 or more hours per month for at least five months of a school year. Existing members don’t need to meet the hours requirement.

When can I apply for service credit?

Once the school year is over, you can apply for service credit and request a bill beginning in September of the next school year. To avoid paying interest on the contributions, submit your application between September and February of the school year following the one in which you worked.

For example, if you worked during the 2016-17 school year, submit your application between September and February of the 2017-18 school year. If your payment is received after the last day of February, you will be charged interest on the employer contributions. (Plan 2 must also pay interest on the member contributions.)

Your SERS membership officially will begin on the date your substitute bill is paid in full. For existing members, your membership began on either the date your first substitute bill was paid in full or when you were first hired into a SERS-eligible position.

I’m eligible and want to receive service credit. What should I do now?

Follow the steps below.

  1. Apply by completing this form. If you are a new member, carefully consider whether you want to join Plan 2 or Plan 3, which you will choose on the Member Information Form for Substitutes on pages 4-5. Your choice is permanent. Find out more in choose a plan.
  2. Send in copies of any quarterly reports for the 2003-04 school year, if applicable. For more recent years, each employer you work for during the school year reports your hours and earnings to the Department of Retirement Systems (DRS). However, they don’t deduct contributions from your pay. You may not purchase service credit for substitute time before July 27, 2003.
  3. DRS will process your request. This step can take up to 10 days from the date we receive your forms and any additional documentation. If approved, DRS will send you a substitute bill.
  4. Pay your bill in full.

When will I receive a bill?

Once DRS receives your application materials, we will look up the amount of service credit you are eligible to buy. Then we will send you a bill for the amount due.

Once you pay your bill in full, we will apply the service credit to your account. View your service credit balance in your online account.

How can I submit my payment?

Payment must be made in a full lump sum. You can make a direct payment with a personal check or cashier’s check. You can transfer funds from another of your eligible retirement accounts to purchase service credit.

The IRS classifies DRS plans as 401(a) accounts.

Will I owe interest on my bill?

The interest-free period lasts from September through February of the school year after the one for which you’re seeking service credit.

If your payment is received after the last day of February, you will be charged interest on employer contributions. Plan 2 members will also be charged interest on the member contributions.

Must I submit quarterly reports?

You must submit a quarterly report only if you are purchasing service credit for the 2003-04 school year. For more recent years, each employer you work for during the school year reports your hours and earnings to DRS.

Quarterly reports must show the exact hours you worked as well as the compensation you earned each month. Your employer must sign the reports too.

What if I previously withdrew my SERS contributions?

If you were previously a member of SERS Plan 2 and withdrew your contributions, you can reestablish your membership.

To reestablish membership in Plan 2, you must work as a substitute for five months for at least 70 or more hours per month during a school year.

Complete the Substitute’s Application for Service Credit to receive a bill.

If you are a Plan 3 member and withdrew your defined contributions, you can continue to apply for service credit in Plan 3.

Is buying substitute service credit my best option?

Typically, yes. However, if you’re age 65 or older and vested, purchasing your current substitute service credit might not be your best choice. Please call DRS to discuss your options.

Elected or appointed official

As an elected or governor-appointed official, you are eligible to join a state retirement plan. To participate, you need to earn at least 90 times the state minimum wage each month. Or you can participate if you are already working in another position with a DRS retirement plan. To enroll or opt out, complete this membership form. You can enroll at any time during your elected or appointed service. Your contributions will continue until you separate from employment.

Your contributions and retirement benefit

  • See contribution amounts.
  • See retirement benefit calculation.

How service is calculated

  • State elected officials earn one full credit for each month worked, regardless of hours worked.
  • Governor-appointed and local elected officials need to earn 90 times the state minimum wage and then service credit will be based on the standard rules of the plan—full credit is applied when you work at least 90 hours in a month, with partial credit for fewer hours.

Can you purchase credit for past terms?

You can purchase a maximum of two years credit for past elected terms.

What if you retired from a DRS plan before you were elected or appointed?

You can choose to remain retired or you can return to active membership.

  • Remaining retired: You will be subject to the standard retiree return to work rules for your plan.
  • Returning to membership: This will stop your ongoing benefit, but resume your contributions and service credit accumulation for a larger benefit when you reapply for retirement.

Can you retire with a DRS pension and still receive monthly payments while in an elected position?

In some cases, yes, but your elected official income will need to fall under a limit. This is important to know if your elected position extends beyond retirement. Contact us for more information.

For additional assistance, contact the Elected Official Team at 800-547-6657, extension 47966.

Plan resources

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