Deferred comp. by local gov.

AN ACT Relating to automatic deferred compensation enrollment for 1
county, municipal, and other political subdivision employees; and 2
amending RCW 41.50.770. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 41.50.770 and 2022 c 72 s 1 are each amended to read 5
as follows: 6
(1) "Employee" as used in this section and RCW 41.50.780 includes 7
all full-time, part-time, and career seasonal employees of the state, 8
a county, a municipality, or other political subdivision of the 9
state, whether or not covered by civil service; elected and appointed 10
officials of the executive branch of the government, including full-11
time members of boards, commissions, or committees; justices of the 12
supreme court and judges of the court of appeals and of the superior 13
and district courts; and members of the state legislature or of the 14
legislative authority of any county, city, or town.15
(2) The state, through the department, and any county, 16
municipality, or other political subdivision of the state acting 17
through its principal supervising official or governing body is 18
authorized to contract with an employee to defer a portion of that 19
employee's income, which deferred portion shall in no event exceed 20
the amount allowable under 26 U.S.C. Sec. 401 (a) or 457, and deposit 21
Z-0322.1
HOUSE BILL 1270
State of Washington 69th Legislature 2025 Regular Session
By Representatives Bronoske, Ryu, Mena, Reed, Jacobsen, Paul, Duerr,
Kloba, Macri, and Simmons; by request of Department of Retirement
Systems
Read first time 01/14/25. Referred to Committee on Appropriations.
p. 1 HB 1270
or invest such deferred portion in a credit union, savings and loan 1
association, bank, or mutual savings bank or purchase life insurance, 2
shares of an investment company, individual securities, or fixed 3
and/or variable annuity contracts from any insurance company or any 4
investment company licensed to contract business in this state.5
(3) Beginning no later than January 1, 2017, all persons newly 6
employed by the state on a full-time basis who are eligible to 7
participate in a deferred compensation plan under 26 U.S.C. Sec. 457 8
shall be enrolled in the state deferred compensation plan unless the 9
employee affirmatively elects to waive participation in the plan. 10
Persons who participate in the plan without having selected a 11
deferral amount or investment option shall contribute three percent 12
of taxable compensation to their plan account which shall be invested 13
in a default option selected by the state investment board in 14
consultation with the director. This subsection does not apply to 15
higher education undergraduate and graduate student employees , or any 16
county, municipality, or other political subdivision offering its own 17
deferred compensation plan, and shall be administered consistent with 18
the requirements of the federal internal revenue code.19
(4) Beginning no later than January 1, 2017, any county, 20
municipality, or other political subdivision offering the state 21
deferred compensation plan authorized under this section, may choose 22
to administer the plan with an opt-out feature for new employees as 23
described in subsection (3) of this section. Any county, 24
municipality, or other political subdivision offering its own 25
deferred compensation plan, may automatically enroll employees in 26
accordance with their plan document all persons newly employed by the 27
county, municipality, or other political subdivision who are eligible 28
to participate in a deferred compensation plan under 26 U.S.C. Sec. 29
457 unless the employee affirmatively elects to waive participation 30
in the plan as described in the plan document.31
(5) Beginning no later than December 1, 2023, the department must 32
offer employees a Roth option in the deferred compensation plan under 33
26 U.S.C. Sec. 457. 34
(6) Employees participating in the state deferred compensation 35
plan under 26 U.S.C. Sec. 457 or money-purchase retirement savings 36
plan under 26 U.S.C. Sec. 401 (a) administered by the department shall 37
self-direct the investment of the deferred portion of their income 38
through the selection of investment options as set forth in 39
subsection (7) of this section. 40
p. 2 HB 1270
(7) The department can provide such plans as it deems are in the 1
interests of state employees. In addition to the types of investments 2
described in this section, the state investment board, with respect 3
to the state deferred compensation plan under 26 U.S.C. Sec. 457 or 4
money-purchase retirement savings plan under 26 U.S.C. Sec. 401 (a), 5
shall invest the deferred portion of an employee's income, without 6
limitation as to amount, in accordance with RCW 43.84.150, 7
43.33A.140, and 41.50.780, and pursuant to investment policy 8
established by the state investment board for the state deferred 9
compensation plan under 26 U.S.C. Sec. 457 or money-purchase 10
retirement savings plan under 26 U.S.C. Sec. 401 (a). The state 11
investment board, after consultation with the director regarding any 12
recommendations made pursuant to RCW 41.50.088(2), shall provide a 13
set of options for participants to choose from for investment of the 14
deferred portion of their income. Any income deferred under these 15
plans shall continue to be included as regular compensation, for the 16
purpose of computing the state or local retirement and pension 17
benefits earned by any employee. 18
(8) Any retirement strategy fund asset mix may include investment 19
in a state investment board commingled fund. Retirement strategy fund 20
means one of several diversified asset allocation portfolios managed 21
by investment advisors under contract to the state investment board. 22
The state investment board shall declare unit values for its 23
commingled funds no less than monthly for the funds or portions 24
thereof requiring valuation. The declared values shall be an 25
approximation of portfolio or fund values, and both the values and 26
the frequency of the valuation shall be based on internal procedures 27
of the state investment board. Such declared unit values, the 28
frequency of their valuation, and internal procedures shall be in the 29
sole discretion of the state investment board. The state investment 30
board may delegate any of the powers and duties under this 31
subsection, including discretion, pursuant to RCW 43.33A.030.32
(9) Coverage of an employee under optional salary deferral 33
programs under this section shall not render such employee ineligible 34
for simultaneous membership and participation in any pension system 35
for public employees. 36
--- END ---
p. 3 HB 1270