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More about Plan 3

 

Plan 3 has two parts – a defined benefit and a defined contribution. Your employer contributes to your defined benefit. You contribute to the defined contribution. You choose your investment program and contribution rate for the defined contribution part of your plan. Once chosen, your defined contribution rate is permanent unless you change employers.




Take a closer look at some Plan 3 features:

 

1% Lifetime Benefit
Plan 3 Contribution Rates
Plan 3 Retirement Age and Service Credit Requirements
Plan 3 Investment Programs

 

1% Lifetime Benefit

Once you meet age and service requirements and you've applied for retirement, you will receive a guaranteed monthly benefit for your lifetime. Your benefit is based on your years of service credit and the pay you've earned. Payments are guaranteed by the state of Washington.


The 1 percent defined benefit formula used to calculate your retirement is:


1% x service credit years x Average Final Compensation

How does it work?

If you worked full time every month for 15 years and your average pay for your highest consecutive five years was $4,000, your benefit would be $600.

 

1% x 15 service credit years x $4,000 Average Final Compensation
=
$600 monthly retirement benefit

 

Plan 3 Contribution Rates

Plan 3 has two parts that fund your retirement.

  • The defined benefit part of Plan 3 is funded by mandatory contributions made by your employer and invested by the Washington State Investment Board. The 1 percent defined benefit part of your plan is guaranteed and is not dependent on investment performance. Employer contribution rates change over time, based on funding needs of the plan.

  • The defined contribution part of Plan 3 is funded by the mandatory contributions you make. You choose how much to contribute from one of these six rate options:


Once I decide on a contribution rate, can I change it?

Once you choose or are defaulted to a rate, you can change it only when you change public sector employers. Changing means working for a different public sector employer, not another division or department where you currently work.


Using the Take-Home-Pay Calculator on this website will provide you with the net effect of how your take-home pay will be impacted considering the various contribution rates listed above.


Even if new rates are added, the restrictions on changing contribution rates still apply.

 


Plan 3 Retirement Age and Service Credit Requirements

Retirement with a full benefit – age 65 with at least ten years of service credit


If you have at least five years of service credit, you can retire at age 65 with a full benefit if you earned at least one of your five years of service credit after age 44.


How does it work?

 

You're age 47 and you have five years of service credit. You earned three years of service credit after the age of 44. You choose to leave public service and begin drawing from the defined contribution part of your plan. You delay receiving your defined benefit until age 65.


Because you have earned at least one year of service credit after age 44, you can retire with a full benefit at age 65 even though you only have five years of service credit.

Transfer members have a different eligibility requirement.


Early retirement with a reduced benefit – ages 55 to 64 with at least 10 years of service credit

Your retirement is reduced because you're younger when you take an early retirement, and you'll be receiving it over a longer period of time than you would a normal retirement. To retire early you must have at least 10 years of service credit and be age 55 to 64.


The amount of your reduction depends on the amount of service credit you have AND how much younger than 65 you are when you retire.


Early retirement with a full benefit – ages 62 to 64 with at least 30 years of service credit


There's one early retirement you may qualify for and still receive a full benefit. To receive an early retirement with a full benefit, you must have at least 30 years of service credit and be age 62 to 64.


Leaving employment before you're eligible to retire

The defined benefit part of your plan is designed to provide you with a source of income throughout your retirement. For this reason, you can’t withdraw the contributions your employer makes to this part of your plan.

  • If you have at least 20 years of service credit when you leave employment and do not start to receive your defined benefit, your defined benefit will increase by approximately 3 percent for each year you delay receiving it up to age 65.

  • If you have at least 10 years of service credit and you're age 65, you can retire with a full benefit.

  • If you have at least five years of service credit, you can retire at age 65 with a full benefit if you earned at least one of your five years of service credit after age 44.

As a Plan 3 member, it is possible to withdraw your contributions and investment earnings from your defined contribution part. However, if you do, you reduce an important source of your retirement income.

 


Plan 3 Investment Programs

The defined contribution part of Plan 3 offers you the choice between two investment programs: The Self-Directed Investment Program and the Washington State Investment Program.

  • With the Self-Directed Investment Program, you can build, monitor and invest your contributions.

  • With the Washington State Investment Board (WSIB) Program, the WSIB invests your contributions for you.

 

 

Read more about Plan 3 investment options