If you're on Plan 3, you MUST read this!
If you're on Plan 3, each January you used to be able to change how much you contribute each month to your Plan 3 investment account. After this month, the IRS will prohibit you from ever being able to change your contribution rate as long as you remain employed with the Lake Washington School District.
It is extremely critical for you to determine if the rate you are currently contributing is the rate you want for the rest of your career in this district.
Plan 3 is made up of two parts---a defined benefit portion and a defined contribution portion. In the defined benefit portion, the employer contributes an amount calculated by DRS that will ensure you receive a set pension based on a formula at retirement (1% x years of service x average earnings from your 5 highest consecutive years).
In the defined contribution portion, the employee selects a percentage of his/her salary to go into an investment program of his/her choice. How well these investments do determines how much of a retirement benefit the employee will receive under this part of the retirement plan.
From now through January 30, 2015, you can change the percentage of your salary that you want to invest in the defined contribution portion of your retirement plan. The rate you have in place on January 31 will permanently remain in place as long as you are employed in the Lake Washington School District.
To determine what your current investment rate is, simply follow these steps:
1. Look up a recent pay stub on Employee Access and grab a calculator.
2. Locate the section of your check marked "Deductions."
3. Find the amount listed under "TRS Plan 3."
4. Find your gross pay, which is listed towards the top right-hand corner of your pay stub under "Gross Pay."
5. Divide the amount listed under "TRS Plan 3" by the amount under "Gross Pay."
6. Move the decimal point two places to the right to find the percentage of your salary you're contributing towards your TRS 3 plan.
If you're satisfied with this percentage and want to keep it, you don't need to do anything further.
If you want to change the percentage you're contributing, you can do so by filling out a change form and turning it in to Payroll by January 30, 2015. Forms are available at http://www.drs.wa.gov/Forms/Member/trs3rateChange.pdf.
Here are the six rate choices available to you:
Option A: 5% of pay at all ages.
Option B: 5% of pay until age 35, 6% of pay from age 35 until 45, and 7.5% of pay at age 45 and above.
Option C: 6% of pay until age 35, 7.5% of pay from age 35 until 45, and 8.5% of pay at age 45 and above.
Option D: 7% of pay at all ages.
Option E: 10% of pay at all ages.
Option F: 15% of pay at all ages.
REMEMBER, JANUARY 30 IS THE LAST DAY YOU CAN MAKE A CHANGE!