SB 5718
In CommitteeSenate
TRS & SERS/plan 2 transfer
Providing members of the teachers' retirement system plan 3 and school employees' retirement system plan 3 that were never offered a choice of plan 2 the opportunity to irrevocably transfer to plan 2 for future service.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill gives certain current TRS and SERS Plan 3 members—those who joined between 1996 and 2007 and were never allowed to choose between Plan 2 and Plan 3—the chance to switch to Plan 2 for future service only. The option is irrevocable, only available in January, and excludes retirees.
- Allows TRS Plan 3 members who joined between July 1, 1996, and June 30, 2007—and were never offered a choice between Plan 2 and Plan 3—to irrevocably transfer to Plan 2 for future service only, during any January after July 28, 2025, provided they earn service credit that month.
- Allows SERS Plan 3 members who joined between September 1, 2000, and June 30, 2007—and were never offered a choice between Plan 2 and Plan 3—to irrevocably transfer to Plan 2 for future service only, during any January after July 28, 2025, provided they earn service credit that month.
- Prohibits any member who has already retired from Plan 3 from transferring to Plan 2.
- States that the legislature may modify or end this transfer option in future legislation.
- Requires suspension of the transfer option if the Internal Revenue Service (IRS) determines it violates federal tax law.
Who is affected
- Teachers' Retirement System (TRS) Plan 3 members — Members who joined TRS Plan 3 between July 1, 1996, and June 30, 2007, and were never given the option to choose between Plan 2 and Plan 3—this bill allows them to switch to Plan 2 for future service only.
- School Employees' Retirement System (SERS) Plan 3 members — Members who joined SERS Plan 3 between September 1, 2000, and June 30, 2007, and were never given the option to choose between Plan 2 and Plan 3—this bill allows them to switch to Plan 2 for future service only.
- Retired TRS and SERS Plan 3 members — Retired members of Plan 3 are explicitly barred from transferring to Plan 2 under this bill.
- Washington State Department of Retirement Systems — The state’s retirement systems (TRS and SERS) must implement the transfer process, track elections, and update benefit calculations.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Members who were locked into Plan 3 without a choice—often lower- and middle-income educators who joined in the late 90s/early 2000s—may gain significantly higher retirement benefits under Plan 2, especially if they have high final average salaries or long careers, improving retirement adequacy and reducing poverty risk in old age.
retirement securityPeopleRef: Sec. 1(1); Sec. 2(1)Higher retirement benefits could enable more retirees to afford stable housing in retirement, especially in high-cost areas like Seattle or Spokane, reducing displacement risk and reliance on public assistance programs.
HousingPeopleRef: Sec. 1(1); Sec. 2(1)Improved retirement income may allow retirees to afford private health insurance or out-of-pocket medical costs before Medicare eligibility, easing strain on Medicaid and community health programs—particularly valuable in rural counties with limited provider networks.
HealthcarePeopleRef: Sec. 1(1); Sec. 2(1)By offering Plan 2—a more generous defined-benefit formula—as a one-time option, the bill may improve recruitment and retention of experienced educators who value predictable, lifetime retirement security, especially in high-need subject areas or rural districts.
EducationPeopleRef: Sec. 1(1); Sec. 2(1)First responders and school-based safety personnel (e.g., counselors, security staff) in TRS/SERS Plan 3 who were denied the original choice may now access a more robust retirement safety net, supporting dignity and economic security in retirement—though this does not directly affect public safety services today.
Public SafetyPeopleRef: Sec. 1(1); Sec. 2(1)
Potential Concerns (5)
The bill may increase actuarial liabilities for TRS and SERS, potentially straining the systems’ long-term solvency and requiring higher employer (e.g., school districts) or state contributions—costs that may lead to reduced funding for classroom resources, teacher support, or local public safety staffing if budgets are constrained.
Public SafetyPeopleRef: Sec. 1(1); Sec. 2(1)By allowing members to switch to Plan 2—known for higher employer contribution rates—school districts and other public employers may face increased unfunded liability payments, diverting funds from instructional or operational budgets and potentially affecting class sizes, maintenance, or local infrastructure.
Local GovernmentPeopleRef: Sec. 1(2); Sec. 2(2)Excluding retirees from the transfer option creates inequity: those who retired under Plan 3 (often lower-income due to capped pensions) are denied the same opportunity as active members, reinforcing disparities in retirement security among aging public employees.
Public SafetyLean peopleRef: Sec. 1(3); Sec. 2(3)The requirement to earn service credit in the January of election may disproportionately impact part-time, seasonal, or intermittent educators (e.g., substitute teachers, adjuncts) who may not work or accrue service in January, limiting access to the option despite eligibility on paper.
Business & EmploymentLean peopleRef: Sec. 1(1); Sec. 2(1)The IRS suspension clause introduces uncertainty: if federal tax authorities challenge the transfer as creating a “double-dip” (e.g., tax-advantaged contributions under two systems), the option could be halted mid-execution, leaving members in limbo and potentially triggering legal or administrative costs for the state and affected employees.
Business & EmploymentRef: Sec. 3
Who Is Most Affected
Educators who joined TRS/SERS Plan 3 between 1996–2007 and never chose between plans—many now in their 40s–50s—stand to gain significantly higher lifetime benefits, especially those with high final salaries or long tenures. However, the irrevocable nature and January-only election window may disadvantage those with irregular work schedules.
Retired educators are explicitly excluded, meaning those who retired under Plan 3 (often with lower lifetime earnings and higher health care needs) receive no benefit, deepening retirement insecurity for this vulnerable group.
School districts and other public employers will likely face higher contribution rates if many members switch to Plan 2, which has a higher employer contribution rate (e.g., 25% vs. 15% for Plan 3). This could strain local budgets, especially in districts already facing funding shortfalls.
The Department of Retirement Systems must implement new processes, track elections, and recalculate benefits—adding administrative burden and cost. However, the agency gains clarity on eligibility and may improve trust if the option is well-communicated and executed.
Future legislators inherit a potentially larger unfunded liability and may be forced to raise taxes or cut other services to cover increased pension costs—though the bill explicitly reserves the right to terminate the option, giving future lawmakers flexibility.