Retirement Badge #07: Employer & Employee Contributions, 403(b) Plans, and VEBA Benefits-Retirement Badge #07

Video Transcription

Video Summary

This WASBO Retirement Badge 7 recording introduces how Washington school districts handle retirement-related contributions, 403(b) savings plans, and FEBA/VEBA (VBAA) health benefits. Rochelle Gaines explains that “contributions” are payments made by employees and/or employers into retirement plans. For Plans 1 and 2, both employee paycheck deductions and employer payments go into a trust fund that finances current and future defined-benefit pensions; a small portion supports DRS administration (administrative expense rate: 0.0020). For Plan 3 hybrid members, employee contributions go to an individual Employee Retirement Investment Account (defined contribution), while employer contributions still go only to the trust fund to support the defined-benefit portion.<br /><br />The session reviews how contribution rates are applied only to “reportable compensation” (with tables in the DRS Employer Reporting Handbook) and notes that rates vary by system/plan. Some member rates (e.g., PERS/TERS Plan 1) are set in statute; Plan 3 members choose from six rate options set by the Employee Retirement Benefits Board, while the Pension Funding Council sets employer and most other rates annually.<br /><br />It also outlines 403(b) plans: traditional (pre-tax, tax-deferred growth) versus Roth (after-tax, tax-free withdrawals). Finally, it explains VBAA/VEBA-funded HRAs used to reimburse retirees’ medical expenses and premiums, including common contribution methods and sick-leave cash-out rules (up to 180 days at a 4:1 ratio).

Keywords

WASBO Retirement Badge 7

Washington school district retirement contributions

DRS Plans 1 2 and 3 (PERS/TERS)

reportable compensation contribution rates

403(b) traditional and Roth

FEBA VEBA (VBAA) HRA retiree medical reimbursement

sick leave cash-out 180 days 4:1 ratio